Housing levy deductions to start this month, says KRA
The new housing levy will be deducted from the March payslips, a new directive from the taxman says.
The Kenya Revenue Authority (KRA) has issued guidelines on the collection of the affordable housing levy, saying the deductions are effective Tuesday, March 19, 2024. Employers will match the 1.5 per cent deductions from the gross income of their employees' salaries.
“With effect from 19th March 2024, all employers are required to deduct the Affordable Housing Levy from the employee’s gross salary and remit together with the employer’s contribution of 1.5 per cent,” KRA said in a public notice.
KRA has also cautioned that the due date to remit the affordable housing levy is the ninth working day of the following month.
“All other persons who receive income or whose income is accrued in Kenya are required to remit 1.5 per cent of their gross income,” added the taxman.
Informal sector
Under the new law, Kenyans in the informal sector and others who are not salaried will pay 1.5 per cent of their monthly gross earnings to fund the Kenya Kwanza government’s housing project.
The new legislation is roping in workers in the informal sector to comply with the High Court ruling that rendered the earlier Act unconstitutional last year.
The High Court had declared the levy unfair, discriminatory, and unconstitutional because it limited the contributions to salaried employees in the formal sector only.
KRA directed all employers to declare the levy under sheet "M" of the Pay as You Earn 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#.
“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,” added KRA.
