Paying zakah on the capital in addition to the annual profit
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Fatwa number ( 18292 )
Q: The zakah paid on the activities of the Binda institution in previous years was calculated on the capital in addition to the annual profit. When we asked some students of knowledge about this matter, they issued a ruling that this is incorrect, and that zakah must be paid on the goods present at the time of inventory, without deducting the debts owed to suppliers or damaged goods. Please note that we purchase goods on credit, so at the time of inventory there are debts owed to suppliers. For example, here are the figures for one year: Total goods at inventory = 3,313,509 riyals. Creditors (suppliers) = 2,712,864 riyals. We ask you to clarify this matter for us, may you be rewarded, and we offer you our sincere thanks and appreciation.
A : It is obligatory to pay zakah on all goods in the commercial establishment for which a lunar year has passed, or on their value at which they were purchased. It is also obligatory to pay zakah on money for which a lunar year has passed, whether it is in the possession of its owners or is a debt owed by people, provided they are solvent and not delinquent. One does not look at the debts owed by the owner of the establishment, nor is the debt deducted from the zakatable wealth in the ownership of the establishment owner when the lunar year is completed, according to the correct of the two opinions of the scholars. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
The amount found in the possession of the shop owner at the completion of the lunar year is subject to zakah, according to the correct opinion of the scholars. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: The zakah paid on the activities of the Binda institution in previous years was calculated on the capital in addition to the annual profit. When we asked some students of knowledge about this matter, they issued a ruling that this is incorrect, and that zakah must be paid on the goods present at the time of inventory, without deducting the debts owed to suppliers or damaged goods. Please note that we purchase goods on credit, so at the time of inventory there are debts owed to suppliers. For example, here are the figures for one year: Total goods at inventory = 3,313,509 riyals. Creditors (suppliers) = 2,712,864 riyals. We ask you to clarify this matter for us, may you be rewarded, and we offer you our sincere thanks and appreciation.
A : It is obligatory to pay zakah on all goods in the commercial establishment for which a lunar year has passed, or on their value at which they were purchased. It is also obligatory to pay zakah on money for which a lunar year has passed, whether it is in the possession of its owners or is a debt owed by people, provided they are solvent and not delinquent. One does not look at the debts owed by the owner of the establishment, nor is the debt deducted from the zakatable wealth in the ownership of the establishment owner when the lunar year is completed, according to the correct of the two opinions of the scholars. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
The amount found in the possession of the shop owner at the completion of the lunar year is subject to zakah, according to the correct opinion of the scholars. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.