I wish to understand how I need paying zakat on some scenarios that I face:
1. I have participated in a joint venture with four relatives on purchasing
a commercial plot with the niyyat of selling it at an appropriate time in
future. The plot has been purchased on instalments with the final instalment
still to be paid (unknown as yet) and the ownership has not yet been
transferred. My share in total is PKR 3,250,000. I started contributing to
my share in January 2013 and have paid 2,900,000 to date. The current value
of the plot has gone up since we started paying instalments in October 2012.
We as a group wish to hold the plot for one to two further years after
ownership transfer before selling so to earn good profit. In the given
scenario how should I calculate my zakat for the passed years and going
2. I have also purchased a shop on 50% sharing with my sister that we intend
give on rent. This purchase has also been on instalments of which the last
instalment will be paid this month (i.e. July 2015). We started paying
instalments for this in January 2014. The shop has not been handed over and
we haven’t received any rent as yet. How am I to calculate zakat on this?
3. My wife has some jewellary that is zakat-able and as a mutual
understanding I pay zakat on that yearly as she doesn’t work or hasn’t got
earning of her own. My current assumption is that this jewellary doesn’t
make me saahib-e-nisaab for the other two assets I have mentioned in first
two points. Please suggest if my understanding is correct?
4. In case I have a zakat-able amount in my bank account, will the
zakat-able amount be totalled adding all three assets (points 1, 2 and 4)
whether a full year has passed on one (or more) of these or not? For
example, if I do not have had the cash for the full year, will I still have
to pay zakat on the cash if I’m eligible to pay zakat on, for instance, land
in the first point?
1&2. 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 query, we understand that you and four other relatives jointly purchased a commercial plot with the intention of re-sale in the future. The plot has been purchased on instalments. Your share is PKR 3.250.000 while you have paid up 2.900.000. We also understand that you purchased a shop on instalments with your sister jointly.
Based on the above understanding and the principles as explained above, your share of the instalments will be considered as a liability when calculating your Zakaat. We advise you to estimate the yearly figure you sincerely intend to pay your creditor and calculate such figure as your liability when calculating your Zakaat. For example, your liability is PKR 3.250.000 and you intend to pay PKR 1.000.000 for this year towards your debt, then you will only calculate that amount as your liability and the remainder will not be considered.
You state that you purchased the land with the intention of re-sale, such land will therefore be considered as stock in-trade and you will pay Zakaat on the market value of the land. Moreover, you will only pay Zakaat once you have taken complete ownership transfer of the land in the form of registration and receipt of the title-deeds from the original owner.
3. Your understanding is correct.
4. Cash on hand is Zakatable. You will combine your cash on hand with other Zakatable assets when calculating your Zakaat on your Zakaat date. The commercial plot you refer to will only be considered for Zakaat calculation after taking ownership of the land. Kindly refer to the following link for more details on Zakaat computation: http://www.askimam.org/public/question_detail/17114
And Allah Ta’āla Knows Best
Checked and Approved,
Mufti Ebrahim Desai.