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Can interest money from a government institution be used for paying taxes?

Answered according to Hanafi Fiqh by Askimam.org

As-Salaam-u-Alaikum. I have a query with reference to your answer for Question 9750. It was stated in the answer that interest monies received from government institutions e.g. Post Office etc. can be used to pay for income taxes. I currently work for the South African Government. They remove about R75,000 personal income tax from my salary every year. If I was to place R500,000 in a Post Office savings account that pays about R50,000 interest every year for the specific purpose of paying my taxes. (1) Can I use this money as income to offset the tax money that I am losing every year? (2) Can this interest money be used directly by myself, due to the fact that my tax is deducted monthly from my account? Jazakallah-u-Khair

Answer

There is a difference between interest and income tax. Interest earned from a post office savings account cannot be used to offset income tax.

Income tax is payable in lieu of services rendered by the government. However, if the government has to charge ?interest?, then only will it be correct to offset the interest amount with the interest money accumulated from the post office or any other governmental department.

and Allah Ta’ala Knows Best

Mufti Ebrahim Desai

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This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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