I am a merchant who owns private capital and have a debt for goods from institutions. I assess everything I own in excess of the debt I have with the institutions and
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The questioner : I am a merchant who owns private capital and have a debt for goods from institutions. I assess everything I own in excess of the debt I have with the institutions and I pay zakah on all of it at the end of the year. Some people told me to deduct the debt I owe to people and pay zakah on my net capital, because the people will pay zakah on their money that is with me. So, please, O honorable Shaykh, settle this matter?
The Shaykh : This matter cannot be settled in reality, because the scholars differ on this issue:
That is, if a person has money with which he trades and he has a debt corresponding to this money: does he deduct the debt from the money he has, or does he not deduct it? The scholars have three opinions on this, and what appears to me is that it is obligatory to pay zakah on the money in his hand, without deducting the debt from it. If, for example, a man has money worth one hundred thousand and he has a debt of fifty thousand, how much does he pay zakah on? According to the opinion we have chosen, it is one hundred thousand, and he does not deduct the debt he had from it. According to the second opinion, he pays zakah on fifty thousand and deducts the amount of the debt he owes. There is another opinion.
The Shaykh : This matter cannot be settled in reality, because the scholars differ on this issue:
That is, if a person has money with which he trades and he has a debt corresponding to this money: does he deduct the debt from the money he has, or does he not deduct it? The scholars have three opinions on this, and what appears to me is that it is obligatory to pay zakah on the money in his hand, without deducting the debt from it. If, for example, a man has money worth one hundred thousand and he has a debt of fifty thousand, how much does he pay zakah on? According to the opinion we have chosen, it is one hundred thousand, and he does not deduct the debt he had from it. According to the second opinion, he pays zakah on fifty thousand and deducts the amount of the debt he owes. There is another opinion.