Can I Use Interest Money to Pay Taxes?
Shafi'i Fiqh
Answered by Shaykh Irshaad Sedick
Question
Is it permissible to use the interest money accrued in my bank account (however minor) as compensation for the unfair taxation by the Country Revenue Authority? Where I live, the tax rates are incredibly high, and we do not get any benefits from the same. Please advise.
Answer
In the Name of Allah, the Most Merciful and Compassionate. May Allah alleviate our difficulties and guide us to what pleases Him. Amin.
Giving, receiving, witnessing, recording, or benefiting from interest is unlawful (riba).
Therefore, any interest earned must be returned to its rightful owner or given away in charity without expecting reward or benefit. It cannot be used for personal benefit, including paying off taxes or other debts, and Allah knows best.
Priority
Regarding your question about using interest money to pay off taxes, it is essential to understand that earning interest (riba) is prohibited in Islam. You need to stop using an interest-bearing account (wherein your money is used to give interest to others) or ask the bank not to provide you with interest (if they have no interest-free accounts). Use an account approved by a reliable Sacred Law Advisory Board if available.
Allah (Most High) says in the Quran: “O believers! Fear Allah, and give up outstanding interest if you are ˹true˺ believers. If you do not, beware of war with Allah and His Messenger! But if you repent, you may retain your principal—neither inflicting nor suffering harm. [Quran, 2:278-279]
Disbursing Unlawful Income
In the future, you should have no more unlawful income. Regarding the unlawful income you currently have, note the following.
The general rule that applies to any form of unlawful funds is as follows:
Where the rightful owner is known, it must be returned to the rightful owner.
Where the rightful owner is not known [or if they refuse], the funds must be disposed of in one of two ways:
It must either be given towards a charitable cause that benefits the public at large, such as public hospitals, schools, or mosques;
Or it should be given in charity to a person entitled by his need to receive charity. [Karaan, Disposal of Riba (Fatwa issued by the MJC)]
Tax
Some taxes are problematic in Sacred Law. However, necessity may allow for some leeway when there is a genuine need.
The type of taxes taken from people, intended to be spent on their interests, whether for military (defense) or other purposes, should not be imposed on the people. Imposition may only happen if there are insufficient funds in the treasury for these expenses. Still, it should only be imposed in the case of necessity. Otherwise, it is an illegitimate source of income (for the State). [al-Mawsu’a al-Fiqhiyya al-Kuwaitiyya]
Riba
Giving, receiving, witnessing, recording, or benefiting from interest is unlawful (riba).
The Messenger of Allah (may Allah bless him and give him peace) cursed the one who consumes interest and the one who pays it, the one who writes it down, and the two who witness it, and he said: they are all the same. [Muslim]
The Prophet (peace and blessings of Allah be upon him) said: “A dirham which a man consumes as interest knowingly is worse before Allah than thirty-six acts of fornication.” [Ahmad, Tabrani] And he (may Allah bless him and give him peace) said: “There are seventy-two types of interest (riba), the least of which is like a man committing incest with his mother.” [Tabarani, Al-Awsat]
Therefore, riba must be avoided as far as possible in all its forms, and Allah knows best.
I pray this is of benefit and that Allah guides us all.
[Shaykh] Irshaad Sedick
Checked and Approved by Shaykh Faraz Rabbani
Shaykh Irshaad Sedick was raised in South Africa in a traditional Muslim family. He graduated from Dar al-Ulum al-Arabiyyah al-Islamiyyah in Strand, Western Cape, under the guidance of the late world-renowned scholar, Shaykh Taha Karaan.
Shaykh Irshaad received Ijaza from many luminaries of the Islamic world, including Shaykh Taha Karaan, Mawlana Yusuf Karaan, and Mawlana Abdul Hafeez Makki, among others.
He is the author of the text “The Musnad of Ahmad ibn Hanbal: A Hujjah or not?” He has served as the Director of the Discover Islam Centre and Al Jeem Foundation. For the last five years till present, he has served as the Khatib of Masjid Ar-Rashideen, Mowbray, Cape Town.
Shaykh Irshaad has thirteen years of teaching experience at some of the leading Islamic institutes in Cape Town). He is currently building an Islamic online learning and media platform called ‘Isnad Academy’ and has completed his Master’s degree in the study of Islam at the University of Johannesburg. He has a keen interest in healthy living and fitness.
