The tax deduction card also know as a P9 form in Kenya is a standard tax deduction form issued by the employers to the employees with total emoluments for the year, it includes: The basic salary,  Benefits, Allowances, Gross pay, Pension contribution, PAYE (pay as you earn), Personal relief entitlement.

The information on a P9 form helps you file your KRA returns between the 1st of January and the 30th of June. Late filing of tax returns attracts a penalty of 5% of the tax due or Ksh. 20,000. There are two types of returns that you can make. If you are employed, you need a P9 form. However, if you are unemployed, you file Nil Returns to avoid penalties.

A P9 form facilitates filing of individual returns. Once can also check and confirm the PAYE remitted by the employer to KRA through his/her ledger on the iTax portal. Once a person files a return, the iTax ledger is debited.

The amounts remitted by the employer on a monthly basis are credited in the employee’s ledger. The credits will either balance, lead to a refund of tax or a shortfall.

The P9 form is a summary of the deductions made by the employer on behalf of the employee. Kindly note that your employer is obligated to provide you with a P9 form. But you can file so long as you know the gross pay, the personal relief for year 2020 (Kshs. 25,824.00), PAYE deducted and pension contribution if available. without this P9 form it is impossible to file your tax report.

Gross pay is the sum of your basic pay and any other taxable allowances and benefits received as a result of employment.

Pension contribution, Mortgage interest and savings in a home ownership savings plan (HOSP) if any are deductible contributions. They are therefore deducted from your gross pay before arriving at the taxable income. These amounts should be captured in their respective sections on the online return form. Failure to capture these correctly on the form, will result in tax payable at the end of the filing process.

The deductible contributions are however subject to various conditions. Mortgage interest or owner occupied interest on an amount borrowed for either purchase of premises or improvement of premises you occupy for residential purposes is deductible up to a maximum of Kshs. 25,000 per month (Kshs. 300,000 per annum).

Savings in a Home Ownership Saving Plan from an approved institution, is deductible up to a maximum of Kshs. 4,000 per month (Kshs. 48,000 per year)

Contributions towards a defined contribution fund such as a registered pension fund, individual retirement fund or the National Social Security Fund (NSSF) is acceptable up to a maximum of Kshs. 20,000 per month (Kshs. 240,000 per annum).The deductible amount is however limited to the lesser of:

1. 30% of your pensionable(basic) income
2. Actual contribution
3. Kshs 240,000 (i.e. equivalent to Kshs. 20,000 per month)

An Individual’s taxable income or chargeable pay is taxed on a graduated scale according to the existing tax rates in that particular year. As a resident individual you are entitled to a personal relief which is a tax incentive that reduces the amount of tax payable. The current rate of personal relief is Kshs. 16,896 per annum (i.e. Kshs 1, 408 per annum) with effect from 1st January 2018.

If you have a life, health or an education insurance policy, you are entitled to an insurance relief of 15% of the amount of premiums paid for self, spouse or child. However, it shall not exceed Kshs. 60,000 per annum.

With these few tax filing concepts, you are now ready to file your returns. It is important to start the filing process early so that in case you face any challenges that require KRA’s intervention, you have ample time to get it sorted out prior to the deadline.