Income tax as Zakah
Mu' meneen Brothers and Sisters,
As Salaam Aleikum wa Rahmatullahi wa
Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)
One of our brothers/sisters has asked
this question:
As
Salaam `Aliekum
From
ones earnings income tax is deducted, which was not the case in the days of
Prophet Saws.
Can we
include income TAX as Zakat and pay zakat on the remaining earings and on the
money saved for that tax year.
Also the
retirement saving is taxed upto 40% if withdrawn for ones own expence. So how
can one calculate zakat on this kind of savings?
Jazak Allah for all your help in deen of Islam
(There may be some grammatical and spelling
errors in the above statement. The forum does not change anything from
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confidentiality.)
Answer:
Income tax as Zakah
In the name of Allah, We praise Him, seek His help and ask
for His forgiveness. Whoever Allah guides none can misguide, and whoever
He allows to fall astray, none can guide them aright. We bear witness that
there is no one (no idol, no person,
no grave, no prophet, no
imam, no dai, nobody!) worthy of worship but Allah
Alone, and we bear witness that Muhammad (saws) is His slave-servant and the
seal of His Messengers.
The ‘income tax’ a worldly government imposes
on its citizens is completely different and distinct from the obligatory
‘zakah’ dues which have to be paid by a believer to purify his
wealth. The paying of one’s
income tax to a worldly government has absolutely no bearing or relevance to
the payment of one’s ‘zakah’ dues.
In principle, a believer of means is liable to pay his
annual ‘zakah’ @ 2.5% on his total excess wealth (total excess
assets after the payment of all liabilities, loans, expenses including the
payment of income tax, etc.) which has been in his possession for a period of
one full calendar year. One’s
annual income or the payment of income tax has absolutely no bearing on one’s
‘zakah’; for ‘zakah’ is to be paid annually on only
one’s total excess wealth which has been in his possession for a period
of one calendar year.
For example a person earns $10,000.00 a year, expenses of
$6,000.00 a year, pays income tax of $3,000, lives in a house worth
$100,000.00, has a car worth $5,000.00, has jewelry worth $5,000.00, an extra
property investment worth $20,000.00, and a bank savings worth $5,000.00.
The zakah calculation of the above person will be done as
follows:
Thus regardless of his income, or expenses, or how much
income tax is imposed on him by his government, or the value of his house or
his car which he utilizes to live
his day-to-day life; the total excess wealth of the above
person will be determined at $30,000.00 (jewelry + extra property or
investments + bank savings) and he will have to pay 2.5% of #30,000.00 or
$750.00 as his ‘zakah’
Your
Question: Can we include income TAX as Zakat and pay zakat on the remaining
earings and on the money saved for that tax year.
As shown in the above example, how much earns and how much
income tax one pays to one’s government has absolutely no bearing on the
determination of one’s zakah.
Zakah is paid only on one’s total excess wealth which has been in
one’s possession for a period of one full calendar year.
Your
Question: Also the retirement saving is taxed upto 40% if withdrawn for ones
own expence. So how can one calculate zakat on this kind of savings?
Retirement savings will be considered amongst one’s
investments and thus excess wealth, and until one has actually withdrawn the
amount one would be liable to pay zakah on it at the rate of 2.5%
annually. When one does actually
and physically withdraw it, and pays the government the 40% imposed tax, he
will be liable to pay 2.5% of what he is able to save from those savings.
Whatever written of Truth and benefit is only due to
Allah’s Assistance and Guidance, and whatever of error is of me
alone. Allah Alone Knows Best and
He is the Only Source of Strength.
Your brother and well wisher in
Islam,
Burhan
