Zakat on money invested in a mutual fund for 10 years

26-11-2007 | IslamWeb

Question:

I deposited200,000 Riyals in a Mutual fund 10 years ago. The amount has become now261,982 Riyals. What Zakat has to be paid now as nothing has been paid for the last 10 years

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

 

First of all, dear brother, you should repent to Allaah for not paying Zakat in the past. You are obliged to pay 2.5% on each lunar year (for all the previous years) during which you were obliged to pay Zakat and you failed to do so. Whoever owns the Nisaab (i.e. the minimum amount liable for Zakat, which is equivalent to 85 grams of gold) and a whole lunar year elapses on it is obliged to pay Zakat on it and on the profits made on each year in which the money reached the Nisaab.

As regards how to pay Zakat on all the previous years, then you should calculate how much capital money and benefits you possessed after the first year has elapsed in which you should have paid Zakat, and if you do not know exactly how much the profit was, then you should estimate it, and then pay 2.5%. You should do the same thing for all other years.

It should be noted that in principle it is permissible to invest money in permissible fields, but if this investment leads to a forbidden matter, like if the Funds trade in forbidden matters or deal with Riba (interest and/or usury), either when borrowing or lending money, then in this case this Fund is forbidden.

In this case, you should pay Zakat on the capital money and the lawful profit made thereof only. As regards the forbidden profit, you should get rid of it by spending it on the general welfare of Muslims, like building schools, bridges, roads, mosques and so forth.

For more benefit, please refer to Fataawa 92747 and 82016.

Allaah Knows best.