Q.1. An amount is invested with an Islamic bank where the returns are credited to the owner’s current account at regular intervals. These returns are immediately withdrawn and used for the family expense. What zakah is liable on such an investment?
Q.2. Can I hold my zakah for a couple of years so that I use it to establish a health care unit for the poor in my hometown?
R. Chowdhury
A.1. According to scholars, the zakah due on your investment is taken from the proceeds. When your current account is credited with returns from your investment, you pay 10 percent of the returns in zakah, and this is due on receiving the returns, regardless of whether you spend them in a day or a week. The amount invested is not liable to zakah while the arrangement is continuing.
A.2. You cannot hold your zakah for a couple of years. Zakah should be paid out as soon as possible after it becomes due. What you can do is to estimate your zakah for the next couple of years and add this amount to your zakah liability for this year, and pay for the health unit now. This means that you pay your zakah in advance for a couple of years in order to establish the health care unit for the poor in your area. Alternatively, you can get some of your friends to join in this effort and all of you pay your zakah into this project, establishing it as soon as possible after you pay in your zakah money.
Investment and Zakah
Q. I have invested money in a mutual fund, and paid zakah last year at the rate of 2.5 percent for the entire amount. Does the same apply this year and in subsequent years.
S. Said
A. Contemporary scholars have dealt with the situation where a person invests an amount of money in a scheme, which means that he leaves that amount for several years to generate an income or to improve in value. Where the investment generates an income, which is paid on annual basis or twice a year, or at other regular interval, zakah is due on the income he receives at the rate of 10 percent.
The principal amount of investment is not liable to zakah as long as it is in such an investment. The zakah is due immediately after he receives the income. The late Shaikh Mustafa Al-Zarqa, a leading scholar of the twentieth century, states this in his Fatwas.
Where the investment is held for growth, and the investor has access to it, then it is zakahable every year at the rate of 2.5 percent, at its value on the zakah date. Suppose you have invested SR100,000, and your investment gives you growth only, with no regular income, then you pay your zakah on the value of your investment every year, because this value changes, or increases, year after year.
If the investment is tied up and you have no access to it for the term of investment, which could be 3, 5, or any number of years agreed, then you pay zakah on the total sum you receive at the end of the term, at the rate of 2.5 percent.
