Clarification – Deduction of Zakat on GP Fund DT 16.01.2006
OFFICE MEMORANDUM
Subject: Deduction of Zakat on GP Fund
In a case, Mr. Liaqat Ali DAD Finance & Accounts HQ TPT Fleet NLC Gujranwala submitted a declaration dated 14th Jan, 2005 regarding non deduction of zakat from his G. P. Fund to CLA (DS) Fund Section Lahore, in the light of decision made by Supreme Court of Pakistan dated 9th March 1999. Later on, he applied a non refundable advance amounting to Rs. 90,000/- on 29-1-2005 to CLA (DS) Lahore. His claim was paid through Cheque dated 12-3-2005 for Rs. 87,750/- after deduction of Zakat for Rs. 2250/- The recovery was affected in the light of Finance Division Central Zakat Administration Islamabad letter No.1236 CE 813 (5) dated 18-12-1990.
- The individual represented against the recovery of zakat deducted from him on the plea that claim was paid on: 12-3-2005 and he has submitted declaration of 14 January 2005 i.e 30 days before the payment of claim and as such zakat should not be recovered from him and he also requested to refund of Rs. 2250/- deducted on account.. of zakat against the amount of advance of Rs. 90,000/-. Secondly in his opinion, in his case, Valuation Date is 6-10-2005 i.c 1st Ramadhan-ul-Mubarik 1426 AH.
- This office felt that there is some ambiguity in the Valuation Date as defined at Sr. No. 11 of First Schedule of Zakat and Ushr Ordinance 1980 and this office of the view that in the case of “Final settlement of Provident Fund”, declaration for exemption of zakat shall be filed “before 30 days of Valuation Date i.e 1st Ramadhan-ul-Mubarik of the preceding year” and in the case of “Non-refundable advance of Provident Fund” declaration should be filed before 30 days from date of payment of claim. In other words. if person suomi declaration alongwith the claim with request in the ZCO that his claim may be paid after 30 days with cut deduction of zakat, see in the provision of the rules crete muclied with. Thus, in such cases, za should not be recovered.Anex/P.257 dated 8-11-2005, so that rules position on the subject case may be clarified at their end to stream line the procedure for deduction and refund of Zakat against such claims. As evidence from the correspondence exchanged, the case was sent to the Ministry of religious Affairs Zakat and Ushr Islamabad by them..
- In response thereto. The Ministry of Religious Affairs Zakat and Ushr Islamabad clarified under his letter No. CE 28 B (501) /2005/1335 dated 21″ December 2005 (copy enclosed) that the matter has been examined. It is held that there is no ambiguity in the law & rules with regard to period of filing of declaration (CZ-50) which shall be filed 30 days preceding the Valuation Date as provided in Clause 3 (a) of Section I of Zakat and Ushr Ordinance 1980 read with rule 20 of Zakat Collection & Refund Rules, 1981 in both cases either it is a final payment of Provident Fund or non refundable advances. As regard claim of refund of Malik Liaqat Ali, declaration filed on 14-01-2005- was not valid for preceding Valuation Date i.e. 16-10-2004, hence, deduction of Zakat made by CLA (DS) Lahore from the claim of non-refundable advance of the above officer, is confirmed and does not liable for any refund in the light of clarification issued by above Ministry.
- All the similar nature of the cases, in your audit jurisdiction may please be dealt with accordingly in the light of above clarification made by the Ministry of. Religious Affairs Zakat and Ushr Islamabad.
