Message No : 3Sr.No : 76/724
Question By : M.Z.CHIDA.

Sir
I am giving below a example I will be greatful in you can give me a advise on this.
1)
First year
Total rent for the year Rs. 1,62,000/-
Less tax etc Rs. 6,668/-
-------------------
Balance Rs. 1,55,332/-
Less annual house expenses Rs. 1,20,000/-
-------------------
Balance A Rs. 35,332/-
-------------------
Second Year :
Total rent for the year Rs. 1,62,000/-
Less tax etc Rs. 6,668/-
-------------------
Balance Rs. 1,55,332/-
Less annual house expenses Rs. 1,20,000/-
-------------------
Balance B Rs. 35,332/-
--------------------
Total Saving A+B Rs. 70,664/-
My understanding is that no Zakath is payable for the first year because the balance 35,332 is held for less than one year.
In the second year the total savings is Rs. 70,664 which consists of first year Rs. Rs. 35,332 and second year Rs. 35,332. The liability for Zakath is only on the first year saving of Rs. 35,332 because it has been held for more than one year but not on the second year saving of Rs. 35,332 because that has been held for less than one year. If in the third year the saving is Rs. 1,05,996 (Rs. 35,332 X 3). The Zakath liability will be on the two year saving of Rs. 70,664 which have been held for more than one year but not on the third Rs. 35,332 because it has been held for less than one year and no Zakath liability on the value of the property. Am I correct in my understanding?
Someone who is better informed than me told that Zakath is payable every year on Rs.1,55,332 which is the balance left after paying the annual taxes and my understanding as mentioned above is not correct and that Zakath has to be paid also on the value of the property.
2).
I have invested capital of Rs. 20,00,000 in business and the break up is as follows.
1. Office premises Rs. 10,00,000
2. Office equipment Rs. 3,00,000
3. Working funds Rs. 7,00,000

=======
20,00,000
=======
Net Profit made from the business Rs. 2,00,000.
I am told that Zakath is not payable on value of on Office Premises, Office equipment and working funds but Zakath is payable on the capital of Rs. 20,00,000. I do not understand this. The items on which that money has been spent as detailed above is exempt then how can Rs. 20,00,000 be liable for Zakath?
I am told that the profit of Rs. 2,00,000 is also liable for Zakath. This amout has been earned during the year and has not been held idle for one year. How can it be liable for Zakath?
3) Stock in trade:
I am told that Zakath has to be paid on Stock which is in possession at the end of the year. My understanding is that Zakath is payable only on that portion of stock which is in possession for more than one year and not on the entire stock.
4) Investment in Shares:
What is the Zakath liability about investment in shares and dividend income received on the shares? Has Zakath to be paid on investment and also dividend?

I request you to let me know which is correct - my view or my friend's view.
Wassalam

 

Reply By : Md. Obaidul;ah Qasmi
Designation : Mufti: ODI, MMERC, Mumabi 

Brother In Islam
Assalamualaikum wwb

1:
As I understood, your first sub-question concerns '' the condition of passing a year on the wealth on which Zakah is due'' .In the light of the Quran and Hadith, Zakah is Furz when Nisab (an amount fixed by Shariah) is held for one year. Shariah regards only the beginning and the end of the year. The wealth increases and decreases round the year. At the end of the year, all the wealth is liable for Zakah even if it was less any time during the year.
(Ahsan-ul-Fatawa 292 v 4)
(................ 265 v4)

If anyone did not pay Zakah of some years and wants to do, he should count the balances of every year and pay the Zakah of each year separately. The debt and the taxes will be reduced from the annual balance before giving Zakah. Only the debt and tax-free wealth is liable for Zakah.
(Fatawa Darululoom 336 v 6)

2:
According to Shariah, only 'Maal-e-nami' is liable for Zakah. ''Maal-e-nami'' means a wealth that grows and increases (which you called perhaps 'working fund'), the articles, which are traded in, etc. The working fund and the profits earning during a year are liable for Zakah (there is no condition for profits to be held for one year, all the growth during a year will be included in the main capital). The office premises and the office equipment have not any liability for Zakah. They did not come in the category of 'Maal-e-nami' and are not held for business. (Fatawa Daruuloom 90, 93, 132 v 6)

3:
Zakah has to be paid on all the stock (kept for business) which exists at the end of the year (even if it was bought at the end of it) The stock is also 'Maal-e-nami' and it will be included in the entire possession for paying Zakah. The condition of passing a year on the wealth is only for the amount of Nisab. If the Nisab remains safe throughout the year all the wealth in possession is liable for Zakah either it decreased or increased. (Ahsan-ul-Fatawa 265 v 4)

4:
Shares are also liable for Zakah on the portion of one's possession. This is the case with dividend income. One has to pay the Zakah of his shares and dividend income if one possesses the Nisab. (Fatawa Darululoom 140 v 6)
(Fatawa Rahimiah 111 v 3)

If the answers are not satisfactory, please, bother to ask again in clear and easy words.
Thank you
Markazulma'arif
Education & Research Center Mumbai 3

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