Have you ever wondered what it means when KRA sends you a notice asking you to file an Income Tax Return? Let’s simplify it.
What Is Section 52 About?
Section 52 of the Income Tax Act allows KRA to require a taxpayer, through a notice, to submit an Income Tax Return for a particular year.
In simple terms, KRA is saying: “We need you to show us what happened during this particular year. Please give us your Income Tax Return.”
It does not automatically mean that you have been hiding money, definitely owe KRA tax, made a profit, or that KRA has already decided how much tax you owe.
It simply means KRA wants you to file a return for the period specified in the notice.
Let’s Use an Example
Imagine someone started a business in 2022. For the first few years, they were simply testing the waters: “Let me try this business and see how it goes.”
They have now been operating for about five years. Then KRA sends them a notice saying: “Please furnish your Income Tax Return for the year 2024.”
KRA wants the taxpayer to declare what actually happened in 2024—income, allowable expenses, and the resulting tax position.
Example 1
Business income: KSh 2,000,000
Allowable business expenses: KSh 1,800,000
Taxable business profit: KSh 200,000
Example 2
Business income: KSh 2,000,000
Allowable expenses: KSh 2,300,000
Business loss: KSh 300,000
Receiving the notice does not automatically mean there is tax to pay. It means KRA wants the taxpayer to file the return and show what actually happened during that year.
What Has the Finance Act, 2026 Changed?
The Finance Act, 2026 has changed the deadline for responding to a Section 52 notice. Previously, the taxpayer was given a reasonable period of not less than 30 days from the date the notice was served.
From 1 January 2027, a fixed deadline will apply.
The return must be furnished by the last day of the fourth month following the end of the person’s year of income.
What Should You Do?
Don’t wait for KRA to ask before putting your records in order. Keep your following records up to date:
- Income records
- Expense records
- Bank records
- Accounting records
- Tax records
When KRA says, “Give us your return,” you should be ready to say, “Here it is!”
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