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Zakat On Fixed Deposit
What is Shariah ruling on Zakat on Fixed deposit?
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10 Replies
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Zakat On Fixed Deposit
updated 2 years, 11 months ago
3 Members
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10
Replies
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The principle is that for zakat to be due on an asset, it has to be at one’s disposal (tassaruf). If an asset is contractually tied up, as in fixed deposit, then zakat doesn’t become due until distribution. That said, bank fixed deposit schemes may not exactly be permissible. For details, please see:
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And he will not pay zakat of the all the previous years ?
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No. It will become one’s asset when it’s at his disposal, hence zakat will become due at that time.
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Thanks Haroon sahib
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Faisal, I have been following the subject of Zakat for a while and I get more and more confused and I feel like there is something missing.
A person saving in a bank or at home pays 2.5% Zakat year after year and looses money to inflation too while another person binds up his savings yearly in an investment contract, for example 10 years, doubles his money and pays no Zakat but only when he can cash out a portion of it each year when it matures?
Something is not adding up.
The above is just for argument and fairness in this World sake otherwise I understand that Zakat is for Allah and it is an investment in the eternal life. Thus the one who paid Zakat each year is far better off at the end.
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Please see my original response. Bank fixed deposit schemes may not exactly be permissible to begin with. Other such arrangements where a person has no control over a sum of money, zakat can only be incurred when that money becomes his possession. I don’t think that it’s confusing at all. If you loan someone $1,000 how can you be liable to pay zakat on it until you get it back?
Please quit mixing inflation with zakat. As I have shared with you before, there’s no correlation between the two. Zakat is an act of worship that has a very specific purpose. Inflation is the change in the value of the instrument (money) that you use to pay your zakat with, and it’s a side effect of the current capital system. There are assets that appreciate over time – cash is not one of them.
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Faisal,
1. Bank fixed deposit scheme is not the only place you can lock your investment.
2. There are many fixed assets on which Zakat is paid from other liquid assets.
3. I didn’t mix inflation with Zakat but used as an equation for someone’s savings. Although I agree to disagree that just like income taxes, inflation is an indirect tax levied by the government and governments can and do manipulate inflation. My understanding is that Ghamidi Sahib encourage free speech and challenges. I am not a scholar, but I challenge perhaps some aspect need further exploration. If you want me to quit, I will.
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#1 – Agree. Each scheme will be looked at individually to figure out whether or not it’s permissible.
#2 – Agree.
#3 – Of course any concept or idea is open for revisitation and discussion, however, there has to be a sound basis upon which an idea is challenged. Such an exercise on the basis of our own wishes is contrary to the letter and spirit of religion.
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Also I must add that inflation is not an indirect tax.
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Thanks Faisal. I think it is a separate topic. I will create a question separately to discuss if inflation is a tax or equivalent to a tax.
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