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Zakat on business
Outline
• General conditions
• Specific conditions
• Reason for adjustment
– Some specific items in Balance Sheet
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General consideration
• Islam
– If mixed ownership, calculate Muslim portion
only.
• Complete Ownership (Milk taam)*
• Intention to do business (niyyah)*
• Haul*
• Nisab*
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Specific consideration
1. Halal asset
2. Productive asset*
3. Acquired thru’ purchase/exchange*
4. Not for personal use*
5. Valuation of asset
6. Form of zakat payment
7. Trade obligation vs financial obligation*
8. Other types of zakat is calculated
separately*
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• In B/S of A: • In B/S of A:
– CA 10k,
– CA 10k,
– Trade creditor 2k,
– Fin. Creditor (Bakr) 1k – Trade creditor 2k
• Zakatable amt = CA-CL – Trade creditor (Bakr) 1k
– 10k-2k = 8k • Zakatable amt = CA – CL
• The 1k owes to Bakr is not – 10k – 3k = 7k
allowed to be deducted
because Ali has complete
• The 1k owes to Bakr is
ownership (the money is in allowed to be deducted
cash ac of Ali; Dr Cash Cr because trading purpose.
loan). (see Bakr BS-it is zakated
• The money (1k) is zakated on Bakr).
on Ali.
This penalises those who borrows moneys without specific trading purposes (1st box)
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