Home Zakat Information 12.14 Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
Zakat Information
12.14. Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
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Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
Zakat is payable on lump sum payments received by an employee upon retirement, or by his dependent, if the money is held by such recipient for a period of one year as from the date of receipt thereof/ No Zakat is payable for preceding years. Take the following example: An employee under a compulsory pension fund receives a lump sum payment of $100,000 upon retirement on 1st January 2005. His Zakat year ends on 1st January 2006. If the lump sum has not been spent at the end of Ins Zakat year, he will pay Zakat thereon, namely 2.5% of $100,000 = $2,500. On the other hand, if he had used the money to buy a house before the end of his Zakat year on 1st January 2006, no Zakat will be payable thereon. The aforegoing applies to compulsory pension and provident funds in the sense that the employee is obliged as a term of his employment to become a member of such fund and make prescribed contributions.

 

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Sitara-e-Isaar Awarded to Hidaya Foundation

Hidaya Foundation was awarded Sitara-i-Eisaar (Star of Sacrifice) by the Government of Pakistan, in recognition of the results-oriented relief efforts during the 2005 earthquake in Pakistan.

Combined Federal Campaign

Hidaya Foundation is a non-profit 501(c)(3) with FEIN 77-0502583. All cash and in-kind donations are tax deductible. Hidaya puts it’s best effort to utilize the funds donated for a specific project, sometimes circumstances dictate we use funds otherwise.