Zakah on Debts |
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english elm
Newbie Joined: 23 September 2014 Status: Offline Points: 23 |
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Posted: 14 October 2014 at 2:38am |
Debt
Definition: It is owed money to be paid by a debtor. ******************************************************************* Ruling concerning Zakah to be paid on debt owed by the payer of Zakah If an individual owes a particular amount that is up to the Nisab or less than the Nisab, Zakah is no longer mandatory on him. However, when his debt, after deduction, does not affect the Nisab, then the equivalent of his debt must be subtracted and Zakah paid on the remainder. For example; if an individual possesses $10000 and he is in debt up to the tune of $10,000, Zakah is not mandatory on him. This is because the debt overshadows the Nisab. This is also the case if he owes $9 950, he does not pay Zakah, because the amount he owes has reduced the Nisab. However if he is in debt of $4 000, he is required to deduct this amount from his money, then $6 000, on which his Zakah is compulsory, will be the remainder. However, the debt may not be used by the debtor in trade, such as if he buys a house that he will pay off in installments over a few years, or use the debt to purchase machines worth millions to start a huge project. A trader might decide to expand his work and thus he buys a new product line for a few millions, which he adds to the one he already has. Do these investment debts lead to dropping Zakah from the assets as well? To agree on such an opinion would mean that there would be a loss of large sums of money from Zakah due to the poor, and may end in the opinion that many of the contemporary traders are not subject to paying Zakah. The Second Symposium on Contemporary Zakah Issues held in Kuwait in Thul Qi'da 1409 Hijra � June 1989 Gregorian concluded that: First: All debts that finance commercial work are deducted from assets upon which Zakah is compulsory if the debtor does not have fixed assets that are more than his basic needs. Second: Investment debts that finance industrial projects � exploited assets - are deducted from assets upon which Zakah is compulsory if the debtor does not have fixed assets that are more than his basic needs in a way that makes it in exchange for the debt. If those investment debts are deferred, the demanded annual installment should be deducted from the assets upon which Zakah is obligatory. If these goods exist, then they are put in exchange for the debt if they are enough. In that case the debts are not deducted from the assets upon which Zakah is compulsory. If, however, they are not enough to pay off the debt, the remaining sum is deducted from the assets upon which Zakah is compulsory Third: For deferred housing loans which are usually paid in long-term installments, a debtor pays as Zakah the money that remains from what he has after deducting the annual installment required of him, if the rest makes a nisab or more. Ruling concerning Zakah to be paid on debt owed by the payer of Zakah 1- If he foresees impossibilities of the redemption of the loan, for instance, as a result of the debtor being bankrupt, or denying the debt; in this case, the creditor (payer of Zakah) is not liable to pay Zakah, yearly on this amount. What he does is to pay Zakah for a year, once he recovers the loan. 2- If he does not foresee any impossibility of its redemption, for instance, should the debtor not procrastinate or show any signs of postponement regarding the payment of the loan, but intends to pay; in this case, the creditor (payer of Zakah) is liable to pay Zakah on it every year. This is because, it is considered as if the money is in his custody. |
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