Q: I have around 8000 pounds in a fixed deposit in an Islamic bank. My money is taken for 2 years and invested in halal things and then at the end of the two years my money is returned to me with profit InshaAllah also added to it. However I cannot access or withdraw any of the money from the account for the 24 months. Do I have to pay zakat on it? The money I do have access to (ie: my spending money) is below the Nissab as I still live with my parents and am a student. I have read that because I cannot access the bank money I do not have to pay zakat but that when I get possession of the £8000 again I should pay the zakat for one year. Is this correct? I am unable to pay the zakat at the moment if I have to pay the zakat for the money in the fixed account as my current account doesn’t have the money.
الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب
A: You are liable to pay zakat on the £8,000 in the fixed deposit account in addition to any increase in value that may thus far have accrued. The stipulation of accessibility for zakat liability is in order to effect increase through investment. The fixed deposit account, as described, is effectively an investment. The £8,000 is invested with a view to earning a profit and so access to the cash is not a requirement for zakat liability. In this regard, this is no different to authorising a third party to use the £8,000 to purchase goods to sell on your behalf whilst agreeing that the profit will be distributed after 24 months. Once the cash has been converted in to the goods it is no longer accessible. This does not, however, absolve one of the liability of zakat. On the contrary, the goods are now subject to zakat which will, in fact, be calculated on the retail price of the goods. If the retail price of the goods is £10,000, zakat will be payable upon the £10,000 and not the purchase price of £8,000. Furthermore, the obligation to pay zakat on the goods is not deferred until one is able to liquidate them. On the contrary, once the zakat anniversary has arrived the obligation matures and zakat is payable immediately even if none of the goods have been sold. The same is true of the fixed deposit account in question.