Home loan to safe income tax

Answered according to Hanafi Fiqh by
You may have received many questions similar to this one. But even after reading answers to all that, I am still not satisfied. I need a clear cut answer to my query. I want to buy a house using home loan from State Bank of India. Currently I am paying more than 1 lakh INR as income tax yearly. Also I am living in a rented flat whose rent is 12000 per month. If I take home loan for 10 years, EMI will be around 40000 per month for 33 lakhs amount. I will be saving around 70000 per year from income tax and around 1.5 lakhs from rent yearly. So to save 2.2 lakhs per year (from income tax and rent). Can I take home loan? I have some land available to construct home and also my wife has a home in her name. But these are in far away town from the city we live in where we are in need of a home. We cannot sell our land and home now, as the value we will get out of those will be very less and I cannot save income tax in that case. Please advise.

بسم الله الرحمن الرحيم

(Fatwa: 269/204/SD=3/1439)


Basically it is unlawful to take home loan. However, if there is no lawful method to save oneself against income tax then since income tax is non-Shariah tax thus it is allowable to take home loan in order to save one’s hard-earned income. Hence in the question mentioned above, if you pay more than one lakh rupees yearly as income tax and in case you take home loan then you may save seventy thousand yearly and likely you will be saving seven lakh rupees within ten years then in such a case in order to save your hard-earned income it is allowable to take home loan.

Allah knows Best!

Darul Ifta,
Darul Uloom Deoband

This answer was collected from the official ifta website of Darul Uloom Deoband in India.

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