What is the permissible amount of profit in the Shari'ah when a person trades in a type of goods? Is it half of the capital, a quarter, a third, or more?
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The questioner : This is a message received from 'Abd al-Samad 'Abd Allah in the city of Duhok, Iraq. The listener says in this question: What is the permissible amount of profit in the Shari'ah when a person trades in a type of goods? Is it half of the capital, a quarter, a third, or more?
The Shaykh : Profit in buying and selling has no fixed limit in the Shari'ah. A person may make a profit many times greater than his capital.
The questioner : Yes.
The Shaykh : Depending on market activity and rising prices, many people have bought an item at a certain price and then sold it for several times that amount. They may make a profit less than that, or they may make no profit at all, or they may incur a loss.
The questioner : Yes.
The Shaykh : The matter in this case depends on supply and demand, and prices are in the hands of Allah (Mighty and Majestic). He is the One who sets prices, who restrains and expands, and who provides sustenance. However, what is to be avoided is for a person to raise the price above what is customary or above the price of the goods in the market, and to deceive the ignorant person with it. For example, if people are selling this item for ten, but he sells it to an ignorant person for fifteen or more, then this is not permissible because it involves deception and fraud. The Prophet (peace and blessings be upon him) said:Jami` at-Tirmidhi 1315Sahih (Darussalam) And if a person is not pleased that someone deals with him in this manner, how can he be pleased to deal with others in that manner?
As for if the market has risen, such as if he buys this item for ten and then the goods increase in price until they reach thirty or forty, there is no harm in selling at this price because it is the price of the people.
As for the hadith to which the questioner referred, the hadith of 'Urwah ibn al-Ja'd al-Bariqi (may Allah be pleased with him), the Prophet (peace and blessings be upon him) gave him a dinar to buy a sacrificial animal.
The questioner : Yes.
The Shaykh : So he bought two sheep with the dinar, then sold one of them for a dinar and brought the sacrificial animal and the dinar to the Messenger of Allah (peace and blessings be upon him). The Prophet (peace and blessings be upon him) blessed his trade, so that if he had bought dust, he would have made a profit in it. This does not indicate what the questioner mentioned, because it is possible that the one who sold the two sheep for one dinar knew that it was for the Messenger of Allah (peace and blessings be upon him) and lowered the price. It is also possible that he was in a hurry to go to his family and sold them cheaply. It is also possible that the price had increased at the time of the purchase, and then the sale took place afterwards.
In any case, there are possibilities.
The questioner : Yes.
The Shaykh : But the fundamental rule is that it is not permissible for a person to take advantage of another in a way that is not necessitated by a rise in price. This is the criterion.
The questioner : May Allah bless you.
May Allah reward you, Shaykh Muhammad, and may Allah magnify your reward for what you have clarified for us and for the honorable brothers among the listeners.
The Shaykh : Profit in buying and selling has no fixed limit in the Shari'ah. A person may make a profit many times greater than his capital.
The questioner : Yes.
The Shaykh : Depending on market activity and rising prices, many people have bought an item at a certain price and then sold it for several times that amount. They may make a profit less than that, or they may make no profit at all, or they may incur a loss.
The questioner : Yes.
The Shaykh : The matter in this case depends on supply and demand, and prices are in the hands of Allah (Mighty and Majestic). He is the One who sets prices, who restrains and expands, and who provides sustenance. However, what is to be avoided is for a person to raise the price above what is customary or above the price of the goods in the market, and to deceive the ignorant person with it. For example, if people are selling this item for ten, but he sells it to an ignorant person for fifteen or more, then this is not permissible because it involves deception and fraud. The Prophet (peace and blessings be upon him) said:
Whoever cheats, he is not one of us.
من غش فليس مناAs for if the market has risen, such as if he buys this item for ten and then the goods increase in price until they reach thirty or forty, there is no harm in selling at this price because it is the price of the people.
As for the hadith to which the questioner referred, the hadith of 'Urwah ibn al-Ja'd al-Bariqi (may Allah be pleased with him), the Prophet (peace and blessings be upon him) gave him a dinar to buy a sacrificial animal.
The questioner : Yes.
The Shaykh : So he bought two sheep with the dinar, then sold one of them for a dinar and brought the sacrificial animal and the dinar to the Messenger of Allah (peace and blessings be upon him). The Prophet (peace and blessings be upon him) blessed his trade, so that if he had bought dust, he would have made a profit in it. This does not indicate what the questioner mentioned, because it is possible that the one who sold the two sheep for one dinar knew that it was for the Messenger of Allah (peace and blessings be upon him) and lowered the price. It is also possible that he was in a hurry to go to his family and sold them cheaply. It is also possible that the price had increased at the time of the purchase, and then the sale took place afterwards.
In any case, there are possibilities.
The questioner : Yes.
The Shaykh : But the fundamental rule is that it is not permissible for a person to take advantage of another in a way that is not necessitated by a rise in price. This is the criterion.
The questioner : May Allah bless you.
May Allah reward you, Shaykh Muhammad, and may Allah magnify your reward for what you have clarified for us and for the honorable brothers among the listeners.