Mansoor Danish – Is Zakah (Zakat) Payable on Provident fund_

			salaam aleikum wa rahmatullah wa barakato. This is a question which has been asked which says how
should we calculate Zakat on provident fund. So, the calculation here is extremely simple, we
firstly break down the provident fund into two types. One is a provident fund which is forced upon
you by your employer and this is as per the laws of the nation, where a company has to compulsorily
take out a portion of the salary of the staff as provident fund. So, it is basically something which
is forced upon you and then there is a sacar there is a Provident Fund, which is taken up
voluntarily by the concerned individual. So, the treatment of both will be separate, if it is a
		

			Provident Fund, which has been taken out voluntarily. Firstly, this is not permissible, because in
an Indian context, we need to understand that most of the provident fund money are going into those
sectors, which are considered impermissible for investments, they trying to generate you fixed
returns which are akin to rubber, and hence, it is not permissible in the first place to invest in
them. And therefore, my advice to people is to come out of those investments if they have taken it
up out of ignorance. Secondly, you will have to pay the Zakat on the capital amount accumulated
every year on your provident fund account, not on the interest amount because the interest amount is
		

			not permissible anyways, so, you don't have to pay any support on that. But as far as the capital
amount is concerned, every year whatever contribution you have made to that provident fund,
voluntarily, you will have to make the cut on the total amount. Whatever the amount is, if it meets
reaches your nisab, the minimum threshold, then the card becomes obligatory. The second scenario is
where it was forced upon you compulsorily. In such a case you don't have to base account on it every
year. You pay the Zakat once you reach or receive the fund at the end. Once you have the fund at the
end of at the end, you possess the money in your hand and one year has passed on that money, then
		

			you need to pay zakat on them and the Zakat amount will be the same two and a half percent in both
the cases. So in short, there are two categories voluntary provident fund, compulsory provident fund
and voluntary provident fund every year on the capital amount that you've paid. You need to pay
zakat on that as far as the interest amount is concerned, it is impermissible for you to take any
benefit of that interest amount. In case of compulsory provident fund. You have no control over here
it is the laws which require you to keep your some portion of your money over there. As such, when
you receive the money at the end of your working life with the company whenever the possession of
		

			the money comes in your hand and a year passes on it, you need to pay the car at two and a half
percent and Allah knows best