Is Committee Money Deductible from Zakat Calculations?

Committee money (or "committee fund") is deductible depending on your role in the committee at the time of Zakat calculation.

It is a common savings and loan scheme. Whether an individual is a creditor or a debtor within the scheme affects how they are treated in Zakat calculations.

Here's a breakdown:

1. If You Are Only Contributing and Haven't Withdrawn Yet:

The money you contribute is part of your wealth. Therefore, it is not deductible, and you must pay Zakat on the total contributed amount.

Example: If you contributed PKR 100,000 and haven’t withdrawn anything, you must pay Zakat on the entire amount.

2. If You Have Withdrawn More Than You Contributed (You Are in Debt):

The extra amount you withdrew is considered a loan. Repayable loans within 12 lunar months are deductible from your Zakatable wealth.

Example: If you contributed PKR 200,000 but withdrew PKR 300,000, the extra PKR 100,000 is deductible from your Zakat calculation.

3. If You Have Withdrawn Less Than You Contributed (You Are a Creditor):

The remaining amount of your contributions is part of your wealth. This remaining balance is not deductible; you must pay Zakat on it.

Example: If you contributed PKR 150,000 but withdrew only PKR 50,000, you need to pay Zakat on the remaining PKR 100,000.

Key Considerations:

• Always document your contributions and withdrawals carefully.

• Committee contributions are not deductible. They are part of your Zakatable wealth.

• Extra withdrawals are deductible only if they qualify as repayable debts within 12 lunar months.

This approach ensures fairness in calculating Zakat while respecting Islamic financial guidelines.

And Allah knows best!