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    Question ID: 32797Country: India

    Title: Regarding Question 31446. What is chit fund?

    Question: This is regarding the quesiton 31466. In answer you were asked about chit fund. What is chitfund and how it works? To form a chit fund, number of people(say 20) are joined together for number of months(say 20). There is person who is handling this chit fund called chit fund leader. Chit fund leader will do action for every month. Who is interested to take this money for that month will participate in that action. Who offer more discount will get that money. The chit fund leader will collect that money from all members and will give it to the person after deducting his commission. The same procedure will continue for 20 months. Who has already taken the money is not eligible for the next action. The calculation is like that. 20 persons, 1 lakh chit fund. 1st month action: 25000(discount) The person will get 100000-25000= 750000 all other person have to pay 800000/20 = 4000 (5000 is commision for the leader). Please answer the questions what I have asked in question no 31446.

    Answer ID: 32797

    Bismillah hir-Rahman nir-Rahim !

    (Fatwa: 1085/B=180/TB=1432) Chit fund is a private fund. You cannot pay government income tax from the interest received from it. The ruling is that haram money should be returned from where it comes. It is not lawful to give the interest of private fund in the government fund i.e. income tax.

    Allah (Subhana Wa Ta'ala) knows Best

    Darul Ifta,

    Darul Uloom Deoband, India