VAT Penalty

The Kenya Revenue Authority (KRA) applies a 10% penalty for late payments, an additional 20% penalty for unpaid amounts and late payments, and a 5% monthly interest for late filing of annual returns. These rules highlight the importance of paying VAT and filing annual returns on time to avoid penalties.

In Zoho Books, you can easily record penalties. First, enter the total tax due in the VAT Payable account. Next, track the penalties and interests in an expense account. Finally, offset these amounts with a designated bank account to keep your finances balanced.

Record VAT Penalty in Zoho Books

To record a VAT Penalty:

Go to Accountant on the left sidebar and select Tax Payments.
In the Tax Due tab, click Record Payment next to the required tax return for which you want to record a penalty.
In the pop-up that appears, enter the required details:
- Select the required Paid Through option to record the VAT payment.
- Enter the Amount Paid and select the required Payment Date.
- Enter the Reference Number and Description if required, for internal use.
- Click + Add Penalty.
- In the Penalty section, enter the required details:
  - Enter the Penalty Amount and the Penalty Interest Amount.
  - Select the Expense Account to track the penalty recorded for the VAT payment.
  - Select the Payment Penalty Date and provide a Reason for Penalty.
  - Click Save.

The tax payment and the VAT penalty will be recorded for the current tax period. To view this:

Go to Accountant on the left sidebar and select Tax Payments.
Navigate to the Payment History tab.

You can view all the VAT payments you’ve recorded in Zoho Books. You can also record penalty from the Reports module. Here’s how:

Go to Reports on the left sidebar.
Select VAT3 Returns under VAT.
Click the dropdown next to the required filed tax return, and select Record Payment.
In the Record Tax Payment pop-up:
- Enter the required payment details.
- Click + Add Penalty.
- In the Penalty section, enter the required details:
  - Enter the Penalty Amount and the Penalty Interest Amount.
  - Select the Expense Account to track the penalty recorded for the VAT payment.
  - Select the Payment Penalty Date and provide a Reason for Penalty.
  - Click Save.

The payment for the VAT penalty will be recorded from the Reports module.

Was this document helpful?

Yes

Want a feature?

Suggest