Zakat on a Small Business with Mixed Assets
A shopkeeper closes his accounts for a lunar year. He has: cash in the till and bank of 4,000 units; inventory bought for 9,000 and now worth 11,000 at market; a receivable of 3,000 owed by a relative who has promised to pay but is in difficulty; a business loan of 5,000 due within the year; a personal car used for deliveries; and gold jewelry of his wife worth 2,000, which she wears. The nisab in his country is set at the value of 85 grams of gold, currently 6,000 units. He asks whether zakat is due, on what base, and whether his wife's jewelry and the doubtful receivable count. He follows a scholar who deducts only debts due immediately.
1. Compute the zakat base under the stated assumptions and identify each item's treatment.
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Start with cash: 4,000, included. Inventory: the majority value it at market, so 11,000, not the 9,000 cost, because zakat is on the wealth as it stands at the haul's end. Receivable: if it is owed by one who acknowledges it but is in difficulty, the common position is to include it now if it is likely to be paid, or to pay zakat on it when received; under the stricter inclusive approach add 3,000, under the deferred approach add nothing now. Business loan due within the year: 5,000, deducted under the stated scholar's view. The car used for deliveries is a fixed asset in use, not for sale, so excluded. The wife's worn jewelry is her property, not his, and worn jewelry is excluded in the Hanafi and Maliki views and included by others; either way it is not in his base. Base (inclusive): 4,000 + 11,000 + 3,000 - 5,000 = 13,000. That exceeds the nisab of 6,000, so zakat is due at 2.5 percent, i.e. 325 units. If the receivable is deferred, base = 10,000 and zakat = 250. The answer must state which convention is used.
2. The shopkeeper says the market value of inventory is uncertain because prices may fall. How should he handle valuation and the debt deduction?
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Zakat is assessed at the moment the haul completes, using the value at that date, not a forecast. If the inventory's market value is genuinely disputed, he should use a reasonable estimate supported by recent sales or a wholesaler's quotation, and record it. He should not delay zakat indefinitely waiting for certainty; a good-faith estimate with a note is the practical rule, and if the value later proves materially higher he may make up the difference as a voluntary act. On the loan, the stated scholar deducts debts due immediately; the 5,000 qualifies because it is due within the year. A long-term loan would be deducted only in the portion due, under that view. He should not deduct the full value of a car or equipment used in the business, since those are not zakatable assets. If he is unsure whether the relative's debt will be paid, the safer course is to pay on it when received rather than to include and later face a refund problem; either way he should be consistent year to year.
3. Draft a short written note the shopkeeper can keep with his records explaining his method.
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The note should record: the lunar date of the haul; the nisab used (85 grams of gold, valued at 6,000); cash 4,000; inventory at market 11,000; receivable 3,000 treated as included (or deferred, with reason); business loan due within the year 5,000 deducted; excluded: delivery car (fixed asset) and wife's worn jewelry (her property); base 13,000; rate 2.5 percent; zakat 325. It should state the scholarly view followed on each contested point and the date of payment. Keeping such a note serves three purposes: it makes the calculation reviewable, it prevents double counting next year, and it documents good faith if a scholar later disagrees. The shopkeeper should also separate business and personal accounts so that the base is not confused, and review the nisab value each year, since the gold price changes. If his circumstances change materially, he should revisit the method with his scholar rather than assume last year's note still applies.