Is Zakat Due on Money Intended for a Future Purchase?

Answered by Shaykh Muhammad Carr

Question

Before my zakat anniversary, I agreed to purchase a business for $100,000. Due to some delays, I paid half of the amount before my Zakat anniversary and the remaining half afterward.

Am I required to pay Zakat on the $50,000, or is it exempt since the agreement was made before my Zakat anniversary?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

Allah (Most High) says,

“Accept charity offerings from their wealth, cleansing them and making them grow thereby to full purity in faith and deed.”[Quran, 9:103]

You are required to pay zakat on the $50,000, even though you intended to use it to purchase a business. Your obligation to pay zakat is directly linked to the zakatable wealth in your possession.

Zakat becomes due when the cash you hold reaches or exceeds the nisab (the minimum zakatable amount) and remains at or above this threshold for a full lunar year.

Taha Hamadi states: “If a person possesses the minimum zakatable amount while also having an equivalent debt, he is still required to pay zakat on the amount in his possession. This is due to the generality of the evidence obligating zakat, as well as the fact that he owns the minimum zakatable (nisab) amount and has the ability to manage it.” [See: Hamadi, Fath al-Wahhab]

Make Your Zakat Do More

If you do owe zakat, I would advise you to consider supporting the Islamic Scholars Fund. Its reach and impact are enormous, and you’d be supporting many scholars and students who make a real difference in the lives and faith of many Muslims worldwide.

Please take a look at the ISF Report.

See also: Zakat: A Comprehensive SeekersGuidance Reader

I pray this is of benefit and Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.