Zakat and Debts

http://darulfiqh.com/can-a-debt-be-relieved-as-a-form-of-zakat-payment/

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The Answer:

The only time forgiveness of a debt can be considered as Zakat is when one only has assets in the form of debt receivables and he forgives the entire debt as a Zakat payment[1]. For example, the Nisab is £200 and a person has no other form of wealth besides a debt owed to him which is £200, he will be liable to pay Zakat as he has a debt receivable which is a Zakatable asset.  If he wants to pay Zakat by forgiving the debt, he will have to forgive the entire £200 for the forgiveness of debt to qualify as a Zakat payment.  He cannot forgive 2.5% of the debt as a Zakat payment. 

To understand the above, one must first comprehend the different methods in which Zakatable assets are formed.  One’s total Zakatable assets can be formed in three ways[2]: 

1)    Zakatable assets in one’s physical or constructive possession.  This incorporates cash in one’s wallet, savings in a bank account, investments etc. 

2)    Zakatable assets not in one’s physical or constructive possession.  An example of this is a receivable or debt owed to a creditor.  Such a receivable and debt is a Zakatable asset which the creditor has to pay Zakat on despite not having possession of it. 

3)    Zakatable assets composed of assets in one’s physical or constructive possession and other assets not in one’s possession.  An example of this would be a person who has cash equalling the nisab and also has a debt owed to him.

When somebody has Zakat assets formed from Zakatable assets in hand and debt owed to him, he cannot forgive any amount of a debt owed to him as a Zakat payment.  This is due to the following reasons:

1)    The Fuqahā’ (jurists) consider this as a subprime (Nāqiṣ) payment in lieu of a prime payment.  Paying Zakat by forgiveness of a debt is a subprime payment of Zakat because a debt receivable is subprime in terms of wealth in relation to cash in hand which is a prime (Kāmil) Zakatable asset.  A debt is inferior in relation to cash in hand.

2)    It is not permissible to pay Zakat by transferral & forgiveness of a debt for Zakatable assets which are in one’s possession. If one forgives a portion of a debt for Zakat, he will be paying a subprime form of wealth in lieu of a prime form of wealth.  Zakat will be paid by an inferior type of wealth for a superior form of wealth which is not permissible.

3)    The jurists further state that it is not permissible to forgive part of a debt as Zakat after which the rest of the debt will be recovered at a later date[3].  This is because the debt in its current form is a subprime form of wealth which will eventually become a prime form of wealth upon receiving.  Thus, ultimately it will be a Zakat payment in the form of subprime wealth for prime wealth.  Therefore, 2.5% of a debt cannot be forgiven as a Zakat payment. 

And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam al-Mahmudi, 

www.darulfiqh.com

<QUESTION>

I owe the bank a lot of money for my mortgages. I also earn a lot of money which goes to pay for these loans. This money is always spent on my debts. I do not have any saved money in my business accounts, although I have a lot of money being earned, and a lot of money being spent, on our house, our bills, and on our lifestyle.

I have a few savings plans which generate a lot of money also. These saving plans are not touched and the money grows each year. They are savings plans which have to be kept for 10 years. However, my plan for these savings plans is to pay off my mortgages just in case I am not able to do so within the next few years with the money I am earning. 

Do I need to pay any zakat on my savings? I know that I should not have these mortgages, but I do. Whenever I try to calculate my zakat, I find that I have too much debt in my mortgages, and this seems to cancel out any Zakat I need to pay. Is this correct?

Do I need to pay any zakat on my savings? 

<ANSWER>

In the name of Allah, Most Compassionate, Most Merciful,

A very important and simple principle concerning the calculation of Zakat should always be kept in mind and which makes the calculation of Zakat straightforward - that is, when one becomes the owner of the fixed nisab amount (612.36 grams of silver) for the first time in one’s life, then that (Islamic) date should be kept in mind. Then the following year on the same (Islamic) date, if one is still the owner of nisab, one will be considered to be sahib al-nisab, hence Zakat will be obligatory at the rate of 2.5% on the total Zakat-able assets. It makes no difference whether the wealth increases or decreases during the course of the year, neither is it necessary that every part of the wealth remains in one’s possession for the whole year. (See: Bada’i al-Sana’i, 2/96-98 & al-Lubab fi Sharh al-Kitab, 1/145)

Secondly, when one adds all the Zakat-able assets as one amount, one must see how much debt one owes to others, and then subtract this debt from the total. Thereafter, Zakat is paid from whatever remains after subtraction, if it reaches the value of nisab, at the rate of 2.5 %. (Radd al-Muhtar 2/260)

As regards short-term and long-term loans, the preferred opinion in the Hanafi School is that only short-term loans will be deducted and not the long-term loans. As such, one should avoid deducting the total outstanding amount of mortgage from one’s calculations and restrict it to only that payment which is immediate. (Radd al-Muhtar, 2/261) 

Based on the above explanation, when you calculate your zakat on your designated Zakat date, only deduct the amount of debt which is immediate. The mortgage is paid in instalments and on a long-term basis, thus you should avoid deducting the full amount of mortgage that you need to pay. In this way, you may well have to pay Zakat from the savings you have in your account.

I hope I have managed to clear up things for you, Insha' Allah.

And Allah knows best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

<QUESTION>

My husband and I are opening a furniture and home accessories store. To purchase the merchandise we have been using credit cards that offer a 0% APR for a certain period. Some of the credits cards being used are mine and others are my husband’s. The monthly payment of these credit cards as well as the monthly expenses of the business will be paid from money that I have saved. Of course, we are hoping that the business will generate some kind of revenue to help out with its own basic monthly expenses (rent, utilities, etc.). At the end of the 0% APR if we haven’t been able to pay off the credit cards on the monthly basis due to the business not generating enough to cover its expenses (this will more then likely be the case since the 0% APR are only for 6-12 months) I will be responsible for paying off the full balance. 

The question is: how do we deal with deducting the loan for payment of the zakat? I ask this question because even though I am responsible for the loans some of the credit cards being used are my husband’s and that makes him liable for the loan to the credit card companies. This year my husband is not liable for zakat, I am. 

I had thought about placing the total dollar amount of the loans into the business account and then just claiming all the loans to the business. For one thing my husband doesn’t want me to put all the money into the business account. So far the way that it’s been done is that I deposit money into the business account and then the payments are made from that account. Also, even if my husband agreed to deposit the money into the business account I don’t know if that would be the best way to do it since the loans are in our names.

<ANSWER>

In the name of Allah, Most Compassionate, Most Merciful,

As a principle, one must always remember that when one becomes the owner of the fixed Nisab amount (which is 612.36 grams of silver) for the first time in one’s life, then that (Islamic) date should be kept in mind. Then the following year on the same (Islamic) date, if one is still the owner of Nisab, one will be considered as sahib al-Nisab hence Zakat will be obligatory at the rate of 2.5% on the total zakat-able assets. It makes no difference whether the wealth increases or decreases during the course of the year, neither is it necessary that every part of the wealth remains in one’s possession for the whole year. However, if due to some reason all the wealth is lost, then when one becomes the owner of Nisab once again, that will be the new date and zakat will be calculated thereupon. (See: Bada’i al-Sana’i, 2/96-98 & al-Lubab fi Sharh al-Kitab, 1/145) 

Thus, both you and your husband should have a fixed date for calculating zakat. If you have not, as yet, fixed a date, you need to fix a date as soon as possible, and then calculate your zakat on that specific date. If you are unsure as to when exactly you became the owner of Nisab for the first time in your life, then make a precautionary estimation, and from now on calculate your Zakat each year on that date. 

When calculating your zakat-able assets, you may subtract the various debts as of that date, for zakat is not obligatory on wealth that one owes to others. The debt will be deducted from the total wealth of the one who is responsible of paying it off. Thus, if you and your husband decide to share the responsibility of the debts on a 50-50 basis (regardless of whose credit-card was used), then each one of you may deduct the relevant amount from their total wealth. If one of you takes full responsibility of paying the debt off, then the debt will only be deducted from the total wealth of the one taking this responsibility.

In conclusion, it is not necessary that the debt be deducted from the wealth of the one whose credit-card was used; rather, one of you can pass on this responsibility to the other and the other can accept it. If this is the case, each one of you will be deducting the percentage of debt that they have taken the responsibility of repaying.

On a side note, you need to be careful not to fall into Riba (usury), for that is a major sin. Hence, if interest is charged in the case of you not being able to pay off the monthly payments on the credit-cards, then that will be unlawful and must be avoided. Using credit-cards is only permitted when the card-holder is sure they have the ability and will actually pay off the debt to the card-issuing company before any interest becomes due.

And Allah knows best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

<QUESTION>

If someone has £5000 in his bank account and at the same time he is in debt of £6000. Is Zakaah farz on him/her?

<ANSWER>

In the name of Allah, Most Compassionate, Most Merciful,

Zakat is obligatory (fard) on certain types of wealth, which are: 

1) Gold & Silver

2) Cash

3) Merchandise (i.e. items for resale)

4) Agricultural products

5) Animals & livestock

When one adds all these Zakatable assets as one amount, one must see how much he/she owes to other people, and then subtract this amount from the total. Zakat will be paid from whatever remains after subtraction, if it reaches the value of Nisab (Zakat payable amount), at the rate of 2.5 %.

This has more or less been mentioned in the major Hanafi Fiqh references. See, for example: Radd al-Muhtar 2/260, al-Hidaya 1/186 & others.

The Fuqaha have explained these debts as that which is demanded and claimed by other people. Whether it is the right of Allah, e.g. Zakat demanded by the Imam, or the right of the servants of Allah, such as: debts, dowry, etc. 

The reason behind debts preventing the obligation of Zakat is (as the Fuqaha explain), that one of the conditions for the obligation of Zakat is that the wealth be in excess of ones personal needs. When one has debts that need to be paid off, the Zakatable assets will not be in excess of his personal needs, as he needs to pay all or some part of this wealth to the creditors.

However, a very important point with regards to loans has been mentioned by the great jurist and scholar of the modern era, Shaykh Mufti Taqi Usmani (Deputy Chairman of the International Islamic Fiqh Academy, Jeddah). He (may Allah preserve him) says that there are two types of loans:

a) Normal loans that are taken for personal and basic needs. These will be subtracted from the total.

b) Loans taken by major capitalists and businessmen for the purpose of production, business and importing. 

If a loan of this type is subtracted or deducted from the total, then not only will Zakat not be Fard on these capitalists, rather they will become eligible to receive Zakat. The reason being, that they have taken loans from the bank that is more in value than their possessions. Therefore, there is a different ruling regarding the subtraction of loans of this kind.

The ruling is that, if a person takes a loan for a business purpose and with this loan he purchases Zakatable goods (items on which Zakat is Fard) i.e. raw material, business goods, etc, then this loan will be subtracted. However, if he purchases non-Zakatable items, i.e. machinery, building, etc, then it will not be subtracted.

The reason for this is that, when he purchases items on which Zakat is Fard, it will already be included in his Zakatable assets, thus the loan will be subtracted. But if he purchased non-Zakatable items, they will not be included in his Zakatable assets, and thus he will have to include it in the total (Fiqhi Maqalaat, Vol.3, and P.155).

For more details regarding the issues relating to Zakat, please refer to my booklet titled Simplified Rules of Zakat (A Hanafi Perspective) which has been published and is available in the UK.

And Allah Knows Best 

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

http://askimam.org/public/question_detail/33831

I want to know about my zakat I will have to pay or no? I took Loan from Islamic bank a year before of 42,000 Aed Aprox (PKR 1,150,000) for housing purpose, now I am paying monthly installments 1160 Aed Aprox(PKR 32,000), I will pay this loan in 4 years (48 installments) and I already paid 13 installments and I have aprox 20,000 Aed in my account, this 20,000 aed is mixture of half loan and half my savings in a year, so I want to know I should pay zakat? If yes then how much I have to pay? And I can pay in this month? Or there is specific month and time to pay zakat? I am waiting your reply.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

Zakaat will be wajib (compulsory) upon a person who possesses the amount of nisaab, over and above his basic needs and after fulfilling his debts.

If a person had so much debt that if he had to fulfil the debt, he would have a remainder of wealth which is equal to or more than the nisaab, then zakaat will be wajib on the remainder of the wealth.

If the loan is such that it engulfs the whole wealth, or the remainder of the wealth after fulfilling the debt is less than the nisaab, then zakaat will not be wajib.

However, the ruling will be different in the case of long term debts that exceed the time period of one year. In such situations, the amount owed for one year will be calculated, and only that amount will be considered when applying the rules of zakaat. I.e. if the remainder of the wealth were to exceed the nisaab after fulfilling this amount, then zakaat will be wajib; and if this amount engulfs the remainder of the wealth or the remainder of the wealth after fulfilling this amount is less than the nisaab, then zakaat will not be wajib.  

With regards to your specific question, we understand that you received a home loan from an Islamic Bank and you are currently paying monthly instalments.

According to Shariah, you will consider one year instalments as a liability when calculating your Zakaat. For example, your yearly instalments are AED 12 000 for this year towards your debt, then you will only calculate that amount as your liability and the remainder AED 30 000 will not be considered. You will consider the funds in your bank account as cash on hand when calculating your Zakaat. The loan amount in your bank account is exempt from Zakaat.

Kindly refer to the following link for more details on Zakaat calculation: http://www.askimam.org/public/question_detail/17114

And Allah Ta’āla Knows Best

Ismail Desai,

Darul Iftaa

Checked and Approved,

Mufti Ebrahim Desai.

 http://www.askimam.org/public/question_detail/32927

My father has sold a land to a person, say for ! million in 2010. The person has not paid the amount due yet. Does my father have to pay zakaat on that amount owed (Rs 1m) ? How much does he need to pay each year on that amount? 

Please treat this as urgent as zakat has not been paid and this question came to our minds lately. 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

Zakat becomes compulsory(fardh) based on every individual’s personal financial condition. In principle, if one does not possess the Nisaab (quantum) of Zakaat or one’s liabilities exceed one’s assets, then one is not obligated to pay Zakaat.

Debts receivables are treated as one’s potential wealth and regarded as a strong debt as one is certain of receiving payment of such a debt.

Zakat on strong debts is governed by the following laws:

a.      At the time of calculating zakat if the debt is not received then zakat is not obligatory on that debt.

b.     Once the payment of the debts is one-fifth or more of the nisāb then zakat becomes due on that amount received. The zakat will be calculated for the present year as well as the previous years.

c.      If someone receives the complete debt in a lump sum, then zakat will be paid on the whole amount for that year and the previous years. [1]

d.     It is permissible to discharge zakat on debt receivables before the zakat becomes due on it. In essence, if one pays 2.5% on the debt receivable every year before receiving payments, then one would not have to pay zakat for the past years upon receiving the final payment.

e.      If the credit extended becomes a bad debt (i.e there is no hope of receiving it) then there is no zakat wajib on such debt. However if the debt has been recovered  after losing hope of recovering the debt, then Zakaat will only be applicable on the year one recovered the debt.[2]

And Allah Ta’āla Knows Best

Ismail Desai,

Darul Iftaa

Checked and Approved,

Mufti Ebrahim Desai.

 http://askimam.org/public/question_detail/31945

I have a question with regards to paying zakaat when you have a bank mortgage or loan. In the below Fatwa you explained clearly that Zakaat will only be wajib if saving exceeds nisaab after paying the yearly debt to bank. My question is if by paying yearly debt a person does not exceed in Nisaab is he eligible to get Zakaat?

http://www.askimam.org/public/question_detail/15629

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The fatwa in reference is correct.

In principle, deferred liabilities do not prevent the obligation of zakat. [1] If a person is paying off long term debts such as mortgages/loans etc then, the value of the loan will be deducted from ones total wealth and the amount oweable for one year will be calculated as a debt, and only that amount will be considered when applying the rules of zakat. For example if you have to pay a loan of R10000 for 5 years at R2000 per year and the threshold of zakat is R500. After paying the R2000 for the first year on your zakat date you still had R1000 in your procession then, this amount is zakatable even though you owe the bank/creditor a balance of R8000 for the next four years to come. Conversely, if after paying your debt for that particular year you only had R100 in your possession on your zakat date then, you will not have to pay zakat on the R100 as it is less than the threshold of zakat(R500).[2]

And Allah Ta’āla Knows Best

Ismail Dawoodjee

Student Darul Iftaa
Zambia

Checked and Approved by,
Mufti Ebrahim Desai.

http://askimam.org/public/question_detail/32128

I am resubmitting this question as I have not recieved a reply for 2 weeks.

Dear Mufti Ibrahim Desai Saheb,

I have a very important question reference to Zakat. Please can you enlighten me on this matter.

One of my close friend borrowed money in 2006 and his debt has been building up over the past 9 years.  A friend withdrew money from his credit cards to help this friend 9 years ago. The friend promised that he will repay this amount within 6 weeks. Upto now, nothing has been paid towards the debt and interest charges are rising by the day. My friend has a number of people who are demanding money from him but he only earns sufficient amount of money to run his house, therefore he cannot pay his debtors.

Some of the debtors are paying his debt through credit cards with high interest charges and the debtors are struggling to keep up with the payment. 

His debt is over 100 thousand UK Pounds and is rising by the day due to interest charges.

On top of his debt, he has a house which has an 80% mortgage outstanding on it.

Is my friend eligible for Zakat? Can Zakat money be used to pay his debtors.

May Allah grant you a healthy and long life and keep us all steadfast on Iman. Ameen.

Jazakallah

Irfan Ibrahim

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Brother in Islam,

We are sorry for the delayed response. This was due to a high volume of Fatwas, the intricacies that were in your query and because you used the word friend in three different situations without clear mention of who is being referred to which could effect and change the Sharee implication accordingly in each situation.

Based on the details above our understanding of your situation is A took a debt of R1000 which he could not pay. A’s friend B helped A pay off the R1000 and A promised to pay B back within 6 weeks. It’s now been 9 years and A has still not cleared B of his debt. Meanwhile, A has a house on mortgage which is still 80% unpaid for and A currently only has enough money for his basic necessities. You also mentioned that A is also owing some other people monies.

In principle, it will be permissible for A to take zakat to clear he’s debtors as he does not own any wealth that is equal to or more than the threshold of zakat. [1]

However, A may only take an amount from Zakat through which he will manage to clear that debt he owes debtors and the amount equivalent to clear what he already owes the mortgage and not for what he still owes them. For example A took a mortgage for 10 years at R2000 per year and only 8 years have passed and he has not managed to pay. Then he may take Zakat for the 8 years that he owes them and not for the balance of the 2 years that he is still owing them as defffered liabilities do not prevent zakat. [2]

http://askimam.org/public/question_detail/33538

My father purchased a house for my brother and my brother is now paying a monthly amount to my father in order to acquire this house for himself. My father would like to know if he should pay zakat on the total amount owing by my brother? The amount my brother will end up paying is exactly the price my father paid for the property.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

You state that your father purchased a house for your brother. Your brother is paying out your father and will acquire the house from your father once paid out. Your father is essentially the creditor while your brother is the debtor. Kindly refer to the following analysis regarding Zakaat computation on the above matter.

1. Zakaat will be wajib (compulsory) upon a person who possesses the amount of nisaab, over and above his basic needs and after fulfilling his debts.

If a person had so much debt that if he had to fulfil the debt, he would have a remainder of wealth which is equal to or more than the nisaab, then zakaat will be wajib on the remainder of the wealth.

If the loan is such that it engulfs the whole wealth, or the remainder of the wealth after fulfilling the debt is less than the nisaab, then zakaat will not be wajib.

However, the ruling will be different in the case of long term debts that exceed the time period of one year. In such situations, the amount owed for one year will be calculated, and only that amount will be considered when applying the rules of zakaat. I.e. if the remainder of the wealth were to exceed the nisaab after fulfilling this amount, then zakaat will be wajib; and if this amount engulfs the remainder of the wealth or the remainder of the wealth after fulfilling this amount is less than the nisaab, then zakaat will not be wajib. We advise him to estimate the yearly figure he intend’s to pay your father (creditor) and calculate such figure as the liability when calculating the Zakaat. For example, the total liability to your father is R 1 Million and you intend to pay R 200 000 for this year towards his debt, then he will only calculate that amount as his liability and the remainder amount of R 800 000 will not be considered.

2. Debts receivables are treated as one’s potential wealth and regarded as a strong debt as one is certain of receiving payment of such a debt.

Zakat on strong debts is governed by the following laws:

a.      At the time of calculating zakat if the debt is not received then zakat is not obligatory on that debt.

b.     Once the payment of the debts is one-fifth or more of the nisāb then zakat becomes due on that amount received. The zakat will be calculated for the present year as well as the previous years.

c.      If someone receives the complete debt in a lump sum, then zakat will be paid on the whole amount for that year and the previous years. ^[1]

d.     It is permissible to discharge zakat on debt receivables before the zakat becomes due on it. In essence, if one pays 2.5% on the debt receivable every year before receiving payments, then one would not have to pay zakat for the past years upon receiving the final payment.

And Allah Ta’āla Knows Best

Ismail Desai,

Darul Iftaa

Checked and Approved,

Mufti Ebrahim Desai.

http://askimam.org/public/question_detail/32887

I have a query relating to zakaat.

My Father had passed away 7 years ago and had left me jewellery and an investment policy.

I had no access to the jewellery nor did I have a value of the policy due to legal issues.

Recently I have come to know the  weight of the jewellery and the value of the investment.

How do I go about calculating the zakaat owed for these years ? Do I use historic gold prices to calculate the zakaat and do I use the tax year-end value of the investment for each prior period or do I calculate the zakaat on todays value of the gold and investment and pay it as 1 amount multiplied by the number of years which has passed?

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

An inheritance that one does not have access to is defined as a weak debt. The ruling on weak debts such as inheritance is that there is no Zakat due on it for those previous years when one did not have any access to it. [i][ii][iii][iv]

→ If you were already sahib al-nisab (i.e. Zakat was obligatory on you) before you got access to this inheritance, then this inheritance will be considered a part of your total wealth in the year you got access to it and you will calculate Zakat on it just as you do on the rest of your wealth. 

Example: If you got access to your inheritance this year and your annual Zakat date is sometime next month, then your inheritance will form part of your zakatable wealth on that date.

→ If you were not sahib al-nisab before receiving this inheritance, and this inheritance (either by itself or added to whatever wealth you had from before) reaches the amount of nisab (612.35 grams of silver), then you will wait one lunar year from the date you got access to this inheritance. At the expiry of one lunar year from that date you will calculate your Zakat (if you still possess the amount of nisab) and this date will be your annual Zakat date going forward.

And Allah Ta’āla Knows Best

Sohail ibn Arif,
Student Darul Iftaa
Chicago, USA

Checked and Approved by,
Mufti Ebrahim Desai.


http://www.askimam.org/public/question_detail/33134

my question is zakat related and qurbani related. 1- i've had final instalment of student loan on me in 2013 & it left me with the total loan of £30,000 approx. i have not paid anything back yet as i am not working and got married in 2010. I have approx 50tola of gold given in my wedding. Although my husband has been giving full zakat on it since 2011 every ramadan but ive heard n been reading that if u have loans then u should take away that amount n whatever is left....

Giv for zakat. M I eligible to still pay zakat even though i have £30,000 loan n have not paid anything back n don't know when i'll pay back as m a full time mother now.? And if there r any exceptions then what about all that zakat paid since 2011? Can i recalculate and adjust for this year? We are always very happy to give zakat alhamdulliah. 2- my 2nd question is.... Ive also been told /heard that if u pay zakat that means you're wealthy n it becomes compulsory to do qurbani. This also relates to above loan n gold....

M I obliged to do qurbani? Also i have 2 daughters both under 5. Is qurbani / zakat farz on them though they have very little gold for them. Will my husband also have to do qurbani if wife is doing so?....as he has separate loan of £6000 approx from his mother n will pay off as soon as he gets a source? I'llbe very thankful if u could answer before ramadan as we give zakat on the 1st of ramadan. 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

1. You state that are indebted for a student loan and you possess a certain amount of gold. Your husband has been paying Zakaat on the gold on your behalf. 

In principle, deferred liabilities do not prevent the obligation of zakat. If a person is paying off long term debts such as mortgages/loans etc then, the value of the loan will be deducted from ones total wealth and the amount oweable for one year will be calculated as a debt, and only that amount will be considered when applying the rules of zakat. For example, your total liability for the student loan is $50 000 and your yearly instalments are $5 000. You will only calculate $5 000 as your liability when calculating your Zakaat. You should calculate your total liabilities versus your assets when calculating your Zakaat. For example, your liabilities are $5000 and your Zakaatible assets are $5000. You are not obligated to pay Zakaat. 

You may re-calculate your Zakaat for the previous years and adjust your Zakaat payments for the current/future years accordingly. You state that you have 50 tola of gold. You should calculate the value of the 50 tola gold and offset the value of the 50 tola gold with that of one year’s repayments for the student loan in order to ascertain your eligibility for Zakaat. For example, the 50 tola gold is valued at $5000 and one year’s repayments for the student loan is $5000. One will not be obligated to pay Zakaat since the liability of the student loan negates the value of the 50 tola gold when calculating Zakaat. If the value of the gold is for example $10 000 and the student loan is $500


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Question:

Can a creditor be paid Zakat directly on behalf of a debtor?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The Answer:

It is permissible to pay Zakat directly to the creditor of a Faqīr debtor on condition there is acknowledgement from the Faqīr debtor.  If the Faqīr debtor does not sanction the payment, the payment will not be Zakat, rather, it will be a voluntary payment.

The Fiqh (jurisprudence of the answer):

The integral of Zakat is Tamlīk to the Zakat recipient.  Tamlīk refers to the transferral of ownership to the Zakat recipient by granting him possession.  Payment to a creditor without the acknowledgment of the Faqīrdebtor is void of Tamlīk.  Although the payment was for the Zakat recipient but it was not to the Zakat recipient.  Providing a service to a Zakat recipient with Zakat funds without the acknowledgement of the Zakat recipient fails in fulfilling Tamlīk.

When the Zakat recipient acknowledges the payment, the creditor acts as an agent and Wakīl.  As an agent, the creditor takes possession on behalf of the Zakat recipient initially and then takes possession for himself as a payee of the funds.  Thus, Tamlīk is found in such a scenario and the Zakat payment is valid.

And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam al-Mahmudi, 
www.darulfiqh.com