Darul Iftaa Mahmudiyyah

Can the interest be offset against the tax?

· 19 Rabiʻ II 1429 AH1 min readFatwa 16634English

Question

The Company which I have been working for had a mandatory contribution to a Pension Fund that was deducted from my salary monthly. I have now left the company.Below are the amounts at withdrawal of Pension Fund.

Total amount at withdrawal R126,609.28 ,Actual Contributions R88,448.32 ( total amount deducted from my salary) .After tax I received R101,120.84

My questions regarding the above:

1)Can the interest be offset against the tax ?

2)The difference between what I received after tax and my actual contributions is interest - which is the best way to dispose of this.

Answer

In the name of Allah, Most Gracious, Most Merciful

Assalaamu `alaykum waRahmatullahi Wabarakatuh

If the pension fund was mandatory and you did not have an option in the matter, then the excess amount received will be permissible for you. It will be considered as your actual salary was the amount after deductions. The pension pay out is regarded to be a gift from the company.

Nawadirul Fiqh 1/326 Maktaba Darul Uloom Karachi
Fatawa Mahmoodiyya 16/391 Jamia Farooqiyya Karachi
Ahsanul Fatawa 7/35 H.M.Saeed
Ap ke Masail 6/212 Maktaba Bayyinat

And Allah knows best

Wassalam

Ml. Ishaq E. Moosa,
Student Darul Iftaa

Checked and Approved by:

Mufti Ebrahim Desai
Darul Iftaa

Answered by
Ml. Ishaq E. Moosa
Checked & approved by
Mufti Ebrahim Desai
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Source: Darul Iftaa Mahmudiyyah — https://askimam.org/public/question_detail/16634
Fatawa SA: https://fatawa.co.za/fatwa/askimam-16634

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