Zakaah on a deposit paid to a school, rental or phone company, or to show commitment when entering into bidding

Praise
be to Allah

Money that a person puts down as a deposit for a school, or
when entering into bidding, or for a phone company, and the like, is subject
to further discussion:

1.    

If it is held
temporarily, then he must pay zakaah on it along with the rest of his
wealth, if it reaches the nisaab (minimum threshold at which zakaah becomes
due) by itself or when other cash, gold or silver is added to it.

2.    

If it is held
permanently or for a number of years, then he should pay zakaah on it once,
when he takes it back, because it comes under the same heading as a debt for
which one has no hope of repayment, or wealth that is not under one’s
control.

It says in a statement of the Islamic Fiqh Council (no. 143
(1/16)), concerning zakaah on restricted-access accounts, Islamic insurance
companies, money paid as insurance and end-of-contract bonuses:

The International Islamic Fiqh Council, belonging to the
Organisation of the Islamic Conference (OIC), met in its sixteenth session
in Dubai (in the United Arab Emirates), 30 Safar-5 Rabee‘ al-Awwal 1426 AH
(9-14 April 2005 CE).

After studying the research papers submitted to the Council
on the topic of zakaah on restricted-access accounts, Islamic insurance
companies, money paid as insurance and end-of-contract bonuses, and after
listening to the discussion that took place on this topic, the following was
determined:

1.    

Zakaah on
investment accounts:

(a) 

Zakaah must be
paid on the deposits in investment accounts and on the profits thereon, by
the holders of these accounts, if they fulfil the conditions of zakaah,
whether they are long- or short-term investments, and even if no withdrawal
of the deposit is permitted because of restrictions imposed by the
investment company or by the account holder.

(b)

Zakaah must be
given on current accounts. It makes no difference whether the money is being
saved for something the account holder needs or to carry out investment
projects, unless it is for the purpose of paying off debts that he owes.

2.    

Zakaah on
accounts that are kept for the purpose of business transactions:

(a) 

Money that is
offered to show commitment when bidding on a project (i.e., a sum of money
that is offered to confirm a binding promise, in order to cover any harm or
loss that may result from not fulfilling the promise), if it is not
deposited in an investment account, and money that is offered as an initial
security when entering into bidding is to be deducted from zakaatable funds
held by the organisation where the money is deposited, and the owner must
pay zakaah on it, along with other wealth that he possesses. If many years
have passed since it was deposited, zakaah is to be paid on it for one year
when it is given back to its owners. But if this money is in an investment
account, then clause 1(a) is applicable to it.

(b)

Deposits kept
when bidding on a project, security deposits that are taken from individuals
and companies in return for specific services such as phone and electricity
services, and security deposits when renting places or equipment are subject
to zakaah, to be given by the one who paid these deposits; he should give
one year’s zakaah when he takes the deposit back.

(c) 

A downpayment is
not to be deducted by the seller from other wealth  of his on which zakaah
is due; rather he must give zakaah on it, because he has taken possession of
it, regardless of whether the purchaser cancels the deal or goes ahead with
it.

3.    

Legal deposit

This is what
special bodies or government departments stipulate must be deposited in the
bank in order to issue a licence to the company. If it is held on a
temporary basis, then the company should pay zakaah on it, along with other
wealth it owns. If it is kept permanently, then the company should pay
zakaah for one year when it is returned to them.

End quote from Qaraaraat wa Tawsiyaat Majma‘ al-Fiqh al-Islami
(p. 265).

Council’s website:

http://www.iifaaifi.org/2171.html

This was also stated in al-Ma‘aayeer ash-Shar‘iyyah.
See: Mi‘yaar az-Zakaah (p. 573).

Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) was asked
about orphans who have wealth that is deposited in the bank, and they cannot
access it until they reach the age of maturity.

The reply: … Based on that, zakaah must be paid on the wealth
of these orphans who are minors. But if it is in the bank and the bank is
refusing to give it to them, and they cannot take it out of the bank, then
no zakaah is due during the period in which the bank is withholding it,
because they are not able to make use of their wealth. Therefore it is like
a debt that is owed by someone who is not able to repay. But once they
receive it from the bank, they must give zakaah of one year only.

End quote from Noor ‘ala ad-Darb.

And Allah knows best.