Zakaat - Rules and modern issues

Zakaat on provident fund

In government and the private sector, a certain percentage from the salary of the employee is set aside and at the end of the service tenure or on the death of the employee, then the company adds its own sum to this amount and it is given to the employee or the employee’s heirs.  Is Zakaat Compulsory on the amount collected from the employee and on the extra amount given by the company?

          In this situation, there are 2 opinions of the scholars.  Some say that the amount deducted from the salaries of the employees is not within their power.  As such there is no Zakaat on it.

          Other scholars say that Zakaat is Compulsory on it as the employees are the owners of that amount.  As the amount is not yet in their possession, the payment of Zakaat is not binding on them yet.  When they get that amount, then along with other forms of wealth, if it meets the prescribed criterion and a year passes on it, Zakaat is Compulsory on it.  The second opinion is the more cautious one.  Similarly, when the amount from the company is received, Zakaat will become Compulsory on it as well.