Published: February 2026
Applies to: 2025 Income Tax Returns filed from January 2026

KRA has introduced major changes to the Income Tax Return filing process on iTax.

If you run a business, earn rental income, farming income, or file IT2C/ITR/ITNR returns — this affects you.

Let’s break it down in simple language.

1️⃣ What Has Changed?

KRA has:

Introduced auto-populated returns
Added income validation checks
Added expense validation checks
Linked returns to:
- eTIMS/TIMS
- Withholding Tax data
- Customs (ICMS) import data

👉 The system now compares what you declare vs what KRA systems already know.

If they don’t match — your return will be rejected.

2️⃣ You MUST Download the New Return Template

Before filing:

Go to iTax →
Click “Download Autopopulated ITR/ITNR/IT2C/IT2P Return”

⚠️ Old Excel templates will not work.

3️⃣ What is Auto-Populated in the New Return?

The following sections now fill automatically:

🧾 Basic Information

Section	Auto-filled?
PIN	✅ Yes
Return period	✅ Yes
Business Type	✅ Yes
Partner details (for partnerships)	✅ Yes

💰 Instalment Tax Credits

If you paid instalment tax during the year:

Item	Auto-filled?
PRN	✅ Yes
Amount Paid	✅ Yes

🧾 Withholding Tax Credits

For IT2C returns:

Type	Auto-filled?
Withholding Income Tax	✅ Yes
Withholding Rent Income Tax	✅ Yes

For partnerships:

WHT credits are prefilled
You must distribute them to partners using dropdown lists

🚗 Advance Tax

Advance tax paid?
It will now appear automatically in your tax computation.

4️⃣ NEW: Income Validation (Very Important)

This is where most people will get errors.

The system now compares:

Your declared income vs:

Total eTIMS/TIMS invoices issued
Gross income shown in withholding tax certificates (non-final WHT)

👉 The system picks the higher figure.

If your declared income is lower than what KRA data shows:

❌ Your return will be rejected.

Example

Source	Amount
Income declared in P&L	4,000,000
eTIMS sales	4,500,000
WHT Gross income	4,200,000

The system will compare against 4,500,000.

If you declare 4M → validation error.

Important WHT Rule Most People Miss

Withholding tax must be paid based on:

The earlier of:

Date expense was recorded in books
OR
Date payment was made

Example:

Expense recorded: 23/08/2023
Payment made: 04/04/2025

WHT should have been paid in 2023 — not 2025.

This affects:

Credit timing
Validation year matching

5️⃣ NEW: Expense Validation

Now your expenses are checked against:

eTIMS/TIMS invoices received (with correct buyer PIN)

If you claim expenses without matching eTIMS invoices:

❌ The system flags it.

🚫 Expenses Excluded From Validation

These are NOT checked against eTIMS:

Expense Type	Where Declared
Airline tickets	P&L Row 5.2
Salaries (Emoluments)	P&L 6.5
Interest expense	Row 7.1
Bank charges	Row 7.2
Capital allowances	E1/E2 sheets
Final WHT expenses	Not required
Imported services	Row 2.2.2

⚠️ If you enter them in the wrong field, the system will validate them.

6️⃣ Imported Goods Validation (Big for Importers)

If you import goods:

Your purchases are validated against:

👉 ICMS (Customs system)

You can only claim:

Amount cleared and marked as “Settled” or “Removed”

If your customs entry is still pending:

❌ Your claim may be restricted.

7️⃣ New Sheets Coming (Before April 2026)

KRA will introduce:

1️⃣ Accounting Adjustments Sheet

For:

Accruals
Prepayments
WIP
Deferred income
Provisions

2️⃣ Manual/Non-eTIMS Purchases Sheet

If you use these:

You must upload supporting documents
You will face post-filing checks

8️⃣ Post-Filing Audits Will Increase

Even after successful filing, KRA will:

Cross-check against eTIMS
Validate customs imports
Review manual expense claims
Confirm expenses were incurred to generate income

This means:

👉 Filing is no longer just form submission.
👉 It is now a system audit.

9️⃣ What This Means for You (Practical Advice)

Before filing your 2025 return:

✅ Reconcile your income with eTIMS
✅ Reconcile your WHT certificates
✅ Confirm buyer PIN was captured correctly
✅ Check customs entries are “Settled”
✅ Review expenses classification
✅ Avoid inflating expenses

🔎 Who Is Most Affected?

Importers
Contractors receiving WHT
Rental property owners
Businesses not using eTIMS properly
Partnerships
Businesses with manual accounting adjustments

📌 Final Thoughts

KRA is moving toward full digital cross-validation.

The message is clear:

If it’s not in the system, you cannot claim it.

Tax compliance is no longer about estimating numbers.
It is about matching system data.

📞 Need Help Filing?

If your return is showing validation errors, you likely need a reconciliation — not guesswork.

👉 Consider professional review before submission.

🚨 New KRA Income Tax Return Validations (2026): What Every Kenyan Taxpayer Must Know