✦ Zakat on Land Purchased for a Factory: Islamic Ruling ✦
❖ Question:
If land is purchased for constructing a pharmaceutical factory, and the construction will take 3 to 4 years, will Zakat be due on the land during that period?
❖ Answer by:
Shaykh Muhammad Idrees Athari (Hafizahullah)
Shaykh Abdul Wakeel Nasir (Hafizahullah)
❖ Land as a Tool of Trade
✔ If the land is purchased with the intention of resale (i.e., for trade), then Zakat is obligatory on it.
✔ However, if the land is bought to build a factory, and not to resell, then Zakat is not due on the land itself.
In such a case, Zakat will become obligatory on the income the factory generates once it becomes operational.
❖ Principle of Zakat on Business Tools
According to Islamic law:
◈ Any asset used as a tool for business (e.g., land, machinery) is not subject to Zakat, even if its value is high.
◈ If the intention behind the land is to sell it, Zakat will be mandatory.
◈ But if the intention is to establish a factory, Zakat is not applicable on the land itself.
❖ Summary:
✔ Zakat is obligatory on land if it was purchased with the intent to trade.
✔ If the land is bought for constructing a factory, and there is no intention to sell it, Zakat is not due on the land.
✔ Once the factory becomes operational, Zakat will apply on the profits or savings generated from it.
