Various Zakah Questions


Contemporary Fatawa, Fiqh / Thursday, May 13th, 2010

Q. 1a) Is ‘Zakah’ payable on a Bungalow/House irrespective of how big it may be, which is occupied by us? If ‘Zakah’ is payable, should it be on cost or on the Market Value?

b) If any loan is taken against the Bungalow or House, should Loan amount be deducted before calculating ‘Zakah’ Amount?

A. a) Zakah is not payable on the Bungalow/House which you own and utilize for residential purposes. However, if the Bungalow/House is purchased or built with the intention of resale, then Zakah will be payable on it’s market value.

b) A loan taken against the Bungalow/House can be deducted from the Zakatable amount.

Q. 2. Is ‘Zakah’ payable on Furnitures, Fixtures, such as Electric Equipment, Airconditioners, Carpets, Crockery, etc.? If payable, should it be on the cost or on the market Value?

A. Zakah is not payable on furniture, electric equipment, airconditioners, carpets, crockery, and their items that are for household utilization.

Q. 3. Is ‘Zakah’ payable on Bungalows/Houses or Flats which are given on rent or which remain vacant. If payable, should it be on the original cost or on the market value?

A. Zakah will be paid only on the rent accrued from the properties owned. Zakah will not be paid for vacant property, unless if procured for resale purposes; more specifically, for the sale of such assets.

Q. 4. Is ‘Zakah’ payable on the cost or the market value of an investment made in open land (Residential plot)?

A. If the residential plot is purchased for the purpose of resale then Zakah will be liable at the market value, but if the plot is acquired for purposes other then being resold then Zakah will not be payable.

Q. 5. JEWELLERY

a) Is ‘Zakah’ payable on jewellery and Diamonds? If so, on the purchase value or on the market value?

b) Is ‘Zakah’ payable on Gold/Silver jewellery in use by wife, daughter or kept as investment-If so, is zakah payable on the purchase value? or the market value?

A. a) Zakah will be payable on gold and silver jewellery, if such jewellery exceeds the minimum weights:

for Silver : 52.2 Tolas / 613,35 Grams. for Gold : 7.5 Tolas / 87,479 Grams.

Zakah will be paid as follows :

[Number of Tolas / Grams x cost of 1 Tola / Gram (Silver / Gold)] multiplied by 2,1/2 % = Zakah amount

Zakah is not payable on diamonds, despite their value.

b) Zakah is payable on jewellery of Gold / Silver even if it is used by your wife or daughters (Hanafi view).

Such Zakah is calculated on the market value of the gold or silver used in the jewellery.

Q. 6. Is Zakah payable on :

a) Premium of Insurance Policies (personal). If payable, whether on the total premium amount paid. Should it be paid yearly or can be paid at maturity on total receipt inclusive of bonus etc.?

b) Investments made in bearer Instruments such as prize Bond, NDFC, where no zakah deductions are made. Is Zakah payable on the face value or on the accrued value ? Can Zakah be paid on maturity?

c) On investment in securities such as N.I.T. Units, Khas deposit certificates (Registerd), in this case ‘Zakah’ is deducted on profits and on the face value each year, and net amounts paid to investor. Are we liable to pay any other amount as “Zakat”?

d) Investment made in Public limited Shares where ‘Zakah’ is deducted on Dividend paid. ‘Zakah’ is not deducted if devidends are unpaid.

Are we liable to pay ‘Zakah’ each year if not paid by the company. Also whether ‘Zakah’ payable on market value of Shares = (Difference Value i.e. Market Value – Purchase Value)?

A. a) Most of the conventional insurance modes are impermissible according to a Shariah. Anyone who has entered into such conventional insurance modes, should refrain therefrom. However, he is entitled to receive the amount of the actual premiums which he has paid into the company. So if he receives the premiums back, he must pay Zakah on the amount which he has received. If he has received it after a number of years, Zakah will be payable for all the preceding years as well. Any bonus, intrest or insured amount paid to him by the company will be impermissible. He must refuse to accept such sums or distribute it to those entitled to receive Zakah.

b) The “Prize bond” and other investment instruments of the NDFC are in direct conflict to the injuctions of Islam. Any returns accrued from such investments will resultantly be classified as impermissible. Zakah will be paid on the faoce value of the bonds are certificates issued by the NDFC (National Development Finance Corporation – Pakistan).

If Zakah is paid at maturity, then Zakah will have to be discharged for the previous years as well.

Any Profit, prize or intrest received on these bonds or certificates would be Haraam, hence not liable to Zakah. Yet the entire amount of this profit, prize or intrest should be given as Sadaqah to anyone entitled to receive Zakah.

c) The Zakah deducted on NIT Units (National Investment Trust – Pakistan) each year, need not be re-given, provided that zakah is deducted on both the face value and the profit.

As for the Khas deposit Certificate, profits given on them are impermissible in Shariah. Profits accrued on them are of intrest and should therefore not be accepted. Anyone receiving such sums should distribute them to those entitled to receive Zakah.

d) Yes, if Zakah has not been deducted by the company, you are under obligation to pay Zakah on the market value of the Shares. You can deduct from the Zakatable value a proportion equivalent to that of the fixed assets of the company (which are non-zakatable). If it is difficult to ascertain that proportion, then it would be advisable pay Zakah on the total market value of the shares.

Q. 7 a) We have a firm which does import and export business. This firm also invested in a building. The building stands in the name of a partnership Firm. Part of the building is given to a factory on rental basis.

b) Is ‘Zakah’ payable on the building value? Also whether on the original cost of the building, the Depreciated value or the current market value?

A. a) As mentioned earlier, if the building is not acquired or built with an intention to re-sell it, then no Zakah will be payable.

Only such part of the rent shall be liable to Zakah which stands in your balance on the Zakah valuation date of each year and which has not been spent.

b) However, Zakah shall be paid on it’s market value if the building is acquired or constructed with a clear intention of re-sale. In which event, it becomes stock-in-trade.

4 Replies to “Various Zakah Questions”

  1. salam, i would like to ask whether conventional insurance is obligatory to pay zakat also? or they just have to pay tax only?compared to takaful, they have to pay tax as well as zakat.
    tq

  2. Assalam alaikum rwbt,

    I have purchased few open plots with the intention that
    Ill sell and invest the same in other better plot finally build a house and give it on rent. points here to be noted are some of them stayed with me over two years and others few months only, 3 to 6 months only. now the one currently
    i have is just one month old. others are already sold and i’ve invested same money here.

    Do i have to pay zakath on this then for which plots which stayed with me over two years, on that selling price. or even which does not lasted a year.

  3. Assalam alaikum rwbt
    Can I distribute gold to my wife and daughters 7.5 thola each and pay Zakah on the remaining Gold?
    Example:
    Have 52 Thola of Gold
    1 wife and 3 minor daughters = 4*7.5=30 thola
    Gold remaining with myself = 52-30= 22 thola
    Is this permissible? Please guide. Thank you

  4. Assalam alaikum,

    I’m serving money to enable me to one day to perform Hajj. Do I have to pay Zakat on the servings if whatever I have accumulated lets say in two years qualifies for Zakat ?

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