Is Scanning Thrown-Away Receipts for Refunds Permissible?

Answered by Shaykh Muhammad Carr

Question

In my country, there’s a system called ƏDV, which allows people to scan purchase receipts and receive a small percentage of the amount spent as a Value Added Tax (VAT) refund. Some customers decline to take their receipts, so stores often collect and discard them—sometimes by throwing them away, other times by burning them.

During my teenage years, I occasionally collected discarded receipts from trash bins and scanned them to claim refunds. I no longer engage in this practice, but I would like to know if the money I received through this method is considered haram.

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. Thank you for your question.

Allah says,

“O you who believe, devour not your wealth between you through falsehood; but only through trade by your complete mutual consent.” [Quran, 4:29]

Money received from scanning discarded store receipts to claim VAT refunds is impermissible. Only the purchaser is entitled to the refund. The refund serves as an incentive to influence the purchaser’s behaviour. You have not engaged in the sale to qualify for the refund. A person engaging in such unauthorised activity is called a fuduli in Islamic Law. Such practices fall squarely under the ambit of the verse mentioned above.

Refunds received through this method must be given away in charity.

Entitlement to VAT Refunds

By law, only the purchaser (the person or entity who paid the VAT) is generally entitled to a VAT refund or reclaim, because:

VAT is a consumption tax, and the right to reclaim input VAT (in business contexts) is usually granted only to:

• The person/entity whose name appears on the invoice, and
• Who actually paid the VAT as part of a taxable transaction.

Why Only the Purchaser?

1. Proof of Payment: Tax authorities require documentation (like a tax invoice) that shows who paid VAT.
2. Avoiding Fraud: If someone else could claim the VAT refund, it opens the door to misuse or double claims.
3. Input VAT Rules: Businesses can reclaim input VAT only for purchases made for their own taxable activities.

The Hadith of the Bankrupt Person (al-Muflis)

The Prophet (Allah bless him and give him peace) said,

“Do you know who the bankrupt is?” They said, “The bankrupt among us is the one who has no money or possessions.”

He said,

“The truly bankrupt person from my Umma is the one who comes on the Day of Judgment with prayer, fasting, and zakat. But he comes having insulted this one, falsely accused that one, unlawfully consumed the wealth of another, spilled the blood of this one, and beat that one. So this one and that one will be given from his good deeds. And if his good deeds run out before justice is done, their sins will be cast upon him, and he will be thrown into the Fire.” [Muslim]

General Rule of Impermissible Income

The general rule that applies to disposing of unlawful funds is as follows:

1. Where the rightful owner is known, it must be returned to the rightful owner.
2. Where the rightful owner is not known (or if they refuse), the funds must be disposed of in one of two ways: a) it must either be given towards a charitable cause that benefits the public at large, such as public hospitals, schools, or mosques; b) or it should be given in charity to a person who is entitled by his need to receive charity. [Nawawi, Majmu‘ Sharh al-Muhadhdhab; Karaan, Disposal of Riba (Fatwa issued by the MJC)]

I pray this is of benefit and that Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefited from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.