Is it haram to earn interest on saving?

Riba, which means interest, is haram (Prohibited) in Islam at any cost. It is one of the fundamental teachings of Islam to be away from any situation related to interest. Prophet (S) has strictly warned to avoid all situations that will guide to interest. Holy Quran forbade interest in four verses. The Quran considered the people who are taking interest as they are calling for war against Allah and his Prophet (S).

Islam prohibited all types of interest as it will be a reason for social inequality and social problems. Islam prohibited taking, giving, witnessing, and other support of interest to teaching us it will destroy the social structure. This religion showed us the pure way of income and forbade other unhuman ways of earning money.

As Allah states in Holy Quran. 2:275 as for those who devour interest, they behave as whom Satan has confounded with his touch
2:278 O believers fear Allah and give up outstanding interest if you are a true believer.

There are many ways of earning money, but all must be through the right path. The right path in Islam is the way of halal. But to earn thorough money interest is haram as it is against the Haq or right of one’s fellow being.

What can interest money be used for in Islam?

If a Muslim is compelled to take interest money as the bank gave him some amount for his savings, then what do they have to do with that money? Can they use it for different purposes? If it is allowed to use then where they can use it? These are the common questions asked by many regarding interest who are compelled to take interest in unavoidable situations. As Islam teaches interest is haram (prohibited) without any doubt if it is given by bank also without our intention.

Interest money can be used for public welfare and cannot be used for personal needs. There are many needy people who are facing different kinds of financial problems. But this money can be used for the needy and poor as if they need for their medical needs. And it is taught by great Islamic scholars that interest money can be used for the public good. For example for the construction of roads, digging the wells and construction of public toilets. But if the person who is taking interest in getting any benefit from these things these all activities also are prohibited.

Can I use interest money to pay tax?

If the answer is “YES” there is a chance of Fitnah (unrest) as it will be encouging to open a bank account to get interest to pay tax. The question Can I use interest money to pay tax? It is relevant only if there is not another option in front without opening an interest based bank account. That means if there isn’t any Islamic banks which is run without interest.

There are different situations of paying tax. Some countries are forcefully collecting tax from their citizens. There won’t be another way in front of citizen without paying interest. But even in this situation also to use interest money to pay tax is not allowed as it will be like getting some benefit from the haram and it will be a reason for guiding the believers to haram. If someone is using the interest money for paying tax it is coming like he / she is using that for personal benefit and any activity by interest is prohibited if it is for personal gain.

Can we give interest money to poor?

Basically it is not permissible to deposit money in an interest bearing bank account according to Islamic teachings. But if there is not another option without dealing with interest based banks then one can that interest money for poor and needy. It is better to transfer the amount from the same account where the interest amount was deposited instead of giving the same amount from another account as there would be confusion. But if the giver expecting any benefit by giving this amount it will be haram as he is relating with personal gains here.

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