Discharging Zakaat While In Debt

Question

If I owe somebody R136000 and somebody owes me R133000, how should I calculate Zakaat?

Answer

Discharging Zakat where one is indebted with a Short-term loan:

First of all, one should add all the Zakatable assets e.g. gold, silver, cash, etc. along with the debt people owe him; thereafter he will deduct all the debts that he owes and will pay the Zakat of the remainder. Moreover, this is only when the remainder reaches the Zakat’s Nisaab amount; however, in the case where the remainder does not reach the Nisaab amount, Zakat will not be compulsory.

In the enquired scenario, where someone owes you R133,000 and you are owing a debt of R136,000; the procedure would be as follows:- After adding all of your Zakatable assets which is for instance 100,000 Rands, you will add the money which you have lent (which is R133,000 in your case) and these two figures make the total of (100,000 + 133,000) R233,000; thereafter you will deduct the amount of 136,000 Rands that you borrowed from the total amount of 233,000 (233,000 – 136,000) which will give you the sum of R97,000 and from this amount of R97,000 you will pay your 2.5% Zakat which is R2425 in this case. 

Discharging Zakat where one is indebted with a Long-term loan:

In this case, one should only deduct what one is obliged to pay in the current year from one’s Zakatable assets.

For instance, if all of one’s Zakatable assets equal to the value of R200,000 and one also has a debt of R100,000 which will be paid in installments, R12,000 each year, the R12,000 (and not the entire debt of R100,000) will be deducted as a liability and he will pay his Zakat on the remaining R188,000. 

In conclusion, where one is indebted with short-term loans he will deduct the entire amount of the loan from Zakatable assets and in long-term loans, only this year’s instalment will be deducted; however, in both the cases, the money that he has lent others will not be deducted. 

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.

References

كنز ج ١ ص ٢٠٣ ط دار السراج 

(رد المحتار) 2/305 (باب زكاة المال) (ط: سعيد كميني) 

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