Muwatta Malik (Yahya)

It is narrated from Yazid bin Khusaifah that he asked Sulayman bin Yasar: A man has wealth but he has debt equal to it, is zakat obligatory on him? He replied: No.

When, afterwards, so much is received that it completes the nisab, then when he receives the equivalent of twenty dinars or two hundred dirhams, zakat will become obligatory. After this, whatever amount, small or large, he receives, zakat will increase accordingly.

Imam Malik, may Allah have mercy on him, said: What we have stated, that a debt is not collected for several years, and then when it is collected, only one year's zakat becomes obligatory, the evidence for this is that a person has trade goods with him for years, and when he sells them, only one zakat is obligatory on the price he receives. This is because it is not obligatory upon the owner of the debt or the owner of the wealth to pay zakat for this wealth or debt from another wealth; rather, zakat for each wealth should be paid from that very wealth, and not that zakat for one thing be given from another thing.

Imam Malik, may Allah have mercy on him, said: The ruling regarding which there is no difference of opinion among us is that if a person possesses assets sufficient to pay off his debt, and in addition to that he has cash, then he should pay zakat on the cash.

Imam Malik, may Allah have mercy on him, said: If cash and goods combined are equal to his debt, then zakat will not be obligatory upon him until the cash exceeds his debt and reaches the nisab. As long as this is the case, he should give zakat.

Imam Malik, may Allah have mercy on him, said: In our view, there is no difference of opinion regarding this ruling that zakat is not obligatory on a loan until it is received. So if the loan remains with the debtor for several years and then is received, zakat for only one year will be obligatory. If the amount of the loan received is less than the nisab, then zakat will not be obligatory on it, except in the case where that person has other wealth as well, so he should combine it and pay zakat on the total. If he does not have any other cash wealth but still has other loans due from debtors, then zakat will not yet be obligatory, but he should keep in mind the amount that has been received. After that, if so much is received that the nisab is completed, then zakat will become obligatory at that time. If he has spent the wealth that was received earlier, even then zakat will be obligatory.