KRA Nil Returns 2026: New AI Automated Validation Rules

In previous years, you could file a Nil return even if you had small transactional income. In 2026, the AI engine scans your linked mobile money accounts and bank records. If the system detects taxable income above the relief threshold that hasn't been declared, it will reject the Nil return and prompt you to file an 'Income Tax Individual' return instead. This automation is designed to catch 'side-hustle' income that was previously under the radar. Filing a false Nil return can now lead to audit flags and higher penalties than simple late filing.

For the first time, KRA has moved to a 'Pre-Populated' return system. Because all employers are now integrated into the Unified Payroll System, your employment income is automatically loaded into your iTax profile. You no longer need to wait for a physical P9 form from your HR department. You simply log in, verify that the figures match your payslips, and click 'Submit.' If you were employed for only part of 2025, the system will calculate the remaining months as Nil automatically.

Filing remains straightforward if you truly had no income:
1. Log in to the iTax Portal using your PIN or National ID.
2. Click on the 'Returns' menu and select 'File Nil Return.'
3. Select 'Income Tax - Resident Individual' as your obligation.
4. The system will perform an 'Instant Validation.' If no transactions are found in eTIMS or mobile money, it will allow you to proceed.
5. Submit and download your acknowledgement receipt.
Remember, the deadline is still June 30th, but the AI system experiences high traffic in June, leading to 'Validation Delays.'

A common misconception in 2026 is that 'The AI will file for me.' This is false. While the AI validates data, the responsibility to file lies with the citizen. If June 30th passes without a submission, the KES 2,000 penalty is generated instantly. In a new policy for 2026, KRA has significantly reduced the 'Penalty Waiver' window. Unless you can prove a medical emergency or a system-wide downtime, waivers are virtually non-existent. This fine must be paid before you can renew your Tax Compliance Certificate (TCC).

If you are a student, your PIN is often used to open bank accounts or apply for HELB. Even with zero income, that PIN must be active. Failure to file Nil returns for several years can accumulate penalties that make it impossible to get a job later, as most employers require a clean TCC as part of the onboarding process. Start the habit of filing every January to stay ahead of the system.