A person ‘X’ is a manufacturer of clothing. He has the following assets and liabilities at the end of the Zakah year.
1. House 2,000,000
2. Furniture & Household Effects 25,000
3. Motor Vehicle 600,000
4. Gold 100,000
5. Diamonds 50,000
6. Cash 1,500,000
7. Stock-in-trades 1,000,000
8. Machinery 500,000
9. Receivable from others 800,000
10. Vacant Land 800,000
11. Bank overdraft 50,000
12. Trade creditors 500,000
13. Loans 700,000
Total Liabilities 1,250,000
Calculation of Zakah
Assets subject to Zakah Read more... (366 words, 1 image, estimated 1:28 mins reading time)
Zakah is payable on trading stock if their market value is equal to or more than the value of nisaab.
Definition of trading assets
Trading assets are those, which are purchased with the intention of resale or capital gain. Consequently, goods that have been purchased for personal use and not for the purpose of trade are not subject to Zakah, irrespective of their value. Similarly, goods (other than gold and silver) originally bought for personal use are not subject to Zakah if the purchaser subsequently intends to sell them for trade and had not intended it at the time of purchase. Once sold, however, their sale price would be subject to Zakah. Read more... (769 words, estimated 3:05 mins reading time)
The amount of Zakah payable is two and a half percent (2.5%), or 40th portion of:
1. the value of gold and silver if it is equivalent to nisaab or above it.
2. trading stocks, or its value at the time of obligation of payment of Zakah, if the stock is equal to nisaab.
3. cash on hand if equal to nisaab.
Zakah on gold and silver
• Gold and silver are subject to Zakah regardless of whether they are owned for personal use or otherwise if the weight thereof equals the prescribed nisaab and one year elapses thereon. Gold and silver are also always liable to Zakah irrespective of the asset type (gold bar, jewellery, ingot, coin etc.) Read more... (715 words, estimated 2:52 mins reading time)
Allah Ta’ala has put the most minimum burden of monetary obligations on Muslims so that paying Zakah becomes convenient for every sahib-un-nisaab Muslim.
Firstly, it is not obligatory to pay Zakah on every asset. Rather only those assets are the subject matter of Zakah that have the potential of growth or increase. These assets may be broadly classified as follows:
1- Trading assets.
2- Cash & Cash Equivalent (like prize bonds, Travelers Checks etc)
3- Gold and silver
4- Livestock (goats, sheep, cows and camels)
5- Agricultural output. Read more... (642 words, estimated 2:34 mins reading time)
Debts can be classified into two types:
- Receivables i.e. owed to oneself e.g. Loans given to somebody.
- Payable to others e.g. Money borrowed from somebody.
Debts receivable from others
There are different types of debt receivables. The ruling of Zakah for each kind of debt receivable is different from the other. It is therefore pertinent to first understand all these types of debts receivable.
Types of Debts Receivable
Imam Abu Hanifah (R.A.) has classified debts into three categories, namely: Read more... (506 words, estimated 2:01 mins reading time)
- Trade Debts
- Non-Trade Debts
- Other Debts
Lexically, the word Zakah covers two meanings.
2. Growth and increase
In the terminology of the Quran and Sunnah, Zakah is the portion of asset that is made mandatory to be spent in the ways specified by Allah Ta’ala.
Benefits of Zakah
Zakah has two straightforward benefits.
Firstly, the payer himself gets purified from inner germs of the spiritual diseases.
Secondly, Zakah helps those who are not able to fulfill their needs independently. For e.g. orphans, widows, handicaps, poor people etc.
Allah Ta’ala says in Surah Taubah: Read more... (383 words, estimated 1:32 mins reading time)
1. The following rules apply to items that are not sold by weight, but sold either by measurement or counting. If a particular type of item is exchanged for the same type of item, e.g. guavas are exchanged for guavas, or oranges are exchanged for oranges, or a fabric is exchanged for similar fabric, then in all these cases it is not a prerequisite for both the items to be equal. It is permissible to have some difference. However, it is wâjib for the transaction to be executed there and then. Read more... (669 words, estimated 2:41 mins reading time)
It is not permissible to eat or drink from gold and silver utensils. In fact, it is not permissible to forany purpose items that are made of gold or silver. For example, it is not permissible to:
(a) eat and drink from gold or silver utensils,
(b) clean the teeth with a toothpick made of gold or silver,
(c) sprinkle rose water with a gold or silver utensil which has been made for such a purpose,
(d) to keep surmah in a gold or silver utensil which has been made for such a purpose, Read more... (199 words, estimated 48 secs reading time)
11. You have taken someone else’s ring in exchange for your ring. Check if both have any stone or gem. If both the rings have a stone or gem, this exchange is permissible irrespective of whether the amount of silver in both the rings is equal, less or more. However, it is necessary that this exchange takes place in one sitting.
If both the rings are plain, i.e. without any stone, then the condition is that the silver will have to be equal. Even if there is a slight difference, it will be regarded as interest. Read more... (1091 words, estimated 4:22 mins reading time)
1. There are several ways of purchasing gold and silver. One is that gold could be purchased in exchange for gold or silver in exchange for silver, e.g. a person purchases gold with a gold coin which he has in his possession or silver with a silver coin which he has in his possession. In other words, the item that is being purchased is of the same category as that with which it is being purchased. In such a case, two factors are wajib : (i) the gold or the silver on both sides will have to be equal, (ii) the transaction must be complete before the buyer and the seller can separate, there must be no outstanding amount. If they conduct this transaction contrary to any of these two factors, it will be interest. For example, if you purchase silver with a R1 coin (which is made of silver), you will have to purchase the silver that is equal in weight as that of the R1 coin. If it is more or less than the R1 coin, it will be interest. Read more... (1319 words, estimated 5:17 mins reading time)