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Zakat On Islamic Naya Pakistan Certificate (INPC)
Assalam Alaykum
Pakistan government offers investment opportunity in INPC through Roshan Digital Accounts in several banks. On the investments for 3 year or 5 year period, a profit is given every six months, after deduction of 10% tax. For this investment,
a) Will the Zakat be payable only on the profit or the whole amount?
b) If it is 10% on the profit, then will it be considered paid due to the 10% tax?
Jazakallah Khair.
The following link has some details about INPC:
https://www.meezanbank.com/naya-pakistan-certificate/A brief description copied from the website is pasted below:
Underlying Islamic Mode: Investors will enter into a Mudarabah contract for investment of their funds in Shariah-compliant INPCs with the INPC Company Limited. The investors are Rab-ul Maal and INPC Company Limited is the Mudarib.
Profit & Loss Mechanism: The INPC Company Limited (Mudarib), will share the profit with investors on the basis of a predetermined percentage of the distributable profit of the business, called PSR (Profit Sharing Ratio). All the investors will be assigned weightages based on the features of the INPC held by them, such as tenure, profit payment options and other applicable features for the purpose of calculation of profit.
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9 Replies
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Zakat On Islamic Naya Pakistan Certificate (INPC)
updated 1 year, 2 months ago
4 Members
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9
Replies
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Regarding Government Saving Schemes, please see:
Regarding Zakat on Investment, please see:
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In response to this question you have only shared a discussion relating to government scheme. Its gives an impression that you are relating INPC to a government saving scheme.
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The last response posted in the above thread provides response of Ghamidi Sahab in relation to project based investment with a Government (Discussion 1276 • Reply 69418). Since it was posted at a later date so you might have missed it earlier.
Demanding profit on loan is Riba (Sood) and is Haram in Sharia. Investment/financing in any company or with a government do not fall in this category.
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Correct. The discussion shared above by Umar sahab is regarding general government saving schemes which are primarily based on loan transactions.
The Naya Pakistan scheme as described at the Meezan Bank link that you shared above is structured differently. Instead of a loan transaction, it is based on Mudarabah (partnership) with a predetermined schedule of profit sharing. From the information provided at the link there is nothing objectionable in this scheme from the Sharia perspective.
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Thanks for further clarifying about the investment in INPC. But I am still not very clear about my original question. If INPC is investment, and if I tie up my money for five years in this investment (I can get it back any time but I have no such intention, and this can be said about many other businesses too), then am I required to pay zakat on the principal amount? If this is the case then INPC investment does not remain very attractive (the net profit will be 6% (on USD account) minus 2.5% = 3.5 % only). Please explain this in a bit detail.
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Unfortunately we cannot offer investment advice on Ask Ghamidi. As far as Zakat, it is correct that 2.5% Zakat is due on the total current value of all of your assets once a year, excluding items of personal use. For more details on Zakat please see:
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Dear Sir, let me elaborate. Ghamdi sb’s well-known opinion is that zakat on investments is 10% of the profit (not 2.5% as you mentioned). So if INPC is an investment then why it would be 2.5% on the invested amount and not on the profit. I am seeking a convincing reply from religious point of view. The best I could get, on another thread, is that if investment is easily retrievable then it will be counted as asset and not the investment. This does not sound very convincing. Let me give an example. If I invest in my brother’s shop and he assures me that I can withdraw my share any time, will I pay 2.5% on the invested amount or 10% on the profit? If it is 10% on profit then how do you distinguish INPC from this scenario. Hope I could clarify this time.
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The 2.5% Zakat mentioned above is on assets. The 5%, 10%, or 20% Zakat is on production. The rule about an asset being at one’s disposal is about when Zakat becomes payable. For an investment, Zakat is still due both on the value of an asset as well as any production (profits).
Since it is not possible to reiterate all the details in response to every question, I shared a link to our Zakat FAQ which explains everything in detail.
This particular thread is about Naya Pakistan. If you have general questions regarding Zakat please feel free to create a new post. We have also answered many questions regarding Zakat on Ask Ghamidi. You can browse them at:
https://ask.ghamidi.org/forums/topic-tag/zakat/
The Naya Pakistan is an investment.
Finally, you may enter appropriate numbers in our Zakat Calculator after reading the description for each box. When you reach the end, it will generate a statement showing you exactly what you owe after any applicable deductions, and what percentage was applied to each category. It’s also a great way to learn the sharia of zakat.
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Jazakallah Khair. I got confused between production and investment. It is clear now.
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