Zakat Could Be Tax Deductible: Here Are the Rules
Jakarta, CNBC Indonesia - As the end of Ramadan approaches and the Idul Fitri prayers begin, Muslims rush to fulfill the obligation to pay zakat, a tenet of Islam. This year, the holy month of Ramadan coincides with the submission period for the Annual Tax Return (SPT Tahunan), which closes on 31 March 2026. As is known, zakat payment is also a component that must be included in the annual tax return.
Did you know that zakat payments can reduce the tax burden? This provision is set out in Minister of Finance Regulation No. 114 of 2025, which provides that zakat or obligatory religious alms may be deducted from the gross income of a taxpayer, provided the specified conditions are met. The regulation states that zakat that is not deductible is zakat paid to zakat bodies established or approved by the government.
Payments of zakat that can be used to reduce a taxpayer’s PPh are also available to members of the public beyond Muslims. The mechanism is the same: zakat must be paid to a government-formed or government-approved zakat body.
The latest list of such bodies can be seen in the attachment of Director General of Taxes Regulation PER-3/PJ/2024 on Bodies or Institutions Formed or Endorsed by the Government Designated as Recipients of Zakat or Obligatory Religious Donations that Can Be Deducted From Gross Income. PER-3 lists 317 bodies/institutions formed or endorsed by the government that are designated as recipients of zakat or obligatory religious donations deductible from gross income, up from 20 bodies/institutions in 2011.
The following categories of zakat can be used as a tax deduction as listed on the BAZNAS website:
- Obligatory zakat
This is regulated in Government Regulation No. 60/2010. This means zakat that can be deducted from tax is zakat al-fitr.
- Zakat paid through Baznas or LAZ (Lembaga Amil Zakat)
Zakat that can be deductible from income tax is zakat paid to government-formed/endoresed zakat recipients in accordance with Article 22 of Law No. 23/2011, which reads:
“Zakat paid by muzaki to BAZNAS or LAZ may be deducted from taxable income.”
Article 23 of this regulation further states:
“Baznas or LAZ must provide a zakat deposit receipt to every muzaki (donor), and the receipt is used to offset taxable income.”
A zakat payment receipt must include:
Full name of the taxpayer and the taxpayer identification number (NPWP)
Amount paid
Date of payment
Name of the zakat body; or government-formed religious institution
Signature of an official of the zakat body or government-approved religious institution on the receipt for direct payments
Bank validation on the receipt when payment is via bank transfer.