Understanding the Legality of GP Fund and Employee Options Fatwa by Darul Ifta, Jamia Uloom-e-Islamia Allama Muhammad Yousuf Banori Town

Fatwa Number: 144305100829

In the case of the monthly deduction from a government employee’s salary for the GP Fund, if the government enforces this deduction and the employee does not have the authority, and an additional amount is added to the GP Fund at an annual interest rate of eight percent, and the government also allows employees the option to either accept or decline this increase, granting them the choice to accept or decline. This gives the employees the discretion to not take the interest and save it. On the other hand, regarding interest on the GP Fund from Banori Town Karachi, it is stated that the employee does not have the choice.

The question is whether, despite having the option to accept or decline, is it permissible for an employee to take the additional amount from the GP Fund?

It should be clear that the legality or prohibition of the GP Fund’s permissible and impermissible aspects relies on the fundamental principles of forced and discretionary deductions. If the deduction from the GP Fund is enforced upon the employee, then any additional amount received beyond the deducted sum is impermissible for the employee due to its resemblance to riba (usury). However, if this deduction is voluntary, without compelling the employee, then the additional amount received is not considered impermissible for the employee but rather a donation. Therefore, in the latter case, it is permissible for the employee to take this additional amount.

Regarding the decision of whether the employee wishes to take this increase or not, that choice rests with the employee. The previous ruling will not be affected by this choice. The fundamental principle of the matter will remain the same. In other words, if the initial deduction was forced, then any amount received by the employee will be considered a donation, and the permissibility or impermissibility of receiving the amount will not be determined by the choice of receiving or not receiving, due to the choice of receiving or not receiving not being a reason to label the amount as impermissible. However, if an employee, by utilizing this choice, returns this increase, it is undoubtedly an act of piety and commendable.

(Source: Jawaahir al-Fiqh, Provident Fund, Zakat, and Interest Issue, p. 258, Publisher: Maktaba Darul Uloom Karachi)

Only Allah knows best.

Fatwa Number: 144305100829

For more clarity, please visit the official website of Darul Ifta:


Issued by: Darul Ifta, Jamia Uloom-e-Islamia Allama Muhammad Yousuf Banori Town

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