Transactions confused with interest : taking a house loan as a tax shelter

Fatawa Question

Dear Sir Assalamu Alaikum. I am a citizen of India. I am working for the most prestigious software company. My payment is about 20,000 RS P. M. I pay about RS 3,000 every month in the form of income tax here. I had consulted various learned Islamic scholars here. They say that tax is not a liability in Islam and U r not required to pay tax as a religious obligation. I pay the Zakah regularly. What I want to know is what should I do in such Situation ? I had devised a very good and legal (in terms of legal constitution of India) way to prevent myself from paying tax. I saw that every year I am paying about RS 36,000 as Tax. Then why not I take some home loan, buy a home and start paying the installment. In this case the government will give me tax exemption. I will save tax and instead of paying the money to the corrupt officials I will pay to the needy Muslims. If suppose that I am required to pay RS 20,000 instead of RS 36,000 then I save 16,000. I am willing to divert this entire amount to the needy Muslims. One of the scholar here whom I respect very much said that It is not allowed, the reason being that I am paying interest to the bank when I take the loan and Islam does not allow transaction where Interest is involved. What's your opinion sir, please reply soon Allah Hafiz.

Fatwa

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Publication Date

2001-09-19

Main Subjects

Economics & Business Administration
Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Housing
• Loans
• Taxes

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-726589

• APA
• MLA
• AMA