When to Pay Zakat On Tabung Haji Savings

Since 1963, Muslims in Malaysia have been keeping their savings in their Tabung Haji accounts with the aim of saving up the money needed to perform Hajj and Umrah in Mecca. However, is zakat paid on these savings in the Tabung Haji accounts since it is a type of savings that usually exceeds the niqab zakat rate in a given year and most probably has, indeed, exceeded the haul period? Well, truth be told, there are actually reasons why you don’t need to pay zakat on this particular savings, but there are also particular reasons why you might need to pay zakat on Tabung Haji savings. 

Essentially, Muslims all over the world adhere to the same five pillars of Islam, the first of which is to recite the shahadah, the second is to perform obligatory prayers five times a day, the third is to fast for a month in the month of Ramadhan, the fourth is to pay zakat and fitrah, and the fifth is to perform Hajj and Umrah. For the fifth pillar of Islam, it is usually required only for those who are able and have the funds to do so. However, a Muslim should try his or her best to fulfill this fifth pillar of Islam according to their ability.

The Start of Savings in Tabung Haji

Normally, when needing a big amount of money for whatever reason, one would save up funds in the bank until they reach the required amount. However, for the purpose of performing the Hajj, most Muslims do not feel comfortable saving in conventional banks because of wariness of usury, or riba’. Therefore, to help Muslims in Malaysia save to meet the expenses required to perform Hajj and Umrah, an organisation called Perbadanan Wang Simpanan Bakal-Bakal Hajj (PWSBH) was established after being proposed by Professor Diraja Ungku Abdul Aziz, to the government of the Federation of Malaya on December 1959. On September 30, 1963, Malaysians began saving up for funds to perform the Hajj at PWSBH, which was later known as Tabung Haji in 1995. Therefore, with the existence of Tabung Haji, there are also savings that need to be charged zakat, especially if the amount of savings have exceeded the nisab and haul.

Nisab of Zakat on Tabung Haji Savings

The nisab of zakat for Tabung Haji savings is of course the same as the nisab of zakat for normal savings. In 2023 in Selangor (for July to December), the total nisab zakat savings is set as RM23,035. This is the minimum value of savings on which zakat must be paid. This value is based on the current price of 85 grams of gold, which is equivalent to 20 gold dinars.

Compare this value with the amount of savings in your Tabung Haji account, as well as the price of payment to perform the Hajj in 2023. According to a statement from Tabung Haji, the cost for a Malaysian to perform the Hajj in 2023 is RM30,850. This amount is certainly higher than the nisab zakat of the state of Selangor for the year 2023. However, if your savings have not reached this amount nor the value of the nisab, of course you do not have to pay zakat on your Tabung Haji savings. 

In fact, because the cost of performing Hajj is subsidised by the Malaysian government, many Malaysians do not even need to save as much as that amount. For the year 2023 – which can be used as a yardstick for the following few years, at least – the fee charged to a pilgrim from the B40 economic group (earning a household income of less than RM4,850 per month) is only RM10,980. Meanwhile, the payment for a pilgrim from the M40 economic group (with household income from RM4,851 to RM10,960) is RM15,980 per person to perform the Hajj. Finally, pilgrims from the T20 economic group have to pay the actual cost of RM30,850.

However, many Malaysians likely have more than the nisab value in their respective Tabung Haji savings. One of the reasons may be because it is not yet their turn to perform the Hajj according to the quota set by the Malaysian government together with the Saudi Arabian government. Among other reasons, this also happens when a depositor keeps a large amount of their savings in Tabung Haji. This is because the Tabung Haji Board will invest members’ savings in sharia-compliant investments with relatively high returns compared to normal savings. Therefore, if the amount of your savings has exceeded the nisab level for the year, then Tabung Haji savings zakat will be charged on it. Just like other property, the zakat rate for Tabung Haji zakat is 2.5%.

How to Pay Zakat on Tabung Haji Savings

Good news for owners of Tabung Haji savings, because you don’t have to make any zakat payments yourself for the savings in your account. This is actually because the Tabung Haji Board will make a collective zakat payment on behalf of all Tabung Haji savings members. In fact, every year investment profits are distributed to Tabung Haji depositors only after the Tabung Haji Board has paid zakat on behalf of the depositor. Therefore, your savings in your Tabung Haji account, including the profit rate shared by Tabung Haji, no longer needs to have zakat paid on it.

However, if you withdraw savings from your Tabung Haji account, and transfer this money to another savings account such as a bank account or unit trust fund, then you need to add this amount to other property or savings to calculate the amount of zakat that will be charged. After enough haul in one Hijrah year and reaching the nisab of zakat in that year, then it is necessary to pay zakat on savings or property zakat on the amount of your property, including the money from Tabung Haji’s savings earlier. This is because property zakat or savings zakat is applied to the total amount of property or savings you have.

Pay Zakat On Tabung Haji Online

If you withdraw a large amount from your Tabung Haji account, and this amount exceeds the nisab rate for the year, and it is kept privately until the haul period is sufficient, then 2.5% zakat rate must be paid on it. To pay zakat on property or savings easily, you can make an online payment here.

After obtaining the amount of zakat due, make sure to pay it to the legitimate zakat recipient. A recognised zakat institution is the right place to make correct and legal zakat payments. You can also make payments online on Bayar Zakat Malaysia.