Getting a loan with interest to reduce taxes

30-11-2005 | IslamWeb

Question:

I am living in India. I have to pay very high taxes every year. This amount is deducted from my salary and I have no control over it. I have no house of my own. But if I take a home loan then I can reduce this tax. So do I keep paying high taxes every year with no benefit or take a loan and reduce the tax. The tax which we pay are misused by the corrupt government officials. Also if I take a car on loan then my taxes are reduced further. Should I go for a loan or pay high taxes.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.

 

It is not permissible for you to get a loan with Ribaa (interest or usury) so that you will be able to reduce high taxes. Borrowing money with a profit [interest] is Ribaa, so it is forbidden to go ahead with it except in case of a necessity, and your case is not a necessity.

For more details, please refer to Fatwa 90430 which itself will refer you to other Fataawa as to when and when not it is permissible to avoid taxes.

Allaah Knows best.