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Fatwa CenterZakah of a sum allocated to repaying debts
Question
A person borrowed a sum of money from a bank to repay throughout a certain period. This person was able to collect the sum and he decided to pay back the loan before the appointed time its repayment is due. He is asking: Should he pay Zakaah for the sum he collected to repay the debt if a lunar year elapsed on it?
Answer
All perfect praise be to Allaah, The Lord of the worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and messenger.
Zakah is not to be paid for cash sums unless two conditions are met: that the sum reaches the Nisaab (the minimum amount liable to Zakah) and that a lunar year elapses on it. If the debt consumes all the Zakah eligible wealth or reduces it below the Nisaab; then, its owner is not required to pay Zakah unless he owns other amounts of money that exceed his basic needs like a house or a vehicle that he does not need. He should compare these possessions to the debt due from him; if their value is equal to the debt or if the possessions in addition to the collected sum exceed the loan with an amount that reaches the Nisaab, he should pay Zakah. Otherwise, he should not.
Therefore, if this sum collected by the mentioned person to repay his debt reaches the Nisaab and a lunar year elapsed while it is in his possession, he should pay Zakah if he owns other amounts of money which are equal to the loan or if the possessions in addition to the collected sum exceed the loan with an amount that reaches the Nisaab. Otherwise, he is not liable to Zakah. It is worth mentioning that if the bank from which he borrowed deals in usury, it is forbidden to borrow from it. The person who does this act should repent to Allaah The Almighty and never repeat this again.
Allaah Knows best.
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