Answered by Shaykh Faraz A. Khan
Question: My questions relate to zakat. I own one house property in which I, my mother and my family are residing. I have income from my salary but there are no savings in cash. My wife’s is using gold which is more that 7.5 tolas. We do not have any silver. I am paying monthly installments of a study loan for my son’s higher studies taken from Bank. Also I am paying installments of a loan taken from my office society. Some amount is received on account of sale of my son’s motorcycle which is kept for the purpose of purchasing another motorcycle. I do not have any bank balance and my GPG balance will be very minimum. Out of the gold used by my wife some of it is from her father side and some of it is gifted by me. I have only one motorcycle at present and no other vehicle in use. In such situation my questions are.
1. How should i calculate my zakat?
2. The study loan taken from bank is a loan taken on interest which is repaid on monthly installment basis and the installment also include a part of interest charged by the bank. When taking loan on interest basis is not good in Islam then how this loan is deductible from zakatable income?
3. Even if this loan is deductible what about the interest part being paid by me to bank every month.
4. I could have avoided taking loan from bank but it was taken to improve the financial position. It did not help to improve financial position but instead my financial position became worse. In such a situation is the loan deductible.
5. Are loans taken for the purpose of building a house or purchasing flats when one has the capacity to pay rent by staying in rented house deductible from zakatable assets.
6. When a person has sufficient income and he can manage his day to day needs from his income after paying the loan installment then why the loan installment shall be deducted from zakat assets.
7. Whether the zakt on the gold owned by my mother who is a widow shall be given by me. The gold is purchased and given as gift by me.
8. Supposing I am not eligible to pay zakat on account of loans payable to bank still if I want to pay zakat shall I pay it or I am defaulting because I am not availing the facility provided to me.
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health and states.
(1) Calculating zakat is very simple: on your zakat due date, add up all the money you own – including cash, market value of your gold and silver, and trade goods if you own a business – and if it is greater than nisab, pay 2.5% of that amount.
You do not consider the house you live in nor the vehicle you use, as such things are from one’s basic personal needs, which are deducted.
Keep in mind that you owe your own zakat (if you have nisab) and your wife owes her own (if she has nisab). So it is important to clarify who owns the gold/silver/jewelery/etc within the family.
(2) through (6): Once you have taken out a loan – whether it has interest or not, and whether it was needed or not – it is deductible for zakat purposes because it is now a real debt that you owe.
For long term debts, you may deduct the next monthly installment, or up to one year of payment.
(7) Once you give something as a gift, it is no longer owned by you. Therefore, your mother is responsible for the zakat payment on her gold (if along with her other money, silver, etc. she owns nisab).
(8) If zakat is not obligatory on you, then focus on repaying your debts since that is obligatory, while any charity you would give – even in the name of zakat – would be voluntary.
Your debts have priority. Particularly in your case, I would strongly urge you to make tawba for the interest-bearing loans you took, and do your best, within reasonable means, to pay them off as soon as possible. But make sure you do not neglect the rights of yourself and your family in the process.
And Allah knows best.
Checked & Approved by Faraz Rabbani