Zakat on a Soldier's Savings, Gold and a Loan
A soldier's zakat year ends on 1 Ramadan. On that date he has: bank savings of PKR 850,000 held for the full lunar year; cash in hand of PKR 50,000; gold jewellery weighing 90 grams, worn regularly by his wife; PKR 300,000 lent to a cousin two years ago, acknowledged by the cousin and repayable on demand; a motorcycle worth PKR 400,000 used to take his children to school; household furniture, kitchen utensils and clothing; and a hospital bill of PKR 400,000 that is due and payable immediately. For this question take the price of gold as PKR 25,000 per gram, the gold nisab as 87.48 grams, the silver nisab as 612.36 grams, and the zakat rate as 2.5 per cent. He asks the unit religious teacher to work out what he owes.
1. Classify each item in the list as zakatable or not, giving the reason in one line each.
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Zakatable:
- Bank savings PKR 850 000 - money is the classic zakatable asset, and it has completed the lunar year.
- Cash in hand PKR 50 000 - same rule as savings; cash held is added to the total.
- Gold jewellery, 90 g - in the Hanafi school followed by most people in Pakistan, gold and silver are zakatable in whatever form they are held, including jewellery in regular use, valued at market price on the zakat date. Some scholars exempt moderate personal use; the safest course is to follow one consistent scholarly opinion, and where a person's situation is complicated, to consult a qualified scholar.
- Loan of PKR 300 000 to the cousin - a debt acknowledged by the borrower and repayable on demand is treated as money in hand, so it is included.
Not zakatable:
- Motorcycle worth PKR 400 000 - a personal-use item, not a trade good; only goods held for sale are zakatable.
- Furniture, utensils and clothing - personal and household effects.
Deducted: the PKR 400 000 hospital bill due and payable immediately is a present debt and reduces the zakatable total.
2. Compute his zakatable wealth, test it against the nisab, and state the zakat due.
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Step 1 - add zakatable assets. 850 000 (savings) + 50 000 (cash) + 2 250 000 (gold: 90 g × 25 000) + 300 000 (loan) = PKR 3 450 000.
Step 2 - deduct the immediate debt. 3 450 000 − 400 000 = PKR 3 050 000.
Step 3 - nisab on the gold standard. 87.48 g × 25 000 = PKR 2 187 000.
Step 4 - compare. 3 050 000 is greater than 2 187 000, so he is a sahib-un-nisab and zakat is due.
Step 5 - zakat. 3 050 000 × 2.5 ÷ 100 = 3 050 000 ÷ 40 = PKR 76 250.
Sanity check: if the silver nisab is used instead (612.36 g; even at a low silver price this is well under PKR 300 000) the threshold is far lower still, so the obligation stands either way. The two nisab standards give the same verdict here, which is why he should not be told that the choice "does not matter" in general - only that it does not change this answer.
3. How would the answer change if the cousin had become bankrupt and could not repay? Show the new figure and the principle behind it.
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Principle: a debt that is acknowledged, repayable and recoverable is treated as money in hand. A debt that is doubtful - the borrower is insolvent, has disappeared or denies it - is not included in the year's zakatable wealth. Most jurists hold that when such a debt is eventually recovered, zakat is paid on it at that time; some hold that zakat is then paid for the past years as well. That is a separate scholarly difference, not part of this calculation.
New total: 3 050 000 − 300 000 = PKR 2 750 000.
Nisab check: 2 750 000 is still above 2 187 000, so zakat remains due.
New zakat: 2 750 000 ÷ 40 = PKR 68 750.
The reasoning to state is that the character of the debt, not its face value, decides whether it enters the total - and the arithmetic must be redone rather than assumed, because in a tighter case the loss of that PKR 300 000 could drop him below nisab altogether.