Authored by Dr. Muhammad Zia-ur-Rahman Azmi (رحمه الله)
Installment Sales (قسطوں پر بیع):
Installment sales refer to the sale of goods on credit, where the buyer pays the price in installments over agreed intervals.- Ruling:
Installment sales are permissiblein Islam.- The opinion against their permissibility is rare and lacks substantial evidence.
- Therefore, installment sales are widely accepted as lawful under Islamic jurisprudence.
Tawarruq (تورق):
Tawarruq involves a person purchasing goods on credit, not for the goods themselves but to sell them to a third party (other than the original seller) for cash. This allows the buyer to utilize the proceeds for other financial needs. The buyer then repays the original seller the deferred price as agreed.- Ruling:
There is a difference of opinion among scholars regarding Tawarruq. However, the most correct opinionis that it is permissible, provided it adheres to the following conditions:- The buyer must take possession of the goods before selling them to a third party.
- The resale must not involve the original seller, as this would constitute Bay’ al-‘Inah (a usurious transaction).
Key Differences Between Installment Sales and Tawarruq:
- Objective:
- Installment Sales: The buyer seeks to acquire and use the goods.
- Tawarruq: The buyer primarily aims to obtain cash by reselling the purchased goods.
- Transactions:
- Installment Sales: The buyer pays for the goods in installments over time.
- Tawarruq: The buyer resells the goods to a third party for immediate cash, while the payment for the original purchase remains deferred.
- Permissibility:
- Installment Sales: Universally accepted as permissible.
- Tawarruq: Permissible under conditions ensuring no violation of Islamic principles, such as avoiding Bay’ al-‘Inah.
Conclusion:
- Installment sales are permissible without any reservations.
- Tawarruq is also permissible according to the stronger scholarly opinion, provided it complies with Shariah conditions, ensuring no usurious practices occur.