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Zakaat On Money Indebted To You

Question

My wife and her sisters together with her brother recently inherited shares in their late fathers business.

The 4 sisters decided to sell their shares to their Brother for an amount of R400000.00 per sister so in Total R1.6million.

The brother does not have any cash to pay this amount upfront so he has agreed to pay this amount off within 3years In-Sha-Allah. This deal was done during Ramadaan

My wife’s  zakaat date is now this month so we wanting to calculate her zakaat. 

To the best of my understanding she has to add whatever amounts are owed to her into the calculation which would include the R400000.00 owed to her for the business share. 

Problem is she has not received any payment from that sale of share as yet and she does not have sufficient cash to cover the zakaat amount which is about R10000.00.

What other option does she have for this year and going forward for the next years until everything is paid?

From my understanding you add any amount owed to you to your zakaatable assets, but in a case like this where they haven’t received anything and the amount is to be paid over a few years how should zakaat be calculated and paid?

We got three opionions from within the family…

1) Full zakaat must be paid every year with Full outstanding amount added to zakaatable assests;

2) She must take the total amount owed(app R400000.00) divide by the number of years that has been agreed to be paid back(in this case 3yrs) and then only pay every year on that specific year’s amount;

3) She must pay on what she received in the 1st year but then in the 2nd year whatever amount is received, she can pay for year 1 and 2, and then in year 3 whatever she received, she can pay for year 1, 2 and 3. 

Please advise if either of these is correct or is there some other method.

Answer

1). As mentioned in option one; Zakaat can be paid on the total outstanding amount every year on one’s Zakaat date. For example, if R400 000.00 is due to your wife and her Zakaat date is 1st of Ramadaan then on the 1st of Ramadaan she will pay Zakaat on the R400 000.00 that is due to her, as well as her other Zakaatable assets. Then, let’s assume that thereafter during the course of the year R100 000.00 was paid to her (before her next Zakaat date) and now on her next Zakaat date R300 000.00 is due to her then she will pay Zakaat on the full R300 000.00 as well as other Zakaatable assets. This is one option where she pays on the total amount outstanding each and every year. 

2). The second option is where she will pay only upon receiving payment from the debtor. For example; she sold her share (of the business) on the 10th of Shabaan 1442. Her Zakaat date is the first of Ramadaan but she hasn’t received any payment for the sold share so she didn’t pay Zakaat on the 1st of Ramadaan 1442 on the R400 000.00. However, she received R100 000.00 on the 1st of Ramadaan 1443 which is again her Zakaat date. In this case, she will pay Zakaat for two years on the R100 000.00 received. For 1442, she will pay 2.5% of R100 000.00 which is R2500.00 and for 1443 she will pay 2.5% of R97 500.00 which is R2437.50. In total she will pay R4937.50 on the 1st of Ramadaan 1443. 

Then on the 1st of Ramaadan 1444 she receives payment of R100 000.00 again. She will have to pay Zakaat for the past three years on this amount. For the first year 2.5% of R100 000.00 which is R2500.00; for the second year 2.5% of R97 500 which is R2437.50 and for the third year 2.5% of R95 062.50 which is R2376.56 In total she will pay R7314.06. This option is listed as option no.3 in your query. 

3). The above two options are in order. Option no.2 which is listed in your query is incorrect.     

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.

References

References

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