The ruling on zakat on a provident fund

Question

Question: is there zakat on a provident fund (an employees’ savings fund) or not? Half the sum in it belongs to the owner, and the institution adds [the other] half and keeps it safe; but the owner has no actual possession (qabd) of it. If there is zakat, is it on the total or only on one’s own sum? And will the ruling of zakat [apply] from after taking possession (qabd), or will its account be included year by year together with one’s other sums?

Answer

Over the amount that the institution adds, ownership has not even been established yet; therefore there is no zakat on it for now. On the amount that has been deducted from the salary, zakat is not yet binding (lazim) either. After discussion and investigation Hazrat Thanawi ﵀ adopted precisely this.

Source: Fatawa Mahmudiyya

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