Q: In what avenues can interest monies be disposed? I am aware that they need to be disposed without intention for reward. Can they be given to poor Muslim families or Muslim organisations? Do you have to disclose to the family or organisation that it is interest money? Can it be used to pay traffic fines, tax penalties and interest on taxes?
A. Yes interest money has to be disposed of without the intention of reward. It can be given to needy Muslims and they do not have to be told that it is interest money.
If it is given to an organisation, they must be informed that it is interest so that they may dispose of it in the appropriate manner.
Interest can be used to pay traffic fines, all forms of tax, penalties on taxes, interest charged on tax, levies, rates, and any state taxation
You cannot use interest to pay lights and water accounts, nor is it permissible to use it to pay interest charged by banks, lawyers or other institutes besides the State.
Mufti Siraj Desai