Configuring Deductions
  • 20 Feb 2024
  • 2 Minutes To Read
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Configuring Deductions

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Article Summary

Deductions within the profit-sharing framework include various categories such as Mudarib, risk, administration fees or others. Multiple deductions can be associated with a Pool. and the sequence for treating these deductions in profit sharing calculations can be managed at the Pool level.

It's possible to create a Pool without any Pool category. Additionally, a Pool an be created with a 0% or 0 amount for a Deduction category, specifically if there's a requirement to establish a deduction category solely for Mudarib share purposes.

You can:

  • Create different deduction categories by selecting Create Deduction.
  • You can add deduction categories and specify an effective date for each category by accessing Modarib Share Settings.
  • Edit existing options by selecting the Actions button and then choosing Create New Version.
  • View existing options by selecting the Actions button and then opting for View.
  • Copy existing options by selecting the Actions button and then choosing Create New Deduction from this.
  • Deactivate existing options by selecting the Actions button and choosing Deactivate.
  • Delete existing options by selecting the Actions button and then opting for Delete.

Note: First, establish a deduction GL account, then define the deduction category, configure the Mudarib Share Settings and finally update the processing sequence at the Pool level.

Deduction

Deductions parameters

ParameterDescriptionRequired
Effective dateThe date when the change should be implemented.YES
NameThe name of the deduction category. Include at least 3 or more letters or numbers, symbols cannot be used.YES
StatusWhether the deduction category is currently active or inactive.YES
DescriptionDocument additional details or context related to the deduction.NO
Modarib shareOne of the deduction categories must pertain to Mudarib shares. This account will be utilised for modifications in calculated interest rates and the percentage of utilisation.YES
TypeIdentifies the specific type of profit-sharing to use (Percentage or Amount). These types show how to calculate the amount for the Deduction category from Gross profit. The deduction can be either positive or negative. A negative deduction decreases the distributable profit, while a positive deduction increases it.YES
Default percentage / amountSets the initial percentage for the deduction rule.YES
Minimum percentage / amountSets the minimum percentage for the deduction rule.YES
Maximum percentage / amountSets the maximum percentage for the deduction rule.YES
Associated poolsPools that are associated with the deduction. The sequence of Deductions categories in the Pools are very important, as they show priorities of calculations.YES

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