The ruling on the effect of investment debt on the account of the debtor in Zakat

Abstract

This research focuses on the ruling on the effect of investment debts on the debtor’s zakat nisab (minimum threshold). The problem of the study lies in the fact that some people in the contemporary era borrow money to establish projects, contribute to their establishment, or develop them. Others borrow to purchase land and real estate and trade in them, aiming to generate profit by investing the borrowed funds. Most of these debts are installment-based, where each installment becomes due according to the term agreed upon between the creditor and the debtor, while the remaining installments stay deferred to their respective agreed terms. The study aims to: clarify what is meant by investment debt, explain the ruling on zakat of a debtor’s wealth in general, and determine the ruling on the effect of investment debts on the debtor’s zakat nisab. The researcher reached several conclusions, the most important of which are: if investment debts are used to finance fixed assets that exceed the debtor’s essential needs, then these debts correspond to those assets and are not deducted from the cash in hand nor from the income generated for the debtor. However, if they are used to finance fixed assets necessary for the debtor’s livelihood and not exceeding essential needs, then the due (current) portion of the debt is deducted from the debtor’s income, while the deferred portion is not deducted. If the remainder reaches the nisab, zakat is due; otherwise, it is not. If the debts are used to finance a commercial activity beyond the debtor’s essential needs, then the annual installment is deducted from the value of trade goods and cash in hand, and zakat is paid on the remainder, whereas deferred installments are not deducted. The researcher adopted the descriptive, analytical, and comparative methodology. The general structure of the research consists of an introduction addressing the research problem, its questions and objectives, the methodology, and the research plan; the first section defines the key terms of the title; the second section presents the jurists’ opinions on the zakat of a debtor’s wealth; the third section discusses the effect of investment debts on the debtor’s zakat nisab; followed by a conclusion containing the main findings and recommendations; and finally a list of key sources and references.

Keywords: ruling, debt, investment, zakat, nisab.