KRA Allows Refund Of Excess Taxes Via iTax

The National Treasury provided provisions for refunds of unintentional payments to KRA for all types of taxes through the Finance Act 2022.

To address this, the iTax system has been improved by adding a new sub-menu for "taxes paid in error" under the "refunds" menu.

“The first phase of this delivery targets taxes whose respective credit has not been reflected in the iTax ledger but the taxpayer has evidence of payments made. The system will allow taxpayers to submit an application for a refund of the tax paid in error for major tax heads (i.e. VAT, income tax, turnover tax, withholding taxes etc.) which will then be subjected to an approval process within the iTax refunds module” said KRA.

The fact that this functionality is now restricted to the taxpayer portal and not the back-office profile suggests that only the taxpayer may start the application procedure for a refund.

According to KRA, the iTax system has also been modified to permit taxpayers to get a credit for overpaid instalment taxes.

“When a taxpayer files their income tax return and they have excess instalment tax payments, the system will generate an instalment adjustment voucher (IAV). The system will subsequently allow taxpayers to capture the IAV when making their next instalment tax payment and, therefore, be able to offset it against instalment taxes payable for the affected period,” said the taxman.

However, the overpaid instalment taxes can only be applied to upcoming instalment tax payments.

The updated iTax system would also let users verify pending liabilities while applying for refunds, according to KRA. If a taxpayer owes back taxes, they won't be able to file a claim for a refund until the taxman has cleared them.