Does Zakat Apply to Money in a Shared Savings Pool or Kitty?

Yes, Zakat applies to money in a shared savings pool or kitty, such as those found in committee schemes. 

These schemes typically involve pooling funds from a group of individuals, which are then lent out to participants at various intervals. Since the money in these schemes is considered part of an individual’s wealth, it is subject to Zakat.

Here’s a breakdown:

• Zakatable Funds: 

Money placed in a kitty or committee scheme is counted towards one's Zakatable assets. If the value of the funds meets the Nisab threshold, Zakat is due when the funds have been held for a full lunar year.

• Deduction for Loans: 

Any money owed to the scheme, such as loans given to participants, can be deducted from the total value of the Zakatable assets. This is because these amounts are not accessible for personal use until they are repaid.

• Calculation of Zakat: 

Only the accessible or available balance (the funds an individual can use or withdraw) is considered when calculating Zakat.

Hence, Money invested in a shared savings pool or kitty scheme is subject to Zakat as it forms part of an individual’s wealth. Amounts owed to the scheme can be deducted from the Zakat calculation, ensuring only the available funds are considered.

And Allah knows best!