Using interest money for payment of property tax

Using interest money for payment of property tax

By: Dr Mohammad Akram Nadwi
Oxford

Question:
I am receiving interest income from my bank deposits. Normally, I dispose of this money by giving it to the needy without any intention of seeking reward. I would like to know whether it is permissible for me to use this interest money to pay my property tax to the Government of India. The property tax comprises various components, such as the annual amount, late payment fine, and interest on delayed payment.

Answer:
In Islam, riba (interest or usury) is strictly prohibited, as stated in the Qur’an (e.g., Surah al-Baqarah, 2:275–279) and the Prophetic traditions. The prohibition arises from the exploitative nature of guaranteed financial gain without corresponding effort or risk. Thus, any income derived from riba is considered impure and cannot be used for personal benefit.

When riba has accrued, particularly in modern banking systems where it cannot always be avoided, it should be disposed of without seeking reward, as it does not constitute sadaqah (charity). Scholars advise that such funds be directed towards public welfare or to assist the poor and needy, as a means of purification rather than charitable giving.

Property tax, levied by the Government or municipal authorities, is a personal civic obligation arising from property ownership. Paying it ensures one’s continued lawful possession and prevents penalties, meaning the benefit ultimately returns to the individual. Therefore, using riba-derived funds to pay property tax (including the annual tax, fines, or interest on arrears) would amount to indirect personal gain, which is not permissible.

Accordingly, property tax and related liabilities should be paid from lawful (halal) income, while interest money should be disposed of through avenues of public welfare or assistance to the needy, without expectation of reward, as an act of moral cleansing.

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