Zakat on Provident Fund
The question of Zakat on provident fund creates significant confusion for Muslim employees worldwide who contribute to mandatory retirement schemes like EPF in Malaysia, India, and Singapore, CPF in Singapore, PF schemes in various countries, KWSP in Malaysia, GPF for government employees, and other employer sponsored provident fund programs. Do you pay Zakat on provident fund contributions when they are deducted from your monthly salary? Is the accumulated provident fund balance zakatable even though you cannot access it until retirement? What about employer matching contributions to your provident fund account? How do vesting periods, withdrawal conditions, and partial accessibility affect Zakat on provident fund? This comprehensive guide resolves every question about Zakat on provident fund with complete Islamic clarity.
The fundamental principle for Zakat on provident fund comes down to one critical factor: accessibility. Islamic scholars across all schools of jurisprudence agree that Zakat applies to wealth you actually possess and can use. The majority scholarly position states that locked provident funds you cannot access until retirement age or specific conditions are met do not constitute zakatable wealth in your current possession. However, once your provident fund becomes accessible at retirement, resignation with completed vesting, or when withdrawal conditions are satisfied, the entire balance immediately becomes zakatable wealth that must be included in your annual Zakat calculation. This guide explains exactly how Zakat on provident fund works for employees, retirees, the treatment of contributions versus withdrawals, and the correct Islamic methodology backed by authentic Quranic and Hadith evidence.
Core principle: Zakat on provident fund depends entirely on accessibility
The determining factor for Zakat on provident fund is whether you can actually access and use the money. If your provident fund is locked by law or employer policy until retirement age, specific resignation conditions, or vesting completion, the majority of Islamic scholars across all four schools of jurisprudence say this inaccessible wealth is not currently zakatable. Your monthly provident fund contributions reduce your zakatable salary income just like income tax deductions do because the money never enters your usable possession.
However, the moment your provident fund becomes accessible, either at retirement when you can withdraw the full balance, upon resignation after vesting requirements are met, or when partial withdrawal conditions are satisfied for housing or emergencies, that accessible amount immediately becomes zakatable wealth. You must include it with all other assets in your annual Zakat calculation. Understanding this accessibility principle resolves all confusion about Zakat on provident fund contributions, balances, employer matches, and retirement withdrawals.
Foundation
What provident fund is and how it affects Zakat
Understanding different provident fund schemes clarifies the Islamic ruling on Zakat.
Common provident fund schemes worldwide
Provident funds are mandatory or voluntary retirement savings schemes where employees and often employers contribute a percentage of salary into individual accounts. The accumulated balance with returns is accessible upon retirement, resignation, or specific qualifying events. Common schemes include Employees Provident Fund in Malaysia where both employee and employer contribute 11% each, EPF in India with employee contribution of 12% and employer match, Central Provident Fund in Singapore with age based contribution rates up to 37% combined, General Provident Fund for government employees in various countries, Public Provident Fund as voluntary schemes, and numerous country specific or employer specific provident fund arrangements.
For Zakat on provident fund purposes, all these schemes share common characteristics that determine Islamic rulings. Money is deducted from salary before you receive it, contributions accumulate in an account you legally own but cannot freely access, the balance grows through returns or interest depending on scheme structure, and full access is granted only when specific conditions like age, resignation, or retirement are met. These shared features mean the Zakat ruling on provident fund is consistent across different schemes, though specific accessibility rules vary by country and program.
How provident fund contributions reduce zakatable salary
Your employment contract states gross monthly salary of 5,000 Malaysian Ringgit. Before your salary reaches your bank account, 11% EPF employee contribution of 550 RM is deducted and sent to your EPF account which you cannot access until age 55 or upon meeting withdrawal conditions. Your net salary deposited to your bank is 4,450 RM. For Zakat on provident fund and salary, you calculate Zakat on the 4,450 RM that actually entered your usable wealth, not the 5,000 RM gross. The 550 RM provident fund deduction is similar to income tax, it never reached your possession so it does not form part of your current zakatable wealth. This same principle applies whether your gross salary is 5,000 RM, 50,000 Indian Rupees, 8,000 Singapore Dollars, or any amount in any currency with any provident fund scheme.
Employer contributions to provident fund
Most provident fund schemes include employer matching or contributions on top of employee deductions. In Malaysian EPF, if you contribute 11% of salary, your employer contributes another 13% for employees above age 60, or 12% for younger employees. In Indian EPF, employer matches the employee 12% contribution. In Singapore CPF, employer contribution rates vary by employee age up to 17% employer share. These employer contributions go into your provident fund account, legally belong to you, accumulate with your own contributions, but remain locked under the same accessibility rules.
For Zakat on provident fund, employer contributions follow identical rules as your own contributions. While the provident fund is locked and inaccessible, employer contributions are not zakatable under the majority scholarly position because you cannot use the money. When your provident fund becomes accessible at retirement or qualifying withdrawal, the total balance including both your contributions and all employer contributions becomes zakatable wealth that must be included in annual Zakat calculation. You do not separate employer versus employee portions, the entire accessible provident fund balance is treated as your wealth. Learn more about employer provided benefits in our Zakat on Salary guide.
Include accessible provident fund
Calculate Zakat on all accessible wealth including provident fund withdrawals
If you can access your provident fund, include it in your annual Zakat calculation.
Calculate Complete Zakat →Critical factor
When provident fund becomes zakatable based on accessibility
Understanding accessibility conditions determines exactly when Zakat obligation begins.
Locked provident fund during employment
While you are employed and below retirement age, your provident fund is typically completely locked. In Malaysian EPF, you cannot access your account balance before age 55 except for specific approved withdrawals. Indian EPF prohibits withdrawals before retirement age except for housing, medical emergencies, education, or after resignation with specific vesting requirements. Singapore CPF locks balances in various accounts with limited access before age 55 or 65 depending on account type. Government provident funds often have similar lock in periods until retirement or resignation with minimum service years.
During this locked period, the majority scholarly opinion states your provident fund balance is not zakatable wealth. You cannot withdraw it, you cannot use it, you cannot access it for any purpose except narrowly defined emergencies or qualifying events. Since Zakat applies to wealth in your actual possession that you can dispose of, locked provident fund does not meet this condition. Your monthly provident fund contributions reduce your zakatable salary similar to how income tax does. The accumulated balance growing in your locked account does not trigger annual Zakat obligation under this majority position. This ruling makes Zakat on provident fund straightforward for most working Muslims with locked retirement accounts.
Majority scholarly position on locked provident fund
Scholars from Hanafi, Maliki, Shafi, and Hanbali schools have addressed retirement accounts and locked wealth. The predominant view among contemporary Islamic scholars is that wealth you legally own but cannot access or control does not constitute zakatable wealth in your current possession. This applies to locked provident funds, pension accounts before retirement age, trust funds before distribution, inheritance before receipt, and similar inaccessible wealth. The reasoning is that Zakat is on al mal al mustafad, wealth that is productive and available for use. Locked provident fund fails the availability test even though you legally own it.
Minority position requiring Zakat on all owned wealth
A minority of scholars hold that legal ownership is sufficient to trigger Zakat obligation regardless of accessibility. Under this view, your provident fund balance is wealth you legally own, so Zakat is due annually on the full accumulated amount even though locked. This position is more cautious and ensures Zakat is paid on all wealth. Muslims following this position must track their provident fund balance annually and calculate 2.5% Zakat on it along with other assets. Consult qualified local scholars to determine which position applies in your situation. Most mainstream Islamic financial institutions and scholars recommend the majority position of excluding inaccessible locked provident funds.
Partial withdrawal provisions
Many provident fund schemes allow limited partial withdrawals before retirement for specific approved purposes. Malaysian EPF permits withdrawals for housing down payment, medical treatment for serious illnesses, education expenses, or performing Hajj pilgrimage. Indian EPF allows withdrawals for housing purchase or construction, medical emergencies, higher education, marriage expenses, or unemployment exceeding one month after seven years of service. Singapore CPF allows using balances for housing purchase or approved investments. These partial accessibility provisions create nuanced situations for Zakat on provident fund.
When you make a partial withdrawal from your provident fund for approved purposes, the withdrawn amount becomes accessible wealth that must be included in your Zakat calculation. If you withdraw 50,000 RM from Malaysian EPF for housing down payment, this 50,000 RM is now in your possession. On your next annual Zakat date, if this money or any portion of it remains in your bank account or was used to purchase something that is not zakatable like your home, you include the remaining cash portion in zakatable wealth. Meanwhile, the balance still locked in your EPF account continues to be non zakatable under the majority position. Only track and include what you actually withdrew and still possess as cash or zakatable assets. Learn more about housing and Zakat in our Zakat on Mortgage guide.
Accessibility event
Zakat on provident fund at retirement or resignation
When your provident fund becomes fully accessible, immediate Zakat obligations arise.
Full provident fund accessibility at retirement
Upon reaching retirement age defined by your provident fund scheme, typically 55 years in Malaysian EPF and Indian EPF, 55 or 65 in Singapore CPF depending on account type, or scheme specific retirement ages elsewhere, your provident fund becomes fully accessible. You can withdraw the entire accumulated balance including all your contributions, all employer contributions, and all returns or interest earned over the years. At this moment of full accessibility, your provident fund transforms from non zakatable locked wealth into zakatable accessible wealth under Islamic law.
For Zakat on provident fund calculation at retirement, you must include the entire accessible balance in your next annual Zakat calculation. If you retire in March and your annual Zakat date is in Ramadan three months later, you check your provident fund balance on that Zakat date. If you withdrew the full amount and it sits in your bank account, you include that cash balance with all other zakatable wealth. If you left some balance in the provident fund account but can withdraw it anytime, include the full accessible amount. If you used part of the withdrawal for expenses and some remains, include what remains. The key is that once provident fund is accessible, it follows the same Zakat rules as any other cash savings or bank balance.
Starting hawl for newly accessible provident fund
When your provident fund becomes accessible for the first time at retirement, this marks the beginning of hawl for that wealth. Hawl is the one lunar year waiting period required before Zakat becomes due on wealth. If you retire and gain access to 800,000 RM in EPF in January, and you have an existing annual Zakat date in Ramadan, you include this 800,000 RM in your Zakat calculation that Ramadan. However, if the 800,000 RM was not continuously above nisab for the full lunar year before your Zakat date because it was locked and not counted previously, some scholars say hawl restarts when it becomes accessible. The practical majority opinion is that once you can include it in your calculation, you do so on your next Zakat date regardless of prior lock status. Consult scholars for precise hawl treatment in your situation. Learn more about hawl in our When to Pay Zakat guide.
Resignation and vested provident fund
If you resign from employment before reaching retirement age, provident fund accessibility depends on vesting rules and resignation conditions. Some schemes allow full withdrawal upon any resignation, others require minimum service years before employer contributions vest, and some restrict access until retirement age even after resignation. Indian EPF requires continuous service of five years for employer contributions to fully vest, though you can withdraw your own contributions and proportional employer share earlier. Malaysian EPF allows withdrawal if you leave Malaysia permanently or reach age 55, but may restrict access for domestic resignations below retirement age.
For Zakat on provident fund after resignation, determine what portion you can actually access. If you resign after ten years of service and can withdraw your entire EPF balance including full employer contributions because vesting is complete, the entire amount becomes zakatable once withdrawn. If vesting is incomplete and you can only access your own contributions plus partial employer share, only that accessible amount is zakatable. If resignation before retirement age means your provident fund remains locked until you reach 55 years, the balance continues to be non zakatable under majority opinion until accessibility is achieved. Always check your specific scheme rules for resignation withdrawal eligibility and vesting schedules.
Retirement and resignation
Include accessible provident fund in your complete Zakat calculation
Once you can withdraw your PF, EPF, or CPF, it becomes zakatable wealth.
Calculate Now →Real scenarios
Detailed examples of Zakat on provident fund calculation
Step by step walkthroughs showing exactly how to handle provident fund in different situations.
Malaysian employee with locked EPF during working years
Background: Ahmad works in Kuala Lumpur with gross monthly salary of 6,500 RM. He has been employed for eight years and has substantial EPF accumulation. His annual Zakat date is 1st Ramadan.
Salary and provident fund deductions: Gross salary: 6,500 RM monthly. Employee EPF contribution 11%: 715 RM. Employer EPF contribution 12%: 780 RM. After other deductions including income tax and SOCSO, net salary received: 5,200 RM monthly. Total annual net salary: 62,400 RM.
EPF balance: After eight years of contributions plus returns, Ahmad's EPF balance is 185,000 RM. He cannot access this until age 55 or approved withdrawal conditions. He is currently 38 years old.
On Zakat date: Bank account balances: 45,000 RM. Savings in Tabung Haji: 22,000 RM. Cash at home: 3,000 RM. Total accessible wealth: 70,000 RM. EPF balance of 185,000 RM is locked and not included under majority scholarly position.
Zakat calculation: Nisab in Malaysia approximately 14,000 RM based on current silver prices. His 70,000 RM accessible wealth exceeds nisab. Zakat due: 70,000 × 0.025 = 1,750 RM. The locked 185,000 RM EPF is not included in this calculation.
Key insight about Zakat on provident fund: Ahmad's monthly EPF deductions reduce his zakatable salary from 6,500 RM gross to 5,200 RM net. The accumulated 185,000 RM EPF balance is not zakatable during his working years because it is locked. He calculates Zakat only on accessible wealth. Learn more about Malaysian specific considerations in our Zakat Calculator.
Indian employee making partial EPF withdrawal for housing
Background: Fatima works in Bangalore with gross monthly salary of 85,000 INR. She has EPF balance of 12 lakh rupees after ten years of service. She plans to withdraw from EPF for housing down payment which is permitted under EPF rules.
EPF withdrawal transaction: Fatima applies for housing withdrawal and receives approval for 6 lakh rupees from her EPF account. This amount is transferred to her bank account in March. Her remaining EPF balance of 6 lakh rupees stays locked until retirement or resignation.
Using withdrawal for housing: In April, Fatima uses 5.5 lakh rupees from the EPF withdrawal as down payment for purchasing an apartment. She keeps 50,000 rupees in her savings account for furnishing and emergencies.
On Zakat date (1st Ramadan in June): Bank accounts: 2.8 lakh rupees including the remaining 50,000 from EPF withdrawal. Fixed deposits: 4 lakh rupees. Gold jewelry beyond personal use: 1.5 lakh rupees value. Total accessible wealth: 8.3 lakh rupees. The 6 lakh rupees still locked in EPF is not included. The 5.5 lakh used for apartment down payment is also not included as residential property is not zakatable.
Zakat calculation: Nisab approximately 75,000 INR. Her 8.3 lakh rupees exceeds nisab significantly. Zakat due: 830,000 × 0.025 = 20,750 INR.
Key insight about Zakat on provident fund: The moment Fatima withdrew 6 lakh from EPF, it became accessible zakatable wealth. The portion she used for non zakatable housing is no longer counted. The cash portion remaining in her accounts is included. The still locked 6 lakh EPF balance remains non zakatable until she can access it. This demonstrates how partial EPF withdrawals create mixed accessibility requiring careful tracking.
Singapore employee reaching CPF retirement age
Background: Hassan worked in Singapore for thirty years and just reached age 65. His CPF accounts are now accessible for withdrawal under CPF retirement rules. He has chosen 15th Shaban as his annual Zakat date.
CPF balances at retirement: CPF Ordinary Account: 180,000 SGD. CPF Special Account: 95,000 SGD. CPF Medisave Account: 68,000 SGD. Total CPF: 343,000 SGD. All amounts are now accessible as Hassan has reached retirement age and can withdraw according to CPF payout schemes.
CPF withdrawal decision: Hassan withdraws 250,000 SGD from his CPF accounts and leaves 93,000 SGD to earn interest and for future medical needs. The withdrawn 250,000 SGD is transferred to his POSB bank account.
On Zakat date two months after retirement: POSB account with CPF withdrawal: 235,000 SGD (spent 15,000 on family expenses). Other savings account: 42,000 SGD. CPF balance still in accounts but accessible: 93,000 SGD. Investment account: 65,000 SGD. Total accessible wealth: 435,000 SGD.
Zakat calculation: Nisab approximately 4,500 SGD. His 435,000 SGD far exceeds nisab. Zakat due: 435,000 × 0.025 = 10,875 SGD. Hassan pays this amount to eligible recipients.
Key insight about Zakat on provident fund: Before retirement, Hassan's CPF was locked and not zakatable. At age 65, the entire CPF balance became accessible and immediately must be included in Zakat calculations. Even the amount he left in CPF accounts is zakatable because he can withdraw it anytime. This transition from non zakatable to zakatable at retirement is the critical moment for Zakat on provident fund. Learn about pension and retirement Zakat in our Zakat on Pension guide.
Government employee with GPF and resignation before retirement
Background: Aisha is a government employee in India with General Provident Fund. She has worked for twelve years and decides to resign to start her own business. Her GPF balance is 18 lakh rupees. She needs to understand Zakat implications of GPF withdrawal upon resignation.
GPF accessibility upon resignation: Under government provident fund rules, Aisha can withdraw her entire GPF balance upon resignation since she has more than five years of service. She submits resignation in September and receives full GPF settlement of 18 lakh rupees in October after final working day.
Receiving GPF and other terminal benefits: GPF withdrawal: 18 lakh rupees. Final salary for October: 92,000 rupees. Leave encashment: 3.5 lakh rupees. Total received from government upon resignation: 21.92 lakh rupees deposited to her bank account.
Using funds and planning business: Aisha uses 12 lakh rupees to invest in her new business, buying inventory, equipment, and working capital. She keeps 8 lakh rupees as emergency fund and personal savings. She spends 1.92 lakh on personal needs and family support.
On next Zakat date (1st Ramadan five months after resignation): Personal savings account: 7.2 lakh rupees (from the 8 lakh, some spent). Business bank account: 2.8 lakh rupees remaining working capital. Business inventory value: 4.5 lakh rupees. Business equipment is not zakatable. Gold: 1.8 lakh rupees. Total zakatable wealth: 16.3 lakh rupees.
Zakat calculation: Her 16.3 lakh rupees exceeds nisab. Zakat due: 1,630,000 × 0.025 = 40,750 INR. She pays from her savings.
Key insight about Zakat on provident fund: While Aisha's GPF was locked during government service, it was not zakatable. Upon resignation, the entire GPF became accessible and zakatable. The funds she invested in business inventory remain zakatable, while business equipment is not. Her provident fund settlement created a large influx of zakatable wealth that must be tracked carefully. This scenario shows how resignation transforms locked provident fund into immediate zakatable obligations. Learn about business Zakat in our Self Employed Income guide.
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Interest and returns on provident fund for Zakat
How to handle conventional interest versus Shariah compliant returns in provident funds.
Conventional provident fund interest is prohibited
Most government and private provident fund schemes invest contributions in interest bearing instruments and credit annual interest or dividends to member accounts. Malaysian EPF declares annual dividends based on investment returns. Indian EPF credits interest at rates set by the government, currently around 8.15% annually. Singapore CPF pays guaranteed minimum interest rates on different account balances. These returns are technically interest income which is prohibited in Islam as riba. Muslim employees participating in mandatory conventional provident funds face a dilemma between legal requirement to contribute and Islamic prohibition on interest.
The scholarly consensus for Muslims in mandatory provident fund schemes is that the contributions themselves are permitted as they are legally required and the principal comes from legitimate employment earnings. However, the interest earned on the provident fund balance is prohibited riba money that cannot be used for personal benefit. When you withdraw your provident fund at retirement or resignation, you must separate the principal contributions from the interest earned. The principal including both your contributions and employer contributions is halal wealth that is zakatable. The interest portion must be given away entirely to charity without claiming Zakat credit, without receiving tax deduction benefit, and without expecting reward. This purifies your provident fund wealth from prohibited elements.
Separating principal from interest in provident fund
Your EPF statement shows total balance of 500,000 RM at retirement. The statement also breaks down total contributions made over the years of 380,000 RM from combined employee and employer portions, and total dividend returns credited of 120,000 RM. For Zakat on provident fund, include only the 380,000 RM principal contributions as legitimate zakatable wealth. The 120,000 RM interest must be given away to poor and needy people or charitable causes, but you cannot count this as Zakat payment, cannot claim it reduces your Zakat obligation, and receive no spiritual reward for this disposal. The 380,000 RM principal is combined with other zakatable assets and Zakat calculated on the total. Most provident fund statements provide contribution versus returns breakdown, making separation straightforward.
Shariah compliant provident fund options
Some provident fund schemes offer Shariah compliant investment options where contributions are invested according to Islamic principles without interest. Malaysian EPF offers Simpanan Shariah option where funds are invested in Shariah compliant instruments and returns come from profit sharing rather than interest. Some Indian EPF trusts and private provident funds offer Islamic investment windows. If your provident fund provides Shariah compliant options, elect these to ensure all returns are halal and fully zakatable without purification requirements.
When your provident fund returns come from legitimate Shariah compliant investments, the entire balance including principal contributions and halal returns is fully zakatable once accessible. You do not need to separate or purify any portion. This makes Zakat on provident fund simpler and ensures your retirement wealth is completely permissible. If Shariah options are available in your scheme, switching to them resolves the interest dilemma for conscientious Muslims. Check with your provident fund administrator about Islamic investment alternatives.
Islamic evidence
Quran and Sahih Hadith on Zakat and wealth possession
Authentic textual sources establishing that Zakat applies to accessible wealth you actually possess.
Quran
Establish prayer and give Zakat
Quran 2:43
Allah commands Muslims to establish prayer and pay Zakat as fundamental obligations. Zakat is required on qualifying wealth including accessible provident fund balances once retirement or withdrawal conditions are met.
Quran
Take from their wealth a charity
Quran 9:103
This verse establishes that Zakat is taken from wealth in possession. Accessible provident fund balances are wealth in your possession that must have Zakat paid from them to purify and bless the wealth.
Quran
Give Zakat from what We provided
Quran 2:110
Believers must give Zakat from provision Allah granted. Provident fund accumulated from employment is provision, and when accessible it becomes zakatable wealth requiring 2.5% payment annually.
Quran
Rights of the needy in wealth
Quran 51:19
In the wealth of believers is an established right for those who ask and those deprived. Accessible provident fund wealth carries this right that must be fulfilled through Zakat payment.
Hadith
Islam built on five pillars
Sahih al-Bukhari 8
Prophet Muhammad established Zakat as one of five pillars of Islam, making it mandatory for all Muslims with qualifying wealth regardless of source, including provident fund balances once they become accessible.
Hadith
No Zakat until wealth completes one year
Sunan Abu Dawud 1573
The Prophet (peace be upon him) clarified that wealth must remain in possession for one complete lunar year before Zakat is due. This establishes hawl requirement for provident fund, confirming monthly contributions do not trigger immediate Zakat but accessible balances meeting hawl do.
Hadith
Zakat is a right in wealth
Sahih al-Bukhari 1395
The Prophet (peace be upon him) taught that Zakat is a right Allah placed in the wealth of the rich for benefit of the poor. Accessible provident fund wealth above nisab is subject to this right and must have Zakat paid from it.
Hadith
Warning about withholding Zakat
Sahih Muslim 987a
Severe consequences are warned for those who possess zakatable wealth and do not pay Zakat. This emphasizes the serious obligation to calculate and pay Zakat on all accessible wealth including provident fund balances at retirement.
Scholarly consensus on accessibility and Zakat obligation
Islamic scholars across all four schools of jurisprudence agree that Zakat applies to wealth that is nama, meaning growing and productive, and that is in actual possession of the owner with ability to dispose of it. Locked provident funds fail the possession test under majority opinion because the owner cannot access or use the money even though legally owned. This principle has been applied throughout Islamic history to various forms of restricted wealth including trusts, inheritances before distribution, and debts owed to you but not yet received. Contemporary Islamic scholars specializing in modern financial instruments have extended this reasoning to retirement accounts and provident funds, concluding that mandatory locked provident funds are not zakatable until accessibility is achieved. The moment accessibility occurs through retirement, resignation, or approved withdrawal, the wealth enters actual possession and becomes immediately zakatable on the next annual Zakat date. This represents scholarly consensus applied to modern employment structures.
FAQ
Frequently asked questions about Zakat on provident fund
Direct answers to the most common questions Muslims have about provident fund and Zakat.
Do I pay Zakat on my provident fund (PF/EPF) that I cannot access?▾
The majority scholarly opinion is that locked provident funds that you cannot access are not zakatable. If your PF, EPF, CPF, or similar fund is locked until retirement age, resignation, or specific conditions, most scholars say it is not part of your current zakatable wealth. However, a minority opinion says all wealth you legally own is zakatable regardless of accessibility. Consult local scholars for your specific provident fund rules.
When does provident fund become zakatable wealth?▾
Provident fund becomes zakatable when you gain the legal right and ability to access it. This typically occurs at retirement age, upon resignation with vesting completed, or when withdrawal conditions are met. Once you can withdraw or transfer your provident fund balance, it becomes accessible wealth and must be included in your annual Zakat calculation.
Do employer contributions to provident fund affect Zakat?▾
Employer contributions follow the same accessibility rules as your own contributions. If the provident fund is locked and inaccessible, employer contributions are not zakatable under the majority position. Once vested and accessible, the entire provident fund balance including employer contributions becomes zakatable wealth that must be included in your annual Zakat calculation.
Should I calculate Zakat on provident fund contributions when deducted from salary?▾
No. Provident fund contributions deducted from your salary reduce your zakatable income similar to income tax. The money never enters your immediate usable wealth. You do not calculate Zakat on PF deductions at the time they occur. Instead, evaluate the entire accumulated provident fund balance for Zakat only when it becomes accessible to you.
What if I can make partial withdrawals from my provident fund?▾
If your provident fund scheme allows partial withdrawals for specific purposes like housing, medical emergencies, or education while the rest remains locked, only the accessible portion is zakatable. Include the withdrawal amount in your zakatable wealth once you receive it. The locked balance that cannot be accessed follows the majority position of not being currently zakatable.
How do I calculate Zakat on provident fund at retirement?▾
At retirement when your provident fund becomes fully accessible, the entire balance is zakatable wealth. On your annual Zakat date after retirement, check your provident fund account balance, add it to all other zakatable assets including bank accounts, investments, gold, and cash. If the total exceeds nisab and has been above nisab for one lunar year, calculate 2.5% Zakat on the complete total.
Does voluntary provident fund (VPF) have different Zakat rules than mandatory PF?▾
No, voluntary and mandatory provident fund contributions follow the same Zakat rules based on accessibility. Whether you contribute voluntarily above the statutory rate or only pay mandatory contributions, the determining factor for Zakat is whether you can access the funds. Locked VPF is not zakatable under majority opinion, accessible VPF is zakatable.
What about provident fund transferred to a new employer?▾
Provident fund transfers do not change the accessibility rules. If you transfer your PF balance from a previous employer to your new employer's provident fund scheme and it remains locked until retirement, it is not zakatable during the locked period under majority scholarly opinion. The transfer itself is just moving funds between locked accounts.
Are provident fund returns and interest zakatable?▾
Returns earned on your provident fund follow the same rules as the principal. If the provident fund is locked, returns are not zakatable. If accessible, returns are zakatable. Note that interest from conventional provident funds is prohibited in Islam and must be given away to charity without Zakat credit. Only permissible returns on Shariah compliant provident funds count as legitimate zakatable wealth.
Do I include gratuity and end of service benefits with provident fund for Zakat?▾
Yes, when you receive gratuity, end of service benefits, or terminal benefits along with your provident fund at resignation or retirement, combine everything as accessible wealth. On your next Zakat date, the total of provident fund withdrawal, gratuity, any final salary payments, and all other wealth must be included in your Zakat calculation if above nisab for the full lunar year.
Implementation
Practical tips for managing Zakat on provident fund
Make your provident fund Zakat calculation accurate with these strategies.
1. Track accessibility status of your provident fund
Know the exact conditions under which you can access your EPF, CPF, PF, or other provident fund. Check scheme rules for retirement age, resignation withdrawal eligibility, vesting schedules for employer contributions, and approved partial withdrawal purposes. Keep documentation of these rules so you know precisely when your provident fund becomes zakatable wealth.
2. Obtain annual provident fund statements
Even though locked provident fund is not currently zakatable under majority opinion, keep annual statements showing total balance, contributions breakdown, and returns earned. This helps you track growth and prepares you for when the fund becomes accessible. Statements also separate principal from interest which is necessary for purification of conventional provident fund returns.
3. Plan for Zakat obligation at retirement
If you are approaching retirement and will soon access substantial provident fund balances, plan ahead for Zakat obligation. A large provident fund withdrawal creates immediate zakatable wealth that will require 2.5% Zakat payment on your next annual Zakat date. Budget accordingly so you have funds available to pay Zakat without financial hardship. Consider consulting Islamic financial advisors for retirement and Zakat planning.
4. Separate halal principal from prohibited interest
If your provident fund earns conventional interest, track the total principal contributions separate from interest returns. At withdrawal, give away all interest to charity without Zakat credit. Only include halal principal in your zakatable wealth calculation. If Shariah compliant provident fund options exist, elect them to avoid this complication and ensure all wealth is fully permissible and zakatable.
5. Include partial withdrawals immediately
If you make approved partial withdrawal from provident fund for housing, medical, education, or other permitted purposes, include the withdrawn amount in your zakatable wealth immediately. Track what remains as cash versus what was spent on non zakatable items like housing or medical treatment. Only the cash portion remaining needs to be included in Zakat calculation. Learn more in our Cash and Savings guide.
6. Consult scholars for your specific situation
Provident fund schemes vary significantly by country, employer, and individual circumstances. Vesting schedules, withdrawal conditions, and accessibility rules differ. If you have complex situations like international transfers, expatriate status, multiple provident fund accounts, or unusual withdrawal scenarios, consult qualified Islamic scholars familiar with both Islamic law and your specific provident fund system for accurate guidance.
The fundamental principle for Zakat on provident fund
Remember this core truth: locked provident fund you cannot access is not zakatable under majority scholarly opinion. Your monthly provident fund contributions reduce your zakatable salary like income tax does. But the moment your provident fund becomes accessible at retirement, resignation with vesting, or approved withdrawal, the entire accessible balance is zakatable wealth that must be included in your annual Zakat calculation along with all other assets. This accessibility principle has governed Islamic rulings on restricted wealth for 1400 years and continues to provide clear guidance for modern Muslims with employer sponsored provident funds worldwide.
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Calculate complete Zakat including accessible provident fund wealth
If your provident fund is accessible through retirement, resignation, or approved withdrawal, include it in your comprehensive Zakat calculation. Use our calculator to combine accessible provident fund balances with bank accounts, investments, gold, and all other zakatable assets for accurate annual Zakat payment.
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Disclaimer: This guide provides general educational information about Zakat on provident fund based on widely accepted Islamic scholarly opinions from the four major schools of jurisprudence. Individual circumstances vary significantly based on specific provident fund schemes (EPF, CPF, PF, GPF, KWSP, PPF, and others), country specific regulations, employer policies, vesting schedules, withdrawal conditions, retirement ages, resignation rules, partial withdrawal provisions, Shariah compliant investment options, conventional interest treatment, expatriate status, international transfers, tax implications, and personal financial situations. For questions about complex provident fund scenarios, minority scholarly positions requiring Zakat on locked funds, interest purification requirements, hawl calculation for newly accessible funds, or interaction between provident fund and other retirement accounts, consult qualified Islamic scholars who understand both Islamic commercial law and your specific provident fund system. This guide aims to help Muslims understand and fulfill their Zakat obligations correctly using established Islamic jurisprudence that has governed restricted wealth for over 1400 years, now applied to contemporary provident fund structures worldwide.
About this Content
Written by the Zakat Finance editorial team. All content is based on authentic Islamic scholarship and is reviewed regularly to ensure accuracy. The content aims to provide guidance on Zakat calculation and does not replace advice from a qualified Islamic scholar.
Last updated: February 2026
Method note: We present common scholarly approaches to Zakat calculation, encouraging consultation with trusted scholars for personal cases.