Zakat and Loans

Hanafi Fiqh

Answered by Shaykh Salman Younas

Question: Assalam aleykum

One of my friends is a University student and he has to take a loan to complete University. So, last year he took a loan and finished his first year but he did not use all of the loan money. The loan money he had on January 3, 2019 on his bank account was more than the Nisab and he kept the loan money for a year unused. He is currently on second year and he is planning on paying all the loan all together once he finishes University which is in 2 more years. Does my friend has to pay Zakat because he kept the loan money for a year without using it and it was above the Nisab amount for a year?

Answer: assalamu alaykum

When calculating one’s nisab, one includes any cash/money that they possess as part of their zakatable assets. This also applies to loan money that has been dispersed to a person’s bank account.

Even though one is meant to deduct debts owed when calculating the nisab, this will not apply in this case as the individual in question is not required to pay back anything at the moment but only after finishing university. At that point, one can deduct any immediate payments he owes.

[Shaykh] Salman Younas

Checked and approved by Shaykh Faraz Rabbani

Shaykh Salman Younas  graduated from Stony Brook University with a degree in Political Science and Religious Studies. After studying the Islamic sciences online and with local scholars in New York, Ustadh Salman moved to Amman where he spent five years studying Islamic law, legal methodology, belief, hadith methodology, logic, Arabic, and tafsir. He is currently a PhD candidate at the University of Oxford and continues his traditional studies with scholars in the United Kingdom.