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One more question is : 3 Years back the bank was giving loan which I took and invested the whole amount with one my friends. I am still paying the loan to bank and I will be paying for two more years. The monthly payment is directly deducted from my salary by the bank. Till now no income has been generated from the investment. On this amount do we have to pay Zakah. If we have to pay how to calculate and pay?

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa
Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

__One of our brothers/sisters has asked
this question:__

**Dear
Sir,**

**Assalaamualikum
wa Rahmatullahi wa Barakatuhu.**

**Sub :
Calculartion of Zakah.**

**I am
working in **

**One
more question is : 3 Years back the bank was giving loan which I took and
invested the whole amount with one my friends. I am still paying the loan to
bank and I will be paying for two more years. The monthly payment is directly
deducted from my salary by the bank. Till now no income has been generated from
the investment. On this amount do we have to pay Zakah. If we have to pay how
to calculate and pay?**

(There may be some grammatical and spelling
errors in the above statement. The forum does not change anything from
questions, comments and statements received from our readers for circulation in
confidentiality.)

**Answer:**

**Zakah determination**

In the name of Allah, We praise Him, seek His help and ask
for His forgiveness. Whoever Allah guides none can misguide, and whoever
He allows to fall astray, none can guide them aright. We bear witness that
there is none worthy of worship but Allah Alone, and we bear witness that
Muhammad (saws) is His slave-servant and the seal of His Messengers.

Every believer, regardless of whether man, woman, or
child, who has excess wealth (over the nisaab which is appx US$1,000.00) of
their own, is liable to pay a 2.5% annual zakat of their nett excess wealth in
Shariah.

Zakat is not determined from ones earnings or profits,
but rather on ones net excess wealth which is left over after paying all their
expenses, and it has been in their possession for a period of one calendar
year. There is no zakah liable on the house one lives in, or the furniture and
fixture one uses in their house, or the car one drives, etc. But if one has property which one has bought
as an investment, or spare vehicles other than the one one drives, or jewelry,
or any other excess assetthen zakah would be liable on these excess wealth and
property.

Any asset, or wealth, or cash, or savings, which are left
over after all of ones expenses are paid, and that excess savings and wealth
has been in their possession for one full calendar year is liable for payment
of annual zakat at 2.5% of its value.

Thus the basic formula to calculate zakah is as follows:

All Assets (except the house one lives in, vehicle one
uses, etc.) minus all loans = Nett Excess Assets. It is on the market value of these Nett
Excess Assets upon which the annual zakah of 2.5% is due.

**Now how to calculate
and pay the Zakah?**

Only as an example, we shall put a value on every asset
and every loan which you have mentioned in your notes; Insha Allah that should
give you a clearer picture on how to determine your Nett Excess Assets.

Assuming that what you have declared are all your assets:

**1. I have three apartments in my native place**

The market value (not original bought price) of each
apartment is say $50,000.00; thus the total value of the three apartments would
be $150,000.00.

**2. Here I have a job
also where the income is fixed.**

Zakah is liable only on assets and not on earnings; thus
regardless of your earnings per month or year, there is absolutely no zakah on
the earnings itself.

**3. In my last
vacation in 2005 I did perform the marriage of my daughter where I met the
expenses of the marriage by taking loan from friends and from bank**

Lets assume the loan still outstanding from your friends
is $10,000.00 and from the bank $20,000.00; thus total $30,000.00 is the value
of the outstanding loans.

**4. The gold
ornaments of family is still there**

Lets assume the total current market value of the gold
ornaments is $5,000.00.

**5. Years back the
bank was giving loan which I took and invested the whole amount with one my
friends.**

Lets assume the loan you took three years ago was
$18,000.00, and you have to date paid $6,000.00 of that loan; thus the value of
the amount as your investment in your friends business is $6,000.00, and the value
of the outstanding loan is $12,000.00.

Thus your Total Assets are:

Three apartments $150,000.00 + gold ornaments $5,000.00 +
your share of the investment in your friends business of $6,000.00; Thus your
Total Assets are $161,000.00.

Your Total Liabilities (or outstanding loans) are:

Loans from friends $10,000.00 + loan from bank for
marriage $20,000.00 + loan from bank for investment $12,000; thus your Total
Liabilities are $42,000.00.

Assuming what is listed above are your total assets and
liabilities, your Total Nett Excess Assets will be $161,000.00 - $42,000.00 or
$119,000.00. Your Zakah for the current
year will calculated as 2.5% of $119,000.00 or $2,975.00.

Whatever written of Truth and benefit is only due to
Allahs Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only
Source of Strength.

Your brother and
well wisher in Islam**,**

**Burhan**

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