Question: I am working in a government organization. It is a fully government institution. Here every month certain amount of money from my salary is deposited in provident fund. A minimum deposit amount is fixed by the government. I can deposit more money if I want. I deposited almost half of the salary from 2002 to 2003. I have deposited approximately 1 lakh rupees in addition to the government obligation.

Profit is paid on this money. This amount can be withdrawn at the time of retirement from employment. However, 80% of this money can be loaned at any time for personal needs. But this money has to be paid in installments.

In this situation I need to know-

a) Will it be legal to take this profit?

b) Do you have to pay zakat every year on this accumulated money?

Answer: It is permissible for the employee to take the excess paid as interest on the portion of the employee's salary which is compulsorily deducted in the provident fund by the government institution. Although it is called usury, it is not usury in the eyes of Shariah.

If the job is halal, if the income is halal, then the pension money is not interest for the employee, nor is it haram.

And it is not permissible to withdraw more money from the provident fund in addition to the mandatory portion. Any excess paid on top of this amount if someone deducts it will be impermissible and include interest.

So from 2002 to 2003 it is not valid for you to deposit additional amount of compulsory portion. Because of this, your interest contract has been sinned. Now it is your duty, if possible, to withdraw what you have deposited in excess of the obligatory, with interest, and to give this interest as charity to the poor and needy without the intention of reward.

And if it is not possible to withdraw now, even when you withdraw all the money at the end of the job, the interest of the optional deposited portion must be given as charity. And you can use the deposited part of your salary.

It is clear that Mandatory Provident Fund is not included in zakat assets till the principal and surplus are acquired. Therefore, after acquiring it, Zakat of the previous year does not have to be paid.

And the 100,000 taka that you voluntarily deposited should be paid as zakat from the year of deposit. The excess of this amount is not Zakatable; Rather, it can be given in charity without the intention of reward.

Source: Mu'atta Imam Malek, Hadith 2511; Ahkamul Qur'an, Jassas 1/468; Albahrur Rayek 2/207; Imdadul Ahkam 3/480; Jawahirul Fiqh 3/258