Presumptive tax tutorial

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Presumptive tax is the latest type of tax introduced by KRA .

So what is it and how do you submit it if you fall within the requirements as provided for by KRA?

Well, in this article we will help you on both fronts.

Definition

Presumptive tax is a type of tax, charged at the rate of 15% of the amount paid as business permit to the county governments.

This means that the tax will be different across the various counties, given that the business permit charges differ across the counties.

Therefore, any person issued, or liable to be issued with a business permit is liable to pay the presumptive tax.

Target

KRA has pointed out that they are targeting the small scale businesses, who annual revenue does not exceed Ksh 5 million per year.

How to pay

Presumptive tax is payable through the i-tax system. As this is done online, it is so easy, fast and convenient.

NB: You need to have a KRA PIN, that is updated on itax to make this return. For more information, see updating my PIN on itax

Let us look at the steps of submitting presumptive tax:

  • Log in KRA via itax portal using your PIN and password. This should display a page as shown below.
  • Navigate to the Payment registration link and click on payment registration. See below
Logging in to itax, to generate a payment slip
  • Once you click on this, it opens an e-payment page, just click on next. When prompted on proceed, click okay.
  • On the page that opens next, there are fields that need to be filled by selecting from the drop down. These are
filing presumptive tax on itax system
  • Tax head – select income tax here.
  • Tax subhead – scroll to the last option and select (0114) – presumptive tax

Payment type – this is self assessment by default. Just leave it that way.

Depending on whether you are doing it the first time, or you are amending an already filed one, select accordingly.

Payment registration – choose this if doing for the first time

Payment amendment – choose this if amending an earlier one

Next you need to fill in the details under presumptive tax details. These are:

Year – this is your year of income. Select from the dropdown accordingly

County – this is the county where your business is registered – i.e. where you obtain your business permit

Sub-county – the sub-county where you carry out your business

Ward – specific ward where your business is. These are all selected from the dropdown list.

Business registration number – This can be obtained from your business permit certificate.

Business name – just fill in according to the permit details

Yearly turnover – this refers to your actual sales for the year.

SBP Payable Value – this is you actual business permit fees payable to the county government.

Presumptive tax @ 15% – this will be automatically computed based on the value that you put under SBP value above.

Once you are done with this section, you need to click on add button, to add the details to your payment slip. See below. When prompted to add details, just click okay.

Next go the section below the add button, i.e. mode of payment. You can either pay by cash/cheque or RTGS (bank transfer). You can also pay via Mpesa. See more details on Mpesa payment here.

Once all this is done, just click on the submit button. When prompted on whether to submit details, just click okay to confirm.  This will process the return, and the page will load again, with a link to download your payment slip. Click on download payment slip to get the payment slip. That’s it.

It’s that simple.

If you have any questions or need help in doing this, you can always contact us.