Effective November 2019, tax overpayment (credits) in respect of Income Tax and PAYE, will no longer be automatically available to offset against future tax liabilities. Any such overpayments/credits will only be accessible to the taxpayer through an application for a refund pursuant to the provisions of Sec 47 of the Tax Procedure Act (TPA Act).

Further, this new requirement provides that an application for a refund should be made within 5 years of the overpayment. Processing of such a refund may be subject to KRA audit. On approval, the overpayment will be used to settle any pending liabilities with any excess being paid out to the taxpayer.

Use of Sec 42 Tab

This section in iTax filing forms allows taxpayers to claim credits under double taxation arrangements. However, in the past, the section has been frequently used erroneously to offset excess payments in the system. The loophole has since been closed to avoid this misuse. Taxpayers who used this section in the past are advised to review the past filing to confirm appropriateness or otherwise and effect necessary corrections. 

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