Installment tax [Definition, calculation, and payment]
Installment tax is income tax paid in advance.
Income tax is an annual tax, however, businesses are required by law to pay this tax in advance in four equal installments for normal business and two installments for farming business.
Calculation of installment tax is based on the lesser of the amount specified in the preceding year assessment multiplied by one hundred and ten percent or an amount equal to the tax payable in the current year. In case of difficulties in ascertaining then installment tax payable you could consult tax advisory firms like Kreston KM to help in computation and payment.
Step by step guide to payment of installment tax.
Step 1: Log in to the iTax portal, enter your KRA PIN, press continue, enter your password, answer the arithmetic question security stamp, and click on “Login”.
Step 2: Go to the “Payment” menu, payment registration, and click on “Next”.
Step 3: Select tax head as “income tax”, subhead as “income tax-company or resident individual for individuals”, payment type as “installment tax”, tax period put current period i.e. Jan 2021-Dec 2021, Installment Tax Prediction Base, chose the method of choice, amount to be paid, input the amount you wish to pay and “add” choose Mode of Payment payment through the dropdown as either, “other payment modes“ for cheque, cash or mobile money.
Step 4: Finally, submit and reprint the payment slip for payment.