Fatwa ID: 09117
Answered by Muftiyah Humairah Badshah
Question:
Assalamu Alaikum wa Rahmatullahi wa Barakatuh,
I hope you are well. I have the following questions:
- Is it permissible to declare oneself as a tax filer by showing assets or information that is not fully accurate, especially for visa or documentation purposes?
- If a person legally reduces their tax by showing genuine expenses and proper records, is this permissible in Islam?
- If a person has little or no savings but still has to pay a high amount of tax, should they pay the full tax, or is it permissible to minimize it through legal expense declarations?
- According to the Qur’an and Sunnah, should tax returns be completely truthful and accurate in all cases?
- Is it permissible and advisable in Islam to become a tax filer, or is it better to remain a non-filer?
- Is it permissible to buy items through a conventional bank credit card with “0% markup” but a one-time processing fee?
- Is it permissible to use or keep a conventional credit card?
- Is it permissible to keep money in a bank account for salary and international payments?
- Is Islamic financing (e.g., bike leasing from Meezan Bank) permissible, and how can one ensure it is truly free from Riba?
I kindly request your guidance according to Shariah.
JazakAllah Khair.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
You must be honest and not lie when filing any taxes that are legally required of you. You must also avoid riba when using credit cards and other financial services.
The Prophet (ﷺ) said: ”Truthfulness leads to piety, and piety leads to Paradise, and a man keeps on telling the truth until he becomes a truthful person. Falsehood leads to wickedness, and wickedness leads to the Fire, and a man may keep on telling lies until he is written before Allah a liar.”[1]
A Muslim must not break the law of their country under normal circumstances, such as when paying their taxes.[2] Lying in general is an evil act which a believer must avoid.[3]
Therefore, regarding your tax questions the answers are as follows:
1) It is not permissible for you to deliberately show inaccurate assets or information, as this will be illegal.
2) It is permissible to use legal avenues to reduce your tax, as these methods are sanctioned and legal.
3) If the expense declarations are legal then it is permissible to use them, regardless of the amount of savings you possess.
4) As mentioned earlier, according to the Qur’an and Sunnah lying is an evil act and a sin which a believer must refrain from in most circumstances. As part of this, you must not lie on your tax returns and they must be truthful and accurate.
5) Whether or not you should become a tax filer is contingent on numerous circumstances. If it is illegal for you not to become a tax filer, you must become a tax filer. If you have a choice between two legal options, then there are many factors to consider, such as your country of residence and which country you will pay taxes to if you become or do not become a tax filer, as well as your financial situation. You should consult a qualified local scholar and a financial advisor or other legal help for advice on whether becoming a tax filer is the right choice in your situation.
As for your other questions, know that riba (interest) is impermissible in Islam.[4] Riba in financial services usually occurs in the form of fees on monetary debts over time, which is a kind of riba wherein money at an earlier time is lended in exchange for more money at a later date.[4]
Jabir [﵁] said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: “They are all equal.” [Sahih Muslim 1598][5]
Therefore, regarding your general financial questions the answers are as follows:
6) Processing fees and other service fees are charged in exchange for the services provided by the bank, and so are a permissible charge in principle. They are not riba, as riba would be in late fees and other interest charges on debts and lended money. However, you must be cautious regarding these one-time processing fees, especially when the fees are charged based on a percentage of the money used rather than a flat fee (and no international payments are being made which would justify higher fees), as these charges can in reality be profit upon the lended money itself rather than payment for services rendered. Therefore, you should avoid percentage-based processing fees wherever possible in situations where deferred payments and the lending of money is occurring, such as when buying items using a credit card.
7) Most credit cards do not necessarily involve riba in every case: if a person avoids ever delaying repayment and causing interest to be charged, then they can have and use a credit card without ever paying riba. Due to this, owning a credit card would be permissible for a person who has properly analysed their financial situation (ideally with the help of a qualified Muslim financial advisor) and is predominantly sure that they will be able to meet every payment deadline without ever falling into the sin of riba.[6] However, the possibility of paying riba always exists in credit cards, and a human being can never be certain of the future. Also, acquiring the credit card involves an agreement to pay interest, which is suboptimal even if no interest is ever actually paid. Therefore, if it can be avoided, you should use other types of payment cards instead, such as debit or prepaid cards, or even virtual cards and wallets which use contactless payment systems.
8) Yes, it is permissible to keep money in an interest-free bank account for reasons such as salary and international payments. However, you must not use bank accounts which accumulate interest if there are interest-free accounts available to you. If you are truly unable to avoid accumulating interest, then know that this interest would be considered as illicitly-obtained wealth and the primary recourse is to return the money back to its rightful owner.[7] If that is not possible, then the money must be donated in charity.[8]
9) Islamic financing is a wide and complex field, and so no blanket judgement can be issued regarding all such services. In general, you must investigate each financial service for qualified and trustworthy accreditation, including verified and well-qualified scholars issuing up-to-date certification. You must also carefully check the service and all terms and conditions before involving yourself with the service. If you are interested in a particular service, consider consulting a qualified local scholar regarding that service in particular with all the relevant documents from the service provider.
Regarding bike leasing from Meezan Bank specifically, you are presumably referring to the ‘Meezan Apni Bike’ service for financing motorcycles. This service is advertised as Shariah-compliant through the use of Musawamah (bargaining for a price), which is a permissible type of transaction.[9] Services from Meezan Bank in general are certified by a Shariah board chaired by Mufti Muhammad Taqi Usmani, a trusted figure in Islamic finance, and the most recent Shariah Board Report dated February 8, 2025 specifically mentions the Apni Bike service as being in line with Shariah guidelines.[10] Due to this, it can be safely assumed that the Apni Bike service is Shariah-compliant, although for an extra level of certainty you may wish to consult a qualified local scholar in Pakistan regarding the service.
In conclusion, you may use any legal permissible avenues available to avoid taxation, but you may not lie or break the law of your country. Credit cards, bank accounts and Islamic financing are permissible to use provided that you avoid riba and any other impermissible elements. As a general rule, however, you should leave places of doubt and potential riba wherever possible, and investigate all financial contracts carefully and thoroughly for Shariah compliance.
Only Allah ﷻ knows best.
Written by Muftiyah Humairah Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
حَدَّثَنَا عُثْمَانُ بْنُ أَبِي شَيْبَةَ، حَدَّثَنَا جَرِيرٌ، عَنْ مَنْصُورٍ، عَنْ أَبِي وَائِلٍ، عَنْ عَبْدِ اللَّهِ ـ رضى الله عنه ـ عَنِ النَّبِيِّ صلى الله عليه وسلم قَالَ “ إِنَّ الصِّدْقَ يَهْدِي إِلَى الْبِرِّ، وَإِنَّ الْبِرَّ يَهْدِي إِلَى الْجَنَّةِ، وَإِنَّ الرَّجُلَ لَيَصْدُقُ حَتَّى يَكُونَ صِدِّيقًا، وَإِنَّ الْكَذِبَ يَهْدِي إِلَى الْفُجُورِ، وَإِنَّ الْفُجُورَ يَهْدِي إِلَى النَّارِ، وَإِنَّ الرَّجُلَ لَيَكْذِبُ، حَتَّى يُكْتَبَ عِنْدَ اللَّهِ كَذَّابًا ”.
Sahih al-Bukhari (https://sunnah.com) b.78, ch.69, no.121 (6094)
[2]
دَخَلَ مُسْلِمٌ دَارَ الْحَرْبِ بِأَمَانٍ حَرُمَ تَعَرُّضُهُ لِشَيْءٍ)مِنْ دَمٍ وَمَالٍ وَفَرْجٍ (مِنْهُمْ)إذْ الْمُسْلِمُونَ عِنْدَ شُرُوطِهِمْ
Radd Al-Muhtaar (Halabi ed., https://shamela.ws) v.4 p.166
[3]
حَدَّثَنَا يَحْيَى بْنُ مُوسَى، حَدَّثَنَا عَبْدُ الرَّزَّاقِ، عَنْ مَعْمَرٍ، عَنْ أَيُّوبَ، عَنِ ابْنِ أَبِي مُلَيْكَةَ، عَنْ عَائِشَةَ، قَالَتْ مَا كَانَ خُلُقٌ أَبْغَضَ إِلَى رَسُولِ اللَّهِ صلى الله عليه وسلم مِنَ الْكَذِبِ وَلَقَدْ كَانَ الرَّجُلُ يُحَدِّثُ عِنْدَ النَّبِيِّ صلى الله عليه وسلم بِالْكِذْبَةِ فَمَا يَزَالُ فِي نَفْسِهِ حَتَّى يَعْلَمَ أَنَّهُ قَدْ أَحْدَثَ مِنْهَا تَوْبَةً . قَالَ أَبُو عِيسَى هَذَا حَدِيثٌ حَسَنٌ .
Jami` at-Tirmidhi (https://sunnah.com) b.27, no.79 (1973)
[4]
ذَكَرَ الرِّبَا، لِأَنَّ فِي كُلٍّ مِنْهُمَا زِيَادَةً إلَّا أَنَّ تِلْكَ الزِّيَادَةَ حَلَالٌ، وَهَذِهِ حَرَامٌ
…
تَعْرِيفُ رِبَا الْفَضْلِ، لِأَنَّهُ هُوَ الْمُتَبَادَرُ عِنْدَ الْإِطْلَاقِ، وَلِذَا قَالَ فِي الْبَحْرِ فَضْلُ أَحَدِ الْمُتَجَانِسَيْنِ. نَعَمْ هَذَا يُنَاسِبُ تَعْرِيفَ الْكَنْزِ بِقَوْلِهِ فَضْلُ مَالٍ بِلَا عِوَضٍ فِي مُعَاوَضَةِ مَالٍ بِمَالٍ
فَإِنَّ الْأَجَلَ فِي أَحَدِ الْعِوَضَيْنِ فَضْلٌ حُكْمِيٌّ بِلَا عِوَضٍ، وَلَمَّا كَانَ الْأَجَلُ يُقْصَدُ لَهُ زِيَادَةُ الْعِوَضِ كَمَا مَرَّ فِي الْمُرَابَحَةِ صَحَّ وَصْفُهُ بِكَوْنِهِ فَضْلَ مَالٍ حُكْمًا
Radd Al-Muhtaar (Halabi ed., Daar Al-Fikr, https://shamela.ws) v.5 p.168
[5]
عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ
Sahih Muslim (https://sunnah.com) b.22, ch.19, no.132 (1598)
[6]
اليَقِيۡنُ لَا يَزُوۡلُ بِالشَّكِ
Al-Qawaaid Al-Fiqhiyyah (Daar Al-Tirmidy ed.) p.15
لَا عِبۡرَةَ لِلتَّوَهُّم
Al-Qawaaid Al-Fiqhiyyah (Daar Al-Tirmidy ed.) p.25
[7]
الرِّبَا فَيَجِبُ رَدُّ عَيْنِ الرِّبَا لَوْ قَائِمًا
Radd Al-Muhtaar (Halabi ed., Daar Al-Fikr, https://shamela.ws) v.5 p.169
[8]
يَتَصَدَّقُوا بِهِ؛ لِأَنَّ سَبِيلَ الْكَسْبِ الْخَبِيثِ التَّصَدُّقُ إذَا تَعَذَّرَ الرَّدُّ
Kitab Al-Bahr Al-Raa’iq (Daar Al-Kutub Al-Islaamiyyah, https://shamela.ws) v.8 p.229
[9]
https://www.meezanbank.com/apni-bike/
الْبَدَلِ يَتَنَوَّعُ إلَى أَرْبَعَةِ أَنْوَاعٍ مُسَاوَمَةٌ وَهُوَ بَيْعٌ بِالثَّمَنِ
…
الَّذِي يَتَّفِقَانِ عَلَيْهِ
Al-Fataawa Al-Hindiyyah (Daar Al-Fikr, https://shamela.ws) v.3 p.3-4
[10]
https://www.meezanbank.com/wp-content/themes/mbl/downloads/Shariah-Certificate-for-MBL-Products.pdf
https://www.meezanbank.com/wp-content/themes/mbl/downloads/SAR2024E.pdf