On repaid debt, am I obliged to pay zakat on it? How do I calculate the amount?

Answered by Shaykh Amjad Rasheed

I lent one of my relatives a sum of money. I was not sure whether or not he would return it. Then, he re-paid the debt. Am I obliged to pay zakat on it? How do I calculate the amount?

Answer:
In the Name of Allah, Most Gracious, Most Merciful

If the amount of the debt reaches the nisab (the minimum that necessitates zakat), and a full lunar year has elapsed, then it is a debt that it is obligatory to pay zakat on for every lunar year. However, every year, one subtracts the amount of zakat that was due for the preceding year.

For example, if the debt amounted to 10,000 Dinars and the debt went on for 5 years, he pays 250 Dinars for the first year (which is the zakat payable on 10,000 Dinars). Then, he pays 243.75 Dinars for the second year (the zakat payable on the [remaining] 9750 Dinars, because one subtracts the 250 Dinars that was the zakat payable for the 1st year and so on).

Amjad Rasheed

(Translated by Sr Lida)