If a Musi, after paying Hissa Amad on their full salary, contributes a certain amount each month toward a pension received upon retirement, is Chanda payable on that pension?

Yes, Hissa Amad is payable on pension income. Although a portion of the pension may represent contributions previously made by the individual after paying Hissa Amad, those contributions generally constitute only a small fraction of the total pension received. Hissa Amad is therefore ordinarily payable on the pension income.

If an individual wishes to exclude the portion representing their own previously contributed funds, only that specific amount may be deducted; Hissa Amad remains payable on the balance of the pension received.

The treatment of a 401(k) retirement plan is different. Employee contributions to a 401(k) are deducted directly from salary before it is received, and Hissa Amad is generally not paid on those amounts at the time of contribution. Therefore, when income is drawn from 401(k) savings upon retirement, Hissa Amad is payable on the full amount drawn each month.