What is the ruling on zakat for the employee provident fund, which is disbursed only after termination of service, and what is the ruling on zakat for the annual distributed profits from this fund?
It is not permissible to participate in a savings fund unless its operations are regulated by principles.
on Saved Funds: If the money is invested in impermissible avenues: The profits are to be spent on general Muslim welfare (ill-gotten gains). Zakat is due on the saved amount (if one cannot access it) once it becomes accessible. If participation was voluntary: Zakat is paid for all past years. If participation was involuntary: Zakat is paid for one year upon receipt. If the money is invested in permissible avenues (trade): It is subject to the rulings of Zakat on trade goods. Both the principal and profits are subject to Zakat annually if they reach the (minimum threshold) and a hawl (one lunar year) passes, with fixed assets being exempt. If the money is invested in service projects (such as rented real estate): Zakat is due on the profits, not on the principal amount, if the profits reach the nisab and a hawl passes.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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