THE long-standing legal and religious question of whether heirs are required to pay outstanding income tax left by a deceased individual has been settled, with Malaysia’s highest Islamic advisory body ruling that such payment is compulsory.
Berita Harian reported on Sunday that the Jawatankuasa Muzakarah of the Majlis Kebangsaan Bagi Hal Ehwal Agama Islam Malaysia (MKI) has decided that heirs are obligated to settle any outstanding income tax of a deceased Muslim, treating it as a debt that must be cleared from the estate before inheritance distribution.
The ruling was confirmed by the chairman of the MKI Muzakarah Committee, Datuk Dr Nooh Gadut, who said the matter was deliberated during the committee’s 122nd meeting.
“Muzakarah has discussed and decided that heirs are obliged to pay the outstanding income tax of a family member who has passed away,” he told Berita Harian.
“Muzakarah is of the view that the deceased’s outstanding income tax constitutes a debt that must be settled by the heirs using only the assets of the deceased,” he added.
The issue had previously drawn public attention in May 2023 when the Inland Revenue Board (LHDN) reiterated that heirs bear full responsibility for managing the income tax affairs of a deceased taxpayer.
Section 74 of the Income Tax Act 1967 stipulates that outstanding tax liabilities are not automatically extinguished upon death.
At the time, then LHDN chief executive officer Datuk Dr Mohd Nizom Sairi said official notices would be issued to the legal representative or estate administrator of the deceased to demand settlement of unpaid taxes.
He said LHDN was required to identify a lawful representative or estate administrator where assets were involved, as outstanding tax revenue could not be left unresolved.
“Outstanding tax liabilities of a deceased taxpayer will only be written off after a certain period, once all relevant procedures have been carried out,” he was quoted as saying.
The matter had previously generated differing views among state muftis on whether unpaid income tax constituted a religious obligation under Islamic law.
Some scholars argued that heirs should promptly “release the burden” of the deceased by settling all debts from the estate before faraid distribution, while others contended that tax was a governmental obligation rather than a requirement prescribed by syariah.
The then Mufti of Penang, Datuk Seri Dr Wan Salim Wan Mohd Noor, was reported as saying that payment of outstanding tax was permissible, citing a hadith narrated by Imam At-Tirmidhi which states that the soul of a believer remains suspended by his debt until it is settled.
Former Negeri Sembilan mufti Datuk Mohd Yusof Ahmad likewise said all debts of a deceased person must be settled before inheritance is distributed.
“Debts owed to anyone, including government agencies, are still debts that must be settled. For example, debts to PTPTN must be paid,” he said.
However, the then Mufti of Pahang, Datuk Seri Dr Abdul Rahman Osman, had taken a different view, arguing that heirs were not required under Islamic law to pay income tax arrears left by the deceased.
“In this matter, it is not a religious issue, there is no syariah obligation. Income tax is not prescribed in Islam. Islam obliges zakat, that is the difference. If zakat is unpaid, heirs must settle it, but tax is not imposed by syariah,” he said.
Following the debate, the MKI Muzakarah Committee undertook a detailed syariah study and consulted relevant stakeholders before deciding at its 122nd meeting in October 2023 that outstanding income tax left by a deceased Muslim must be paid, bringing clarity and uniformity to the issue nationwide. - January 25, 2026
