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Housing Levy deductions to take effect from March 19 -KRA

A file picture of the Times Tower in Nairobi, the headquarters of the Kenya Revenue Authority. (Photo: KRA)

By Lucy Mumbi | Thursday, March 21, 2024

KRA reiterated that individuals, who pay the affordable housing levy, shall be entitled to affordable housing relief.

The Kenya Revenue Authority (KRA) has announced that the collection of the affordable housing levy deduction will commence on March 19, 2024.

In a directive issued on Thursday, the authority instructed all employers to deduct the levies from employees' gross salaries and remit them alongside their contributions.

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The notice stipulates a deduction of 1.5 per cent of the employee's gross monthly salary by the employee and an additional 1.5 per cent of the employee's monthly gross salary by the employer.

Employers are required to remit the Affordable Housing Levy by the 9th working day after the end of the month in which the gross salary was due or gross income was received or accrued.

The Affordable Housing Act, 2024, officially signed into law by President William Ruto on Monday, designates KRA as the 'Collector' of the Affordable Housing Levy (AHL).

Furthermore, the Authority emphasizes that all individuals receiving income or whose income is accrued in Kenya must remit 1.5 per cent of their gross income as the Affordable Housing Levy to KRA.

"KRA clarifies that all employers are required to declare the AHL under sheet "M" of the PAYE return on itax; generate a payment slip under the tax head "agency revenue" and tax sub-head "Housing Levy"; and make payments at KRA agent banks or mobile money through eCitizen Paybill Number. 222 222 or by dialling *222#," the Authority said.

It added that the employer's contribution to the Affordable Housing Levy is an allowable deduction under Section 15 of the Income Tax Act.

KRA reiterated that individuals, who pay the affordable housing levy, shall be entitled to affordable housing relief.

Further, any person who fails to comply with the law shall be liable to payment of a penalty equivalent to three per cent of the unpaid funds for every month if the same remains unpaid.

KRA emphasized that it is committed to ensuring all persons are optimally supported.

"KRA will continuously engage and collaborate with stakeholders to enhance compliance with the Affordable Housing Levy provisions," the Authority said.

The courts had last month abolished the levy but the Kenya Kwanza administration moved to have it back through legislation.

An appellate court on January 26 rejected the government's bid to continue collecting the levy under the tax law.

Ruto has reiterated that the housing project is going to give jobs to young people and provide them with decent living conditions.