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Judgment on Zakat for Houses

Judgment on Zakat for Houses

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Zakat on rental income is computed incorrectly by experts.
Zakat on rental income is computed incorrectly by experts.

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Categories:Types, Business/Law
Published by: Imran Ahsan Khan Nyazee on Sep 02, 2013
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....
Zakāt on Rental Income
Judgment Issued For Virtual Sharī‘ah Court
Imran A. Nyazee Version 1.0
nyazee@icloud.com January 3, 2013Cite as:
VSC–J-1 (2012) ¶ …
The Petition
 was filed in this court seeking a declaratory pronouncementabout the rules of 
zakāt
for real estate, houses and plazas that weremeant for trade or rental income. In particular it was asserted that if two persons, each having a million dollars invest their money with oneinvesting in gold and silver and the other in rental property, the personwho has invested in gold and silver has to pay zakat, while the other has to pay noton the value of his property, but only on the rent received after it has been saved fora year (
ḥawl
). This amounts to some kind of discrimination when the aim of both isinvestment. A judgment is sought that explains the reasons for the different treatmentmeted out to the owner of real estate, along with an elaboration of the rules of 
zakāt
for such a person.
.
1 FC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2 IFTC. . . . . . . . . . . . . . . . . . . . . . . . .
4
3 TRSWR. . . . . . . . . . . . . . . . . . . . . .
4
4 A  R EM . . . . . . . . . . .
8
5 TH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
6 I N A  W  L  S RT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
1 F   C
1.
The issues of 
zakāt
tend to be highly complex in the writings of the jurists, eventhough they may appear simple and direct when a ruling has been issued. The reasonis obvious:
zakāt
deals with the entire range of human activity, wealth and the meansof earning wealth. The primary rules in the Qur’ān are general. For example:1
 
....
2V S‘ C§1“Of their wealth, take
ṣadaqah
” [Qur’ān 9:103] where the word
ṣadaqah
means
zakāt
;“And those in whose wealth is a recognized right, for the (needy) who asks and himwho is deprived (for some reason from asking).” [Qur’ān 70:24, 25]The word
amwāl
(wealth or property) in the above verses is general, therefore, it canapplytoanyandallkindsofwealth. The
Sunnah
thenidentifiesthetypesofwealththatis subject to
 zakāt
and also prescribes the rates to be charged. The jurists classify thesetypes and keep similar things together applying various standards that are derivedmostlyfromthetexts. Attimestheitemunderexaminationcannotbeclearlyassociatedwith one of the established categories, and this causes confusion in the minds of thosewho have to pay
zakāt
.
2.
Theissueofrentalpropertyisonesuchcase. Thereissomedifficultyinassociatingitclearlywithoneoftheestablishedcategories. Shoulditbetreatedlikegoldandsilveror should it be treated like trading goods? Is it possible to associate it with agriculturalland and its produce? The earlier jurists, at least in the Ḥanafī school, were able tosettle this issue with great ability and clarity.
3.
In modern times,
fatwās
abound that convey the ruling to people who have to pay
 zakāt
. Thus, thelearnedAhmadRazaKhanBarelviissuesaone-line
 fatwā
sayingthatthe rent from a house will be subject to
 zakāt
after a yearhas passed after thereciept of such rent.
1
The learned Mufti Taqi Usmani, his esteemed brother Mufti Rafi Usmanihavealsoissuedsimilarrulings.
2
MuftiTaqiUsmanisaysthattherentreceivedwillbeadded to your cash assets and will be subjected to
zakāt
at the end of the year.
3
His sonhas also written a similar book, which serves as a guide on
zakāt
for al-Meezan Bank.The guide, relying on
Fatāwā Qāḍī Khān
and
Bahishti Zayvar
, says: “If a person hasa house that is leased, the value of the house will not be subject matter of Zakah, asleasing a property does not render it a trading asset. However, the rentals receivedwill be the subject matter of Zakah.”
4
The guide considers rentals and wages to beweak debts and says: “The ruling for this class of debts is that Zakah is not payableunlessfullamountispaidandoneZakahyearpassesthereonafterpayment. NoZakahis payable for preceding years.”
5
There are, and must be, countless other
fatwās
of asimilar type, but our purpose here is merely to indicate the prevailing rulings as factsfrom where we proceed.
4.
The above
fatwās
appear to state the correct Ḥanafī position on the basis of thesources of the school. The direction they take is correct, but the rulings are incomplete
1. See Aḥmad Riḍā Khān Barelvi,
Fatāwā Riḍawiyyah
, vol. 30 (Lahore: Riḍā Foundation, 2006), vol. 10,161.2. See, e.g., Usmani, Muhammad Taqi,
Āp Zakāt Kis Tarah adā’ Karen?
(Karachi: Memon Islamic Pub-lishers, n.d.), 58.3.Ibid.4. M. Imran Ashraf Usmani and Bilal Ahmad Qazi,
Guide to Zakah: Understanding and Calculation
(Karachi: Quranic Studies Publishers, n.d.), 18.5.Ibid.
 
....
§1V S‘ C3and partially incorrect, as we will show later. Further, no reasoning is provided at all,which gives rise to questions like the one we are facing in this case. It is not clear why ahouse given on rent is not a trading asset or even a commodity that should be subjectedto
zakāt
on the basis of its value, for after all it is wealth.
¶ 5.
For
fatwās
from the other schools, we may rely on the well known manual of 
zakāt
writtenbytherespectedsufal-Qaraḍāwī.
6
Werefertothetranslationofthismanualby Monzer Kahf. Chapter 8 of the manual is devoted to the issue of houses and othersimilar properties. There does not appear to be a clear ruling on the issue in thoseschools, therefore, the Author focuses on different views from the Companions (God bepleased with them), some well known Hanbalī jurists, and a variety of sources. In theend he resorts to the formula “I select” and gives a ruling that is no different from the
 fatwās
above. The legal basis or the true rationale we are looking for is missing inthis important work too. Chapter 9 is devoted to wages and personal incomes, aboutwhich there is again some confusion. The manual is indeed a good effort and has to beappreciated.
6.
From this we may turn to the resolutions of the Islamic Fiqh Academy of theOIC located at Jeddah. Resolution No. 2(2/2) of the the Council of the Islamic Fiqh Academy, issued during its second session, held in Jeddah (Kingdom of Saudi Arabia),from 10 to 16 Rabiul Thani 1406 H (22-28 December 1985) states as follows:
Having looked into the studies presented about Zakat on real estates and rented non-agricultural  lands, and after thorough and in-depth deliberations which covered the subject from its different aspects, it became evident that: 1. No clear statement is traced which levies Zakat on real estate and rented lands. 2. Similarly, no statement has been reported levying current Zakat on the yield of  real estate and non-agricultural rented lands. The Council RESOLVES: 1. No Zakat is levied on assets of the real estate and rented lands. 2. Zakat is due and payable on its yield, which is one fourth of the one tenth (2.5%), after the elapsing of one year period from the date of its actual receipt, if all other conditions are present and  no impediments exist. 
The net effect of this resolution is no different from the
fatwās
mentioned above. Wehave found only one study that has been published in the Academy’s journal.
7
It ispossible that there were other studies, but these have not been published. What issurprising is that the study does not prefer this ruling. It goes against it on mostcounts. It is only the last para in this study, which says that according to some theseowners should be left alone and whatever income they have will ultimately be added tothe cash assets they have on which
zakāt
can be paid after the passage of a year.
8
It is
6. suf Qarạdāwī,
Fiqh al-Zakah
, trans. Monzer Kahf, vol. 2 (Jeddah: King Abdul Aziz University,n.d.), vol. 1, 235-268; Qarḍāwī’s opinion is also quoted in Aḥmad Fahmī, “al-Zakāt: Wujūbuhā fī Ajral-‘Aqār,”
Majallat Majma‘ al-Fiqhī al-Islāmī 
2, no. 1 (2003): 118.7. Aḥmad Fahmī, “al-Zakāt: Wujūbuhā fī Ajr al-‘Aqār,”
Majallat Majma‘ al-Fiqhī al-Islāmī 
2, no. 1(2003): 109–19.8.Ibid., 119.

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