Shar‘i Ruling on Zakat for Loans
📖 Source: Fatāwā Arkān al-Islām
When is Zakat on a Loan Obligatory?
- If a person lends money to another, zakat is not due until the money comes into his possession.
- While the money is still with the borrower, the lender does not pay zakat on it unless certain conditions are met.
Case 1: Loan Owed by a Wealthy Person
- If the borrower is financially able to repay:
- The lender must pay zakat each year on that loan.
- If the lender includes the loan amount in his other wealth when calculating zakat, he clears his obligation.
- If he does not pay annually, then when the loan is returned, he must pay zakat for all previous years it was owed.
Reason:
- Since repayment is possible, the lender’s choice not to demand repayment does not remove the zakat obligation.
Case 2: Loan Owed by a Poor Person or a Wealthy Defaulter
- If the borrower is either:
- Poor, or
- Wealthy but refuses to pay (delinquent debtor),
- Then no zakat is due annually because the lender cannot realistically recover the money.
Evidence:
﴿وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ﴾
“If the debtor is in hardship, grant him respite until ease comes.” (al-Baqarah 2:280)
After the Loan is Repaid:
Two scholarly opinions:
- Restart the Hawl (Yearly Cycle):
- After receiving the money, wait one full year, then pay zakat.
- Pay Immediately for One Year:
- Upon receiving the loan, pay zakat for one year immediately.
- Then, when the next zakat year arrives, pay again for that year. (This is more cautious.)
Conclusion:
- If the debtor is solvent, zakat remains due annually.
- If insolvent or unwilling to pay, zakat is delayed until the loan is recovered, after which at least one year’s zakat should be paid—more if following the cautious opinion.
وَالله أعلم بالصواب
