Here is a situation.
I have debt totalling $9000.
I’m in possession of $4500 dollars in my bank account.
I pay off my debt at $150 per month.
My total wealth is therefore a debt of $4500.
Would I be obligated to pay zakat because I am in possession of $4500 in the bank, or would I be exempt from zakat because my total wealth is minus $4500, ie. I am in overall in debt?
<~~ No clue.
Give what you can afford?
And then give every now and then because your heart says so.
Don't give because it's demanded of you. Give because you want to.
Give because you might make a difference in anothers life.
Strictly technically, zakat is on "excess" wealth, and not your bank balance at a moment in time. So, review your finances to see how much of the wealth you rotated during the year. Typically its calculated on the lowest balance during the year, cz thats the wealth you never touched during the year.
Secondly, strictly technically, I don't think (emphasis is on "think" and not definite) you are permitted to keep debt as well as excess wealth, according to orthodox islamic teachings. You are supposed to pay off your debt as much as possible.
So, if we presume you pay off all your debt today, then technically you are broke. You don't pay zakat, however, you can now put a claim to receive zakat.
maddy, that interest you pay on 9000 dollar debt will win you a nice leather sofa in hell. pehlay usska intzaam karo...forget about zakaat.:)
that is a great question mr scientist i have to hand it to you :k: shabash
secondly, i believe that u would have to pay off ur debt slowly and when u can afford to pay zakat, because as ur already karzai then how can u pay zakat under debt? that’s why clear ur finanacil situation when u are in the black, pay zakat.
brov’ this is my point of view i myself don’t think that, this is the proper answer, just wait for some 1 to come up with something better or see a good scholar/imam etc and ask them.
[QUOTE]
*Originally posted by ChannMahi: *
maddy, that interest you pay on 9000 dollar debt will win you a nice leather sofa in hell. pehlay usska intzaam karo...forget about zakaat.:)
[/QUOTE]
It's a student loan arranged by the government - the value that I pay back is exactly the same as the value that I borrowed, no matter how long I take to pay it off. Hence nobody is making any profit on the loan.
Channmahi has raised an interesting point. Is the person who is paying interest on debt can avoid paying Zakat (charity)??
let's say if someone borrowed money on interest to buy a car which is his necessity but he is under debt and paying certain amount of repayments which allows him to save some amount in his bank account. is he supposed to pay zakat?
ZAKAH AND SADAQATUL-FITR QUESTIONS AND ANSWERS By Hussein Al-HusseinDate: 12-19-1999
Q. Do I have to pay Zakah?
A. Yes, it is a Fard (must) on every Muslim capable of paying it. It is
also one of the five pillars of Islam.Q. How often do I have to pay?
A. For most items such as cash, stocks, gold, silver, it is paid once
every lunar year (not solar year). For fruits, vegetables, and other
produce, it is paid once only at the harvest time every time there is a
harvest. For the items that require Zakah every year, it is better to
fix a lunar month such as Ramadhan (for more reward) and pay during that
month.Q. Who do I pay to?
A. It is paid to the main eight categories mentioned in the Qur'an.
Among the ones we face often now are the poor, the needy, the ones who
owe a lot of debt, and in the sake of Allah (s.w.t.). You can pay it to
the Masjid and write in the memo Zakah so that the people in charge will >make sure it is spent in one of the eight categories.Q. What do I pay Zakah on?
A. You pay Zakah on the wealth you have that is not for use for
clothing, food, housing, and tools, if it exceeds the Nisab.Q. How much is the Nisab for gold?
A. It is 20 dinars of gold, which is 96 gm according to most books and
85 gm according to Dr. Yousuf Al-Qaradhawi in his book and thesis "Fiqh
Az-Zakah". He found that the Mithqal of gold was not held constant by
Muslims later on, even though the Prophet (s.a.w.) told them to fix it
to Makkah's Mithqal and to fix the Mikyal to Madinah's Mikyal since the
Makkans were people of trading and the Madani people were people of
farming. The current price of gold as of this week is $281. An ounce is
28.35 gm (Dec 19, 1999).Q. How much is the Nisab for silver?
A. It is 200 dirhams of silver, which is 672 gm according to most books
and 595 gm according to Dr. Yousuf Al-Qaradhawi in his book and thesis
"Fiqh Az-Zakah". The current price of silver as of this week is
$5.2/ounce.Q. How much is the Nisab for cash?
A. It is the equivalent of the gold Nisab in cash. So, it is $952 using
the gold Nisab as the base (on Dec 19, 1999).Q. Do I have to pay Zakah on the house that I own and live in and the
car that I use?A. No, you don't have to.
Q. Do I have to pay Zakah on the car and house that I own and rent out
to people?A. No, you do not have to pay Zakah on the value of the house or the car
but on the amount of money earned from renting them.Q. How do I pay Zakah on the merchandise that I trade?
A. You have to have the Nisab at the beginning and end of the year (say
last Ramadhan and this Ramadhan) and you have the intention of buying
and selling the merchandise not owning it. If this is the case, then you
evaluate the merchandise you have this year and you pay 2.5% on that
value after detucting the business expenses such as rent of the place
and maintenance of the merchandise. You pay on the current value if it
is above the Nisab not on the lesser of last year's and this year's
value.Q. Do I have to pay Zakah on gold, silver, precious stones, and other
jewelry that is used for ornament only?A. If the jewelry is not bought for trading but for use by the women in
the house then you do not need to pay Zakah on it. Since it is Haram for
a man to wear gold jewelry, then he is required to pay Zakah on the gold
and other jewelry he owns above the Nisab value; this does not apply to
the silver ring he may be wearing since it is Sunnah for men to wear
silver rings. In Hanafi Mazhab, women pay Zakah on gold and silver
jewelry.Q. How do I pay Zakah on the cash I have?
A. If the cash you had exceeded the Nisab last year and this year, then
pay Zakah 2.5% of the minmum value of last year and this year.Q. How do I pay Zakah on the stocks that I own in a publically traded
company?A. Treat them like merchandise; evaluate them and see if you had the
Nisab last year and this year; then pay Zakah on the current value if
both values are above the Nisab after deducting from it the expected tax
and the commission of selling them.Q. Do I pay Zakah on stocks I own in a privately held company?
A. No, you do not since the stocks are not sellable yet whether you have
paid for them yet or not.Q. Do I pay Zakah on stocks not vested yet?
A. No, you do not.
Q. Do I pay Zakah on stocks vested but not exercised yet in a publically
held company that were offered to me for a market value when the company
was already public?A. Technically, you do not have to pay Zakah on them since you do not
own them. If you got the stock at $20 per share for instance and the
current value is below that value, then for sure you do not pay Zakah on
them since it makes no sense to exercise them and lose. If you they are
traded at a higher value and most likely you will exercise them and wish
to pay Zakah on them to be on the safe side, then pay 2.5% on the net
value of the gain you would get from exercising them, which is the
current value minus the expected tax, the broker commission, and the
price you will pay back for them to own them.Q. Do I pay Zakah on stocks vested but not exercised yet in a publically
held company that were offered to me for a small value (free or few
cents) when the company was private?A. Again, technically, you do not have to pay Zakah on them since you do
not own them. However, I recommend you pay on them because this is a
win-win situation and they are to be exercised and make you money if the
stock is traded way higher than the few cents you would pay for them.
You may be holding them in just to avoid higher tax or waiting for a
higher stock price. So, if you want to pay and be on the safe side, pay
2.5% of the current value minus the expected tax, the broker commission,
and the price you would pay back to own them.Q. How do I pay Zakah on ESPP (Employee Stock Purchase Plan)?
A. Under this plan, the company gives the employee the right to deduct
up to 10% of the salary for example and buy stocks of the company at 85%
of the minimum of the stock values at the beginning and end of a six
month period for example. They deduct money from your salary on monthly
basis which will be considered saving till you earn the stocks. This
saved money before the end of the period should be added to the cash you
are paying Zakah on if you have not finished the term yet. You do not
pay Zakah on the stocks you would get at the end of the term since you
have not owned them yet. Once you own them at the end of the term, they
are now treated like merchandise as explained in the stocks Zakah above.
This means if you owned them before your Zakah pay day (Ramadhan 15th,
for example), then you should pay Zakah on them and no longer on the
cash you paid for them.
Q. How do I pay Zakah on 401K or IRA where there is a 10% penalty for
early withdraw and possibly other penalties?A. If you have had it for over a year exceeding the Nisab last year and
this year, then pay 2.5% on the net value if you were to cash it today.
So, deduct all penalties, the expected tax, and the broker commission
of selling it from the current market value.Q. I have a lot of 401K but have no money to pay its Zakah, how do I
pay?A. Write down the amount you owe as Zakah and pay it whenever you have
the moeny or whenever you collect your 401K. No need to borrow money to
pay the Zakah.Q. If I pay Zakah by credit card to some non-profit organization, do I
need to add the credit card collection fee (1% or 3%) to the value?A. No need to add any value; that is an expense of delivering the Zakah
by the collecting non-profit organizations. They can deduct it from the
collected Zakah but the Zakah payer does not have to pay for it.Q. Do I pay Zakah on money people owe me but have little hope of getting
it back?A. No, you do not. There are differences here. If it is a dead debt and
you chances of getting it back are slim then you do not pay Zakah on it
now in Mazhabs. If you ever get it back, you pay Zakah for one year as
the Maliki Mazhab says, or on all passed years as the Shafi`i and Hanafi
say. My belief is that you count it as new money you own when you get it
back and start from there. The Zakah in Islam is on the wealth not the
person; hence if you owe me some money but you do not have the money to
pay it back to me, then I would be paying Zakah on money that does not
exist if I paid Zakah.Q. Do I pay Zakah on money people owe me and I have hope of getting it?
A. No, you do not. There are differences here. Abu Hanifah says that you
do not pay Zakah until you get it back and then pay Zakah on on all the
years. Ash-Shafi`i says that you pay Zakah on it. In Maliki, you pay on
one year if you get it back. Others say that do not pay Zakah until you
get them back and start paying Zakah on the money when you get it back
without having to pay for all past year or years. If someone bought a
house from another brother for one million dollars over 40 years, he
would be paying $24,000 first year to the owner and the owner would be
paying Zakah of $25,000. At the end, the owner would have paid half a
million in Zakah. That is why I believe you start paying Zakah when you
own the money back and do not have to pay on past year or years on this
recovered debt money.Q. Do I pay Zakah on money I have if I owe people money?
A. If you use the money now to pay off the debt, you pay Zakah on what
is remaining if it is above the Nisab; if you choose not to pay off your
debt now, then you pay Zakah on the whole amount if it is above the
Nisab. Khalifah Othman used to tell people: This is your Zakah month,
so, pay off your debts before we collect Zakah from you. Combining this
question with the above two questions, you find according to some
Mazhabs that Zakah is paid twice on the same money if the money exisits
and not paid off yet, or Zakah is paid once on money that does not
exist and not paid off yet.Q. If my wife is poor, can I pay my Zakah to her?
A. You cannot pay Zakah to people you are financially responsible for
their provision such as your wife, sons, father, mother, ..etc.Q. If I am poor, can my wife pay her Zakah to me?
A. Yes, she can, since she is not financially responsible for your
provision. She will also get a reward for Zakah and a reward for
spending on you as a relative.Q. Do I add my gold to my cash to achieve the Nisab if neither of them
is above the Nisab?A. No, you do not.
Q. Do I pay Zakah on the value of my computer on the value of the memory
in it for example?A. If the computer is for your personal or business use, then you do not
pay Zakah on it. However, if you sell and buy computers, and the
computer is just an item of merchandise, not the one you use, then you
include it in the merchandise that you pay Zakah on. The same about the
memory, if you sell and buy memory, and the memory you are asking about
is not for use by you, then you include it in the merchandise that you
pay Zakah on.Q. I do not mind paying more Zakah than what is required; give me a
simple formula that is easy to use?A. This is what I actually do myself. Every Ramadhan towards the end of
the month, I add up all the cash I have accessible, the net value of all
the stocks I have (means tax, commission, and penalties deducted), and
then pay 2.5% on that value. This way, I do not need to keep track of
what I had last year or how much I had every day of the year or how much
I owe people or how much people owe me. This way, I am always on the
safe side.Q. Who has to pay Sadaqatul-Fitr or Zakatul-Fitr or Fitrah?
A. It is a Fardh (must) on every free mature Muslim, child or grown up,
man or woman, who owns more than the amount of Sadaqatul-Fitr beyond his
basic needs. The adult free Muslim man must pay for all the individuals
he is financially responsible for their provision, such as his children,
wife, and servants.Q. When do I pay Sadaqatul-Fitr?
A. Sadaqatul-Fitr (or Fitrah) is paid anytime before the prayer of
Eidul-Fitr. After the prayer, you still have to pay it if you did not,Eid approaches so that the people it is
but it will count as any Sadaqah not as Fitrah, as the Hadith mentioned.
It is good to pay it as the
paid to can enjoy theEid with the Muslims. In the Shafii Mazhab, it
is Sunnah before Eid prayer and allowed (Ja'iz) after Eid prayer until
sunset of Eid day but it is Makruh to delay it after prayer and Haram to
delay it after Maghrib of Eid day.Q. Who do I pay Sadaqatul-Fitr to?
A. Same categories of Zakah. If you pay it to the Masjid to deliver it
to its destination, make sure to write in the memo "Fitrah or
Sadaqatul-Fitr or Zakatul-Fitr" so that it will get deliver it before
`Eid prayer.Q. How much do I have to pay?
A. It is one Sa
of wheat, dates, rice, corn, beans, or any item of theis four Mudds. A Mudd is the amount the fills both
daily food. The Sa
hands when open jointly together. Some scholars allowed the use of cash
if it is more useful for the ones it is paid to; in this case, it is
about five to seven dollars for each member of the family. There are so
many families in need for both the Fitrah and Zakah that come to the
Islamic Center, and the Masjid Zakah committee members know them.Q. Do I pay Sadaqatul-Fitr on the fetus if my wife is pregnant?
A. No, you do not have to. You do have to pay, however, if she delivers
before maghrib (before `Eid prayer in Hanafi).Q. If someone died before Maghrib of last day of Ramadhan (`Eid Fajr
in Hanafi) do we have to pay Sadaqat Al-Fitr on him?A. No.
mAd_ScIeNtIsT, Allah does'nt make it hard on us to pay Zakat(charity)
if you are in debt, then i believe(just my view) you don't need to pay Zakat. But you have to take in account your assets or land as well i think.
Maddy, do what you think you can, and inshallah you'l be out of debt soon...
[QUOTE]
*Originally posted by mAd_ScIeNtIsT: *
Hence nobody is making any profit on the loan.
[/QUOTE]
Yes someone has made profit on it and that is you.
As far as what I have studied in Fiqh Al-Zakat, one of the conditions for paying zakat is that you should have the wealth for 1 complete year ("Holan al haul"). Another condition is ("zaed an il hajat al-aslia") more than the basic necessities. There are some more conditions also to be eligible for zakat. I am sorry my books are in Pakistan and i don't have them here, otherwise i would have told you in detail. I think the two conditions I mentioned will solve your problem.
Found this hadith which I thought would help you understand zakaat a bit..
The Messenger of Allah (may peace be upon him) said: "Giving charity is obligatory upon each Muslim. It was asked: What do you say of him who does not find (the means) to do so? He said: Let him do manual work, thus doing benefit to himself and give charity. It was asked: What about one who does not have (the means) to do so? He said: Then let him assist the needy, the aggrieved. It was asked: What do you say of one who cannot even do this? He said: Then he should enjoin what is reputable or what is good. He asked: What if he cannot do that? He (the Holy Prophet) said: He should then abstain from evil, for verily that is charity on his behalf."
(Sahih Muslim hadith)
*