Provident Fund is deducted from our salaries and given back to us after retirement. Will Zakat be due on the amount that is deducted from our salaries and saved in the name of this fund? Furthermore, since this amount in not accessible to us, who will pay its Zakat? The company also loans us money from this fund, which is also taken back from us by them making small deductions from our monthly salary.
The amount that is deducted from an employee’s salary and saved as “Provident Fund”, is indeed part of that which is given to him in exchange of his services (i.e. part of his salary), which has not yet come into the employee’s possession. This amount is a debt owed to employee by the company or employer. The jurist has referred to this type of debt as دین ضعیف (a weak debt). The ruling for such debts is that as long as it is in the hands of the debtor (i.e. the company or employer, in this scenario, who will grant the amount saved as Provident Funds to the employer at the time of retirement), Zakat will not be due on it. However, the receiver of the debt (i.e. the employee in this scenario) will pay Zakat on this amount on his future Zakat date since it came into his possession on the day it was paid off to him. However, Zakat will not be due on this amount for the years that have passed before receiving it.
And Allah knows best.