Estimating Zakat on Mixed Assets with a Debt
A trader owns: cash 4,000,000 units; gold jewelry for personal use 300 grams (not for trade); silver 700 grams held for trade; inventory worth 6,000,000; and a debt owed to him of 2,000,000 (likely recoverable). He owes 3,000,000 to a supplier due now. The nisab of silver is 595 grams and of gold 85 grams; assume gold = 4,000/gram and silver = 50/gram for this problem. He asks whether zakat is due and on what base, using Hanafi method.
1. Compute the zakat base and the amount due, stating which assets are included.
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Included: cash 4,000,000 + trade silver (700 g × 50 = 35,000) + inventory 6,000,000 + recoverable debt 2,000,000 = 12,035,000. Subtract the due debt 3,000,000 → net zakatable base = 9,035,000.
Excluded: personal-use gold jewelry (300 g) is not zakatable in the Hanafi school when for personal wear, so it is not added.
Nisab check: silver nisab 595 g × 50 = 29,750; the base far exceeds it, so zakat is due.
Zakat = 2.5% × 9,035,000 = 225,875 units.
2. The trader argues the debt owed to him should be excluded because 'it is not in my hand.' Evaluate.
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The argument fails under the Hanafi position for dayn qawiy (strong, recoverable debt): a debt owed by a solvent debtor is included in the zakat base when combined with other zakatable wealth reaching nisab, because it is mal mutaqawwim owned by him. Only dayn da'if (e.g., inheritance not yet received, or doubtful debt) is excluded or zakat is deferred until receipt. Since the problem says 'likely recoverable,' it is strong and included. The judgment tested: distinguishing dayn qawiy from dayn da'if and applying the debt-deduction rule.
3. If he had held the gold jewelry for trade instead of personal use, how would the answer change?
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Then the gold would be 'urud tijara (trade goods) and included at market value: 300 g × 4,000 = 1,200,000. New base = 9,035,000 + 1,200,000 = 10,235,000; zakat = 2.5% × 10,235,000 = 255,875 units. The change illustrates the niyya (intention) condition: the same physical gold is excluded for personal use and included for trade. The judgment tested: applying intention-based classification of wealth, not the metal itself.