Question :

I am part of a rotating savings group (Jam‘iyyah) for a period of 20 months, and I pay 500 dinars each month. What is required of me regarding zakat, whether before or after receiving the lump sum?

The Answer :

All perfect praise be to Allah The Lord of the Worlds and may His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.                                                                                                                                                                                                                      Financial cooperatives such as these rotating savings groups are classified by jurists as a form of “constructive loan” (Al-Qard Al-Hukmi). This means that each participant in the group is considered a lender when paying their monthly contribution, and a borrower when receiving their designated turn to collect the pooled funds.                                                                                                                                                                                                          Accordingly, the rulings of zakat on debts apply in this case:                                                                                                                                                        If you have already received your turn at the beginning of the cycle, zakat is not due on the lump sum you received unless it reaches the nisab (minimum threshold) and a full lunar year (hawl) has passed while the money remained in your possession. As for the monthly payments you make afterward, they are merely repayments of a debt and thus not subject to zakat.                                                                                                                                                         If you have not yet received your turn, then you must calculate the total amount of contributions you have paid into the fund. Zakat is due on this amount—along with your other zakatable assets—once it reaches the nisab and a lunar year has passed since you first became liable for it. Debt does not nullify the obligation of zakat, as the general texts regarding zakat remain applicable. And Allah Almighty Knows Best.