Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

As-salamu-alaikum,
We took a shop in a mall for INR 35lacs 16 months back with loan and selling gold.the loan will be till 2011. it is generating monthly income of 28,000 but we get 23,000 as they deduct income tax n give. now can u pls guide what will be the zakaat

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Answer:

Zakah calculations

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Zakah is payable annually on the net excess wealth of each believer, absolutely regardless of the monthly or yearly income it generates (or not).

Thus if the market value of the property you bought is still IRS 3,500,000.00 today, and assuming that you took a loan of IRS 2,000,000.00….you will be liable to pay zakah annually on your IRS 1,500,000.00 investment at the rate of 2.5%. If at the time of determining the zakah for the next calendar year, the market value of the property increases or decreases, your zakah dues will also change likewise.

The income the property generates (or does not generate) has absolutely no bearing in the determination of zakah dues. A basic guide to determine the annual zakah for the property is as follows:

Purchase price of property: 3,500,000.00

Market value of property at the time of determining its annual zakah: 5,000,000.00

Loan outstanding on the property: 2,000,000.00

Net Value of your Asset for Zakah purposes: 3,000,000.00

In such a scenario, you will be liable to pay 2.5% zakah on IRS 3,000,000.00 (market value less the outstanding loan amount).

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan