How to file withholding tax

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It is that time of the year again when we are supposed to file our returns again. However, filing withholding tax is a little bit technical compared to filing of Nil returns. In this article, we are going to do a step by step guide on how to file your returns if you have withholding tax certificates.

How to file withholding tax

Step 1

The first is to log into to the itax portal.

You will need:

a) Pin number

b) Password

If you are unable to remember your password please click on forgot password.

Step 2

  • Once logged into itax account
  • Go to my ledger tab
  • Select General ledger
  • Here you will find a list of all the taxes paid

 

 

NB: All withholding taxes paid will start with KRAWHT….. Write down all the tax amounts for the paid withholding tax, you will need them for step 3.

Eg. say I paid withholding tax for four months in 2018 that may be:

  • Jan – Ksh 1409
  • April-Ksh 1752
  • Nov- Ksh 1387
  • Dec- Ksh 1308

Step 3:

  • Go to returns
  • Select file returns

 

 

  • You will be redirected to another tab as shown below

After downloading the excel sheet, click on it to open

Step 4

The excel sheet will look like this

  • Click on enable editing on the topmost part
  • Then click on enable content
  • You will now be able to edit the sheet
  • On the sheet,
  • Fill your pin no, and tax period
  • For No 7. On whether you have any other employment income respond with Yes, in order to open the other tabs such as profit and Loss

 

Step 5

The next step is to click on the Profit and loss account

Go back to step 2 and calculate a total of all withholding tax certificates paid

Ie.  Jan – Ksh 1409

     April-Ksh 1752

     Nov- Ksh 1387

     Dec- Ksh 1308

Totals =   Ksh  5856

NB: Withholding tax is not final tax according to KRA

The next step is to calculate your Gross Profit

5%     – 5856

100%  – ?

Gross Profit = 5856/0.05 = 117120

From here you need to get the amount of money you incurred in expenses:

Gross Profit – Profit = Expenses

Gross Profit   117120

Expenses         

Profit             

Tax               5856

Profit – 100%

Tax – 10%

So then = 5856 – 10%

                   ? – 100%

Profit = 5856/10= 58560

Therefore expenses = 117120 – 58560 = 58560

So then how do we minimize our tax liability?

  1. Through subdividing the profit amount into our expenses
  2. Through subtracting/ Lessing the already paid Withholding tax

Lets now go back to our Profit and loss account on the excel sheet

  • Fill in the Gross profit (117,120) on the ‘Other’ Column
  • Go to operating expenses: Subdivide Kes.58560 among most sensible expenses
  • These expenses may be: Computer expenses   – 18560

                                          Telephone 10,000

                                           Stationary 5,000

                                           Training and expenditure 3000

                                            Workshop 10000           

                                            Subsistence 12000

The balance should be equal to 58560

Step 6

Proceed to the next sheet that is the balance sheet

  • Put a zero on Capital
  • Proceed to cash and put 1 on bank
  • On capital, reserves type 1 to balance everything

Assuming you do not have employment income proceed to the last tab on Tax computation

  • Defined benefits contribution type 0
  • For Personal relief is also 0
  • Withholding tax certificates input the totals we got above that is 5856
  • The balance at the end should be Zero
  • Proceed to click on Validate
  • A new dialogue box will appear telling you the doc is ready, click ok
  • Another dialogue box will appear indicating where the Zip file doc will be saved, click Ok

Step 7

Go Back to Itax

  • Go back to our itax tab
  • Then to Returns
  • Select file returns
  • Select type of file as Original
  • Input tax period that should be from 01/01/2018 to 31/12/2018
  • Click on upload file, select the zip file that was saved earlier
  • Tick the box to agree to terms and conditions
  • Then click submit

If successful, KRA will open a tab showing the acknowledgment report

Hurray!!!, you have done it.

 

 

 

 

 

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