Zakaat on Deposit money for buying a House on Islamic Finance & Gratuity
1. I go by the end of Ramadhan as my year end for Zakat purposes. I am in the process of buying a house on islamic Finance (HSBC UK Amanah Fianance). As of 11th December 2005, the transaction is still under way.
I selected the house before Ramadhan and the legal process of exchange had started before Ramadhan. However due to some legal delays, my deposit money (amounting to appx GBP 12200) was still in my bank account by the end of Ramadhan. Now although this is my money, but I have effectively committed it to the seller. Even though I had not signed the contract by then, but I had and I still have every intention to go ahead with the purchase. Please advise if Zakat is payable on this sum.
2. My father works for a semi-government defense institute in Pakistan. He is promised a gratuity on retirement. During his service, he makes certain contributions to the fund from his salary and the rest is topped by the employer. The fund is then invested in the market, without regard for halal or haram investments. THe sum that my father will get in the end is not dependent on the contributions that he has made into the fund but on his salary at the time of retirement. Please advise whether such gratuity is permissible if it is a compulsory requirement of the job. If it is not permissible, can my father keep a sum equal to his contributions and give the rest in charity. Also, please advise whether Zakat is payable on contributions made to this fund if (a) contributions are compulsory or (b) contributions are voluntary.
1. The money in your bank account will be Zakaatable and should be added to the value of your Zakaatable assets on the date of your Zakaat year end. This is because the money was still in your possession on the day of your Zakaat year end. However, if you have already concluded the deal verbally with the seller or his agent, then the amount owed by you is a recognizable Shar’ee debt of which the next 12 instalments (future year) may be deducted for Zakaat purposes. Please note that we have studied the HSBC Financing Scheme and have concluded that it is not Shari’ah compliant.
2. If the retirement plan is compulsory, then it is permissible to accept the pay out from the employer. If it is voluntary, then your father may only accept his contributions. If the plan is compulsory, then there is no Zakaat payable. However, if the plan is voluntary, then Zakaat is payable on the amount available to him on the day of each Zakaat year end.
and Allah Ta’ala Knows Best
Mufti Ebrahim Desai