The National Health Insurance Fund (NHIF) insurance relief was introduced by the Finance Act 2021, to assist the government in attaining a Universal Health Care program and increase the fund remittances. The insurance relief is a deduction from the tax payable by resident taxpayers and ought to be claimed when submitting annual income tax resident returns.
The Kenya Revenue Authority (KRA) has enhanced the ITAX portal aimed at improving taxpayers’ services, promoting voluntary compliance, and increasing revenue collection. One such measure is the recent update on the income tax resident (ITR) return to allow taxpayers to claim their insurance tax relief while submitting self-assessment Individual Returns (IT1).
The insurance relief was previously limited to taxpayers who paid premiums to approved insurance services providers for life, education (maturity period of at least 10 years), and health policies. The relief is computed at 15% of the total NHIF contribution for the period but shall not exceed sixty thousand shillings per annum (or Kshs.5,000 per month for both Insurance Premiums + NHIF Contributions).
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