Fatwa #1663425 April 2008South Africa
Can the interest be offset against the tax?
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