Date : 14-06-2022

Question :

I`m a tradesman and don`t know how to calculate the Zakah due on trading items. Hawl (Zakah year) has lapsed only over some of the goods; some have been damaged and I might return them to the owner. Sometimes, I pay for goods in advance and, sometimes, by installments. I also have money in my bank account, in addition to cash and uncashed checks. Also, people owe me money; some of which are repayable and some are unrepayable. I`m also indebted and have taxes and expenses to pay. I have vehicles, such as cars, trucks and the like, real estate; some are for trade and some aren`t, and some I rent to generate income. This is in addition to my own private money, car and house and other items not set for trade. My wife has also adornment gold, in addition to gold for saving. What is the ruling of Sharia on all of this?


The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.


Trading merchandise are liable for Zakah (Alms/obligatory charity) after they reach Nissab (Minimum amount liable for Zakah) and one full lunar year lapses over its possession. Therefore, the tradesman must pay the Zakah of the trading merchandise in the currency with which he had bought it and according to the wholesale market price on the day in which the Zakah is due. This is regardless of whether the value of the merchandise is more than the price for which it was bought or decreased during the Hawl (Zakah year). He also adds to this sum other trading money, then calculates the due Zakah for the total.


As for the debts that others owe the tradesman, they are also added to the trade money. However, debts due on rich debtor are liable for Zakah at the end of the Hawl, even if the creditor didn`t receive them, because they are tantamount to the money kept with someone else.


As for the unrepayable debts or those due on a procrastinator, their Zakah for the past years is to be paid-according to the Shafie scholars-once it is collected, which is more prudent and clears the person from liability. However, according to the Maliki scholars, the Zakah of these debts is to be paid for one lunar year only and upon their collection, and this is easier for the people. It is stated in Mawahib Al-Jaleel, Vol.2:P.321: "Debts of trade are liable for the same Zakah of the trading merchandise where a non-forestaller evaluates them along with the items set for trade and pays their due Zakah. However, a non-forestaller pays their Zakah only once and upon their collection."


As regards the bank loan, it is money completely owned by the loan taker and may do with it as he likes in terms of selling, buying, and gifting, in addition to growing it through trading and Mudarabah and the like. Having debts doesn`t relieve the debtor from the obligation of paying Zakah because Zakah pertains to the property itself while the debt is the liability of the debtor, so neither hinders the other. This is also true because of the general meaning of the Sharia texts about Zakah, so whenever the wealth reaches Nissab and one lunar year passes over possessing it, paying the due Zakah is an obligation.


In addition, debts that the tradesman owes to others don`t relieve him from paying Zakah because they don`t hinder him from using his money and growing it. The same goes for the due taxes. If these were paid within the Hawl, then they are considered part of the expenses and not liable for Zakah. However, if they weren`t paid before the end of the Hawl, they are liable for Zakah.


Zakah on trade pertains to the trading merchandise and not items that the tradesman possesses for facilitating his business, such as cars, trucks, computers, personal car, and rented property. This isn`t trade money; however, the revenues of the rented property are liable for Zakah once it reaches Nisaab and a full lunar year lapses over its possession. In addition, it is easier for the tradesman to calculate the revenues of the rented property along with the trade profits, capital and the due debts of the rich debtor, and other aspect of income, then pay their Zakah at a specific day of the year after they meet the conditions of Zakah.


Moreover, adornment gold isn`t liable for Zakah unless it exceeded the customary amount. As for the saved gold, it is liable for Zakah after meeting the conditions of Zakah stipulated in Sharia.


In conclusion, a tradesman is required to evaluate the items of merchandise at the end of the Zakah year where he calculates the items set for trade according to their wholesale price at the time when their Zakah is due. He should also add to that the cash that he has, the debts that others owe him, as explained earlier, and the debts he owes to others. If the total reaches Nisaab (85 grams of 24-carat gold), then (2.5%) of that total must be paid as Zakah. And Allah the Almighty knows best.