KRA Turnover Tax (TOT) Calculator Kenya: How to Calculate, File, and Pay in 2026
If your annual gross sales are between KES 1 million and KES 25 million, you are required to pay Turnover Tax (TOT) at 1.5% of your monthly gross sales. This guide explains exactly how to calculate TOT, file on iTax, avoid penalties, and how PesaLedger automates the entire process for M-Pesa Business Till owners.
Table of Contents
1. What is Turnover Tax (TOT)?
Turnover Tax is a simplified tax regime introduced by the Kenya Revenue Authority (KRA) for small and medium businesses. Instead of calculating complex income tax deductions, you simply pay 1.5% of your gross sales each month. This applies to businesses with annual turnover between KES 1 million and KES 25 million.
TOT = Gross Monthly Sales × 1.5%
For example, if your M-Pesa Business Till received KES 500,000 in total payments during March, your TOT for that month is KES 7,500.
2. Who Qualifies for TOT?
You must register for TOT if:
- Your annual gross sales are between KES 1 million and KES 25 million
- You are a resident person (individual, partnership, or company)
- You are not in a profession listed under the Fourth Schedule of the Income Tax Act (e.g., lawyers, accountants, doctors — these must use standard income tax)
Important: If your annual turnover exceeds KES 25 million, you must switch to the standard income tax regime and may also need to register for VAT (threshold: KES 5 million).
3. How to Calculate TOT
The calculation is straightforward — take your total gross sales (money received) for the month and multiply by 1.5%. No deductions for expenses, cost of goods, or salaries.
| Month | Gross Sales (KES) | TOT @ 1.5% (KES) | Due Date |
|---|---|---|---|
| January | 450,000 | 6,750 | 20th Feb |
| February | 380,000 | 5,700 | 20th Mar |
| March | 520,000 | 7,800 | 20th Apr |
| April | 490,000 | 7,350 | 20th May |
| May | 610,000 | 9,150 | 20th Jun |
| June | 550,000 | 8,250 | 20th Jul |
Key point: TOT is calculated on gross sales (total money received), not profit. Even if you had a loss-making month, you still owe TOT on whatever revenue came in.
4. Filing Deadlines and Penalties
TOT returns must be filed and paid by the 20th of the following month. For example, January's TOT is due by 20th February.
Late filing penalties:
- • Late filing: KES 2,000 per month or 5% of the tax due (whichever is higher)
- • Late payment: 5% of the unpaid tax plus 1% per month interest
- • Failure to register: Up to KES 100,000 fine
These penalties compound quickly. A business owing KES 7,500 in TOT that files 3 months late could face over KES 6,000 in penalties — nearly doubling the original amount.
5. How to File TOT on iTax (Step by Step)
Log in to iTax
Go to itax.kra.go.ke and log in with your KRA PIN and password.
Navigate to Returns
Click 'Returns' in the top menu, then select 'File Returns'.
Select TOT Return
Under 'Tax Obligation', choose 'Turnover Tax (TOT)'. Select the return period (month and year).
Enter gross turnover
Enter your total gross sales for the month. The system automatically calculates 1.5% as your TOT payable.
Upload supporting documents
Attach your M-Pesa statement or PesaLedger iTax CSV export as supporting documentation.
Submit and pay
Review the return, submit it, then generate a payment slip. Pay via M-Pesa Paybill (572572, account = your KRA PIN).
6. Common Mistakes to Avoid
Mistake: Using net profit instead of gross sales
Fix: TOT is on total revenue received, not profit after expenses.
Mistake: Forgetting inter-account transfers
Fix: Transfers between your own accounts are NOT sales — exclude them from gross turnover.
Mistake: Including personal M-Pesa transactions
Fix: Only business till transactions count. Personal sends/receives should be excluded.
Mistake: Missing the 20th deadline
Fix: Set a calendar reminder for the 15th of each month to prepare your return.
Mistake: Not keeping statement records
Fix: KRA can audit up to 5 years back. Keep all M-Pesa statements and PesaLedger reports.
7. How PesaLedger Automates TOT
PesaLedger reads your M-Pesa Business Till statement and automatically:
- Separates sales from transfers — AI categorisation ensures only actual sales revenue is counted
- Calculates TOT per month — the KRA Summary page shows gross sales and 1.5% TOT for each month
- Exports iTax-ready CSV — one-click download of a pre-filled OT return file matching the KRA format
- Shows filing deadline — a countdown card reminds you how many days until the 20th
8. Frequently Asked Questions
Can I switch from income tax to TOT?▼
Yes. If your annual turnover is between KES 1M and KES 25M, you can apply to switch to TOT through iTax. The change takes effect from the beginning of the next tax year.
Do I still need to file annual income tax returns if I'm on TOT?▼
No. TOT replaces income tax. You only file monthly TOT returns. However, you must still file nil returns for other obligations (e.g., PAYE if you have employees).
What if my turnover drops below KES 1 million?▼
You can apply to deregister from TOT. Businesses below KES 1M annual turnover are exempt from TOT but should still file nil income tax returns.
Is M-Pesa float included in gross sales?▼
No. Float purchases and agent commissions are not sales. Only actual payments received from customers through your Business Till count as gross sales.
Can I claim expenses against TOT?▼
No. TOT is a flat 1.5% on gross sales with no deductions. This is the trade-off for its simplicity — you don't need to track expenses for tax purposes (though you should for business management).
How do I pay TOT via M-Pesa?▼
After filing on iTax, generate a payment slip. Go to M-Pesa > Lipa na M-Pesa > Pay Bill. Business number: 572572. Account number: your KRA PIN.