Wednesday | 21 February 2024 | 11 Shabaan 1445

Fatwa Answer

Question ID: 1660 Category: Dealings and Transactions
Can i Buy car on EMI (equated monthly instalment)

aslamaulaikum 

I want to know if I can buy a car on EMI   (for example  if the vehicle is for 8 lakhs ... the total cost will be 8lakhs 50 thousand if I pay with EMI)

I asked a few people about it and I got to know that if you show an EMI product , you won't be charged for income tax will this be ok to do 

if the product is already bought...... what should be done if it's not permissible 

jazakallah khair 

بسم اللہ الرحمن الرحیم

الجواب وباللہ التوفیق

Purchasing a vehicle through installments is not permissible as it involves an interest-based transaction. 

However, the scheme explained in your question to avoid income tax, will be permissible only if you desperately needed a car.

Secondly, you must have available with you the full amount of that car value.

Thirdly, that amount is certain to be taxed by the income tax authorities. Only then there is scope to buy in installments to avoid income tax.

In summary:  

  1. if the car is not a compulsory requirement.
  2. or its full amount is not available at hand.
  3. or if its total value is below the Income Tax threshold.

Then it is not permissible to buy it in installments under the pretext of income tax application. Either a halal form of purchase should be adopted, or a pre-owned vehicle be purchased instead, with available financial resources.

فقط واللہ اعلم واتم