Zakat and Tax – Your Questions Answered

I have a tax bill that is due in December and another due in January. I have already set aside the money for this. Do I need to still pay Zakat on that?

In this case, since this liability is known and is due for payment, albeit the deadlines being in 5-6 months, it is permissible for you to deduct this amount from your other assets before you calculate your Zakat.

Of course, the safer thing to do is to include this money in your calculation, especially if you don’t feel that paying Zakat on it will in any way delay or impede you in clearing the liability when the time comes. But as mentioned, the deduction would be permitted in this case.

I have a company and therefore tax is not deducted till the end of the financial year. I put 20% corporation tax to one side myself, does Zakat need to be calculated on this or is this classed as a debt?

When one’s Zakat anniversary occurs, unpaid tax in relation to a previous financial year can be deducted from one’s cash balance prior to Zakat being calculated.

However, any money being saved to pay for taxes in relation to the current financial year cannot be excluded.

The reason for the above position is that the tax liability for the previous year is known and cannot change. It is a fixed liability now that must be paid. By contrast, tax in relation to the current financial year is neither known precisely in terms of its overall amount nor is it due to being paid.

So to summarise, let us say that one’s Zakat is due today in May 2021. Tax in relation to April 2020/2021 financial year can be deducted from one’s assets prior to calculating Zakat.

But estimated tax in relation to the April 2021/2022 year, or money that has been put aside since April 2021 in relation to one’s expected tax liability, should not be deducted for Zakat purposes.

The taxes one pays here in the UK include Income Tax, Council Tax, Vehicle Excise Duty (known commonly as “road tax”) and so forth. Should these be deducted from the total annual income or not included in my Zakat calculation?

One should not deduct taxes before calculating Zakat unless these taxes are overdue and are required to be paid immediately to the government.

In general, taxes that we pay to the government are in no way a substitute for Zakat because Zakat has to be distributed to specific groups of people as specified by Allah in the Qur’an.

On my Zakat anniversary, can I deduct the tax that is due for that year?

You can make a deduction regarding the liability related to the previous tax year. As an example, if your Zakat is due today you can deduct the tax that you need to pay for the previous tax year.

And Allah knows best!

Approved by Mufti Amjad 6th August 2023

Find out more about how your Zakat can help Muslims struggling through the cost of living crisis

Do you pay Zakat on money owed to you?

If you’re owed money and are confident it will be repaid, or you’ve sold something and are due to receive payment, you need to pay Zakat on these amounts.

CALCULATE YOUR ZAKAT NOW

Approved by Mufti Amjad 6th August 2023

If you’re not currently repaying your loan, it shouldn’t be taken off your Zakat amount. If you’re repaying your loan, only 12 months worth can be taken off. If repaying the loan will not affect your ability to pay your Zakat, it’s advisable not to take it off.

CALCULATE YOUR ZAKAT NOW

Approved by Mufti Amjad 6th August 2023

If paying your Zakat will make it difficult for you to repay your debt, you can deduct up to 12 months of repayments. This includes things like personal loans, mortgages, credit card payments, overdrafts and tax bills; one can only deduct the capital amount and not any interest payments. If you’re able to repay your debt and pay your Zakat, we advise that it’s better not to deduct.

CALCULATE YOUR ZAKAT NOW

Approved by Mufti Amjad 6th August 2023

Is missed Zakat deductible from this year’s Zakat calculation?

Missed Zakat from the previous year can be deducted when calculating one’s current Zakatable assets. A Zakat debt is a deductible liability for the current Zakat year on one’s Zakat anniversary.

Missed Zakat is treated as a liability that needs to be paid off immediately, hence, it is deductible.

When calculating missed Zakat for a number of years, one may deduct all the outstanding Zakat from the previous years from the following years.

For example, the outstanding Zakat from the Islamic calendar years 1425-1435AH can be deducted when calculating one’s net Zakatable assets for 1436AH.

Please refer to this page to find out when to pay Zakat.

And Allah knows best

Approved by Mufti Amjad 13th August 2023

Intention (niyyat) when paying Zakat

Q: Is it important to have an intention when giving Zakat, just as we make an intention before praying (salah)?

A: As Zakat is an act of worship, to have an intention is a condition of its validity. The majority of scholars from the four schools of jurisprudence are in agreement on this matter. The intention must be there at the time of paying the Zakat.

According to the Hanafis, Malikis, and Shafiis the intention can also be made at the time of setting money aside for the payment of Zakat.

There is nothing specific to say when making this intention. It suffices to merely have the thought in your mind.

If a person makes a donation without having the intention for Zakat, then this donation will not be counted as Zakat. If later they make the intention for this donation to count towards their Zakat, it will still not be valid. The liability of the Zakat will remain until they make the donation again with the Zakat intention.

Having an intention of paying ‘Zakat’ is necessary. Zakat is an act of worship and all acts of worship require an intention.

The intention is to be conscious of what one is doing. It is not necessary to verbalise an intention.

When giving Zakat, the intention of the individual should be based on fulfilling Allah’s commandments. Giving Zakat with pure and sincere intentions will ensure rewards in the hereafter; Sūrah Al-Baqarah (2:276) tells us that: “Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He does not love the one who is ungrateful and wicked.”

Q: My father isn’t practising and has never paid Zakat. Can I pay Zakat on his behalf?

A: The Zakat paid on behalf of a sane adult will not be valid if it has been paid without their permission.

As explained above, for the Zakat to be valid, there must be an intention from the payer which clearly isn’t the case in your situation, unless you seek your father’s permission.

There is no disagreement on this issue between any of the four schools of jurisprudence.

Q: Due to the lack of knowledge about its calculation, I never calculated and paid Zakat in the past. However, I have been sponsoring a poor orphan for many years now. Would the money I have been contributing towards this poor orphan count as Zakat or do I have to recalculate and pay the Zakat for the previous years?

One of the conditions of the validity of the Zakat is that one must have the intention of giving Zakat (see first question on this page).

Reviewed on 02/02/2021

Q: I have a Zakat amount which I feel is best to give to a poor person on a monthly basis rather than giving it in one payment. Is that permissible?

A: The general rule according to the 4 schools of jurisprudence, is that the Zakat payment should not be delayed unless the payer has a valid reason to do so. The main reason to spread Zakat out in this way, is because the payer cannot afford to pay in a lump sum. Otherwise, it is not encouraged to pay in instalments because we think it will benefit the recipient.

The Shafi’s and Hanbalis also added that one can delay the Zakat payment in order to give it to one who is more entitled to it from his relatives, neighbours or to one who is in great need.

If a person fears that the recipient will end up spending the Zakat received in an irresponsible manner, then one should discuss with the recipient first and have them agree to receive the Zakat in instalments according to their needs. Once agreed, an agent of the recipient can be designated to receive all the Zakat payment on behalf of their recipient. Then the agent will distribute it to the recipient on an instalment basis. In this way, the Zakat payment would not have been delayed.

As an example: Zaynab needs to pay £500 of Zakat to Umar. Instead of giving him £500 in instalments, and thus delaying the payment, Zaynab will give the full £500 to Faraz who is an agent collecting Zakat on behalf of Umar. From the moment the Zakat is given to Faraz, Zaynab would have discharged her Zakat liability completely. Faraz will then distribute this amount to Umar according to his need.

Another solution would be to pay the Zakat in advance through instalments. See the link below:

Paying Zakat in advance

And Allah knows best!

Reviewed on: 25/11/2021

I have to pay a certain amount in Zakat but to other important commitment, I find it difficult to pay the the Zakat in one go. Can I spread the Zakat payment over few months?

In general the scholars agree that one should not delay the Zakat payment once it becomes due (see the link below). If you truly cannot pay it in one go then pay it in instalments as soon as possible.

Is Zakat due immediately every year?

And Allah knows best!

Reviewed on 30/11/2021

Q: Can I buy a bike with my Zakat money for a recipient, instead of me giving them cash?

A: According to the Hanafi school of jurisprudence, it is permissible to give Zakat in forms other than cash, provided that the value of the item is equal to the amount of Zakat that person would have to pay. This is NZF’s position too.

The Malikis don’t allow for anything other than cash to be given to a recipient as Zakat. Imam Malik (ra) was asked about it and ruled against it.

The Shafi’s are of the same opinion. However, some of their contemporary scholars, from the fatwa department of Jordan, have allowed people to follow the Hanafi ruling (above) when there is a greater need to give an item, besides cash, as Zakat.

Sheikhul Islam, Ibn Taymiyaah (ra), of the Hanbali school, also allows Zakat to be paid in such a manner, except:
• in circumstances when there is a need
• for an interest to be served
• to achieve fairness.

And Allah knows best!

Mufti Billal Omarjee

Q: if your Zakat date is after Ramadan but you wish to pay during Ramadan, how should your Zakat be calculated?****

A: Once the zakatable wealth has reached the nissab value, a person can pay Zakat in advance for any amount of coming years. This is the opinion of the Hanafi school of jurisprudence.

The most famous opinion for the Malikis is that Zakat can be given only one month in advance.

According to the Shafi’i school of jurisprudence, Zakat can be paid in advance for up to only one lunar calendar year.

As for the Hanbalis, the correct opinion is that Zakat can be given in advance for a period of up to two years only.

And Allah knows best!

Mufti Billal Omarjee

Q: If your sister is under debt can you give her your Zakat?

A: If she is eligible to receive Zakat then yes. Please see the links below for more information:

What family members are entitled to my Zakat?

Zakat to help someone pay his debt off

Criteria to determine if a poor person is eligible for Zakat

And Allah knows best!

Mufti Billal Omarjee

I had some money which was stolen from me at a time when my Zakat was already due. Can I make the intention for the stolen money to count as Zakat?

The intention of offsetting the Zakat payment will not be valid. Zakat will still be due upon you.

And Allah knows best!

Reviewed on 09/11/2021

Q: Due to the lack of knowledge about its calculation, I never really calculated and paid Zakat in the past. However I have been sponsoring a poor orphan for many years now. Would the money I have been contributing towards this poor orphan count as Zakat or do I have to recalculate and pay the Zakat for the previous years?

A: Yes you will have to recalculate and pay the Zakat for the previous years. The money you have been giving to this orphan is an act of virtue and InshaAllah you will get immense rewards for it. However this cannot be considered to be Zakat.

One of the condition of the validity of the Zakat is that one must have the intention of giving Zakat. Please see link below:

Having the “intention” (niyyat) when giving Zakat

And Allah knows best!

Mufti Billal Omarjee

My friend has promised to repay me a loan but has failed to pay me on the promised date. Do I need to pay Zakat on this amount?

A: If you have hope of receiving this money, then Zakat will be payable on the amount lent. However, if you have lost hope of receiving this money, Zakat will not be payable.

And Allah knows best!

Q: I have £500 set aside to give to a charity but I will only be able to give it after Ramadan & my Zakat date is 18th Ramadan so when I calculate my Zakat will I include the £500 or do I deduct this amount?

A: You will have to include it into your calculation as this is not a liability.

And Allah knows best!

Mufti Billal Omarjee

Q: I have savings to pay a deposit to buy a house, do I need to pay Zakat on this?

A: Previously our ruling was that if a contract has not been signed by the time the Zakat anniversary comes, then the deposit set aside for the house purchase will also be Zakatable. However, based on our new research, we have now come to a new ruling:

If a verbal agreement has been made between the buyer and seller, then the savings for the house purchase will not be subjected to Zakat. From a Sharia perspective, once the offer is accepted and a price agreed on, then this will be enough to indicate that the contract has already started. If the transaction falls through, and nothing is signed in the end, and neither the deposit is paid, then you would still not need to make up for any unpaid Zakat.

Q: Is there Zakat on the house I live in?

A: Your property is Zakat exempt. Zakat is not binding on the value of the house you live in.

Reviewed on 02/11/2021

Q: I am self-employed. I set aside a specific amount of money each month from my income as per advice from my accountant to pay for the self-assessment tax liability. Do I need to pay Zakat on this money?

A: Yes if the tax isn’t a liability yet then you have to pay Zakat on it.

And Allah knows best!

Mufti Billal Omarjee

The majority of the schools of Fiqh, namely, the Maliki, Shafi’i and Hanbali school’s stance on missed Zakat for a deceased person is that Zakat must be paid from the estate when paying off any debts. Zakat will be disbursed from the estate even without a bequest for the payment of Zakat.

The Hanafi school opines that missed Zakat will not be paid from the estate unless the deceased had bequeathed the payment of Zakat. If he did enumerate missed Zakat in his bequest, Zakat will be paid from one-third of his estate after deducting funeral costs and liabilities.

Allah knows best.

Reviewed on 09/11/2021

Q: I understand that assets need to be owned individually to work out debt (e.g. our shared account is now considered my account), but I was wondering if the same applies to debt. As a couple we have had debt for a few years, including owing family members and a mortgage. Does that debt need to be attributed to one of us or is it a shared debt? If it needs to be attributed to an individual, can we split it between us? Jzk for taking the time to do all this, you are doing the Ummah a great service. May Allah accept.

A: If you had taken the debt with a joint liability, then it will be 50/50. Otherwise, only the person who took on the debt can deduct it.

And Allah knows best1

Reviewed on 22/11/2021

Is the Nisab subtracted from one’s total net assets when calculating Zakat?

No, you do not subtract the Nisab for the Zakat calculation. If you have an amount above the Nisab then Zakat is due on the entire amount.

And Allah knows best!

Reviewed on 22/11/2021

Is a council tax bill deductible?

A: If the tax bill has been incurred and is payable within the next 12 months, one may deduct the outstanding amount due. However, we encourage that only one month’s repayment be deducted.

And Allah knows best!

Mufti Faraz Adam

If I purchased an asset with an intention to resell contingent upon something, is the asset Zakatable?

If an asset is purchased for personal use with an intention of selling only if there is capital appreciation,
such an asset will not be Zakatable. Similarly, if an asset is bought for personal use or as buy to let
with the intention to sell one day in the future upon favourable market conditions, the asset will not be
Zakatable

And Allah knows best!

Reviewed on 30/11/2021

A realistic and genuine attempt must be made to disburse missed Zakat immediately. However, if one genuinely cannot pay the entire outstanding amount due to its large volume, one must pay as much as possible as quickly as possible. The outstanding amount can be divided into instalments.

In addition, it is necessary to write in your will that you have outstanding Zakat. It will be obligatory on the executor of the will to comply with this bequest. This bequest will be fulfilled from one-third of the estate after burial costs and debts as per the Hanafi school of Jurisprudence.

The Maliki, Shafi’i and Hanbali Schools of Jurisprudence state that a Zakat debt will be paid from the estate even if the deceased person did not bequeath it.

And Allah knows best!

Reviewed on 24/11/2021

If I owe money to my family member who gave me a loan, can I deduct that loan from my Zakat calculation?

We have now changed our position in relation to the treatment of personal loan in the Zakat calculation. Our current ruling is the following: any personal debt that will be repaid in the forthcoming 12 lunar months can be deducted.

If you have the intention to repay the loan or some of it then you can make the deduction, however, if despite making the deduction you do not make the repayment, then on the following year you will have to make the adjustment to your Zakat payment and pay Zakat on the amount you initially deducted.

And Allah knows best!

Reviewed 22/11/2021

Q: If I have a long-term debt for a number of years, is there any portion that I can deduct from my Zakat calculation?

A: If the debt is scheduled to be repaid over a number of years, on the Zakat anniversary, one may deduct one year’s worth of instalment repayments.

For instance if you have a debt of £10,000 with an annual instalment repayment of £1,000 over 10 years, that repayment can be deducted from your zakatable assets at the anniversary date. Please note this is assuming there is no haraam clauses (interest payment) in the loan contract. The interest element will not be deductible.

And Allah knows best!

Reviewed on 09/11/2021

One may pay off the outstanding bill. Thereafter, however much money is available, one should endeavour to use the remaining money for missed Zakat even if it does not cover all of the outstanding balance for missed Zakat.

The ideal situation would be to pay the missed Zakat from now in small amounts in instalments in a manner that will not affect the debt payment.

And Allah knows best!

Reviewed on 30/11/2021

If a business has borrowed capital from a bank, what can be deducted from the Zakat calculation?

A: The capital repayment due for the forthcoming lunar year from a long-term bank loan can be deducted.
Any interest element is prohibited and cannot be deducted.

And Allah knows best!

Mufti Faraz Adam

I have interest to repay on a loan. Is interest deductible?

Unlawful debts and repayments like interest repayments are not deductible from one’s gross Zakatable assets total.

And Allah knows best!

Reviewed on 30/11/2021

I have a debt which is not payable at all until 3 years. Is it deductible from my Zakat calculation?

A: A long-term debt which is not repayable within the next 12 months cannot be deducted right now from your Zakat calculation.

And Allah knows best!

Mufti Faraz Adam

Q: If you have outstanding debts does this impact on what Zakat you pay?

With regards to debt deductions, there is permissibility cited by scholars to deduct one year’s worth of repayments. However, ideally, this deduction should only be made if paying Zakat will impact your ability to repay the debt. If the Zakat payment does not impact your ability to repay your debt, we encourage that the deduction is not made. The reason for this is that the philosophy of deducting debts was based on Zakat payments affecting your ability to repay the debt and in turn, put you in harms way. When a person is not in harms way at all by paying Zakat despite having debt, then the debt ought not to be deducted.

Reviewed on 23/11/2021

Q: Can I deduct my mortgage payments for the year?

A: You can deduct 12 months worth of repayment minus the interest.

And Allah knows best!

Reviewed on 30/11/2021

Q: I had a quick question in relation to payment of Zakat and mortgage deductions. I am aware that you can make deductions for capital payments of a mortgage and not the interest. However what if they are rental properties? does this still apply or can you not deduct from your calculated amount?

A: Mortgages on rental properties can also be deducted minus the interest.

And Allah knows best!

We in the Muslim community have a savings account which we call (committee)just an example if for instance I’m paying into that and i receive a lump sum because my number was for example say 5 before the savings finish and i am still paying until number 80, do I have to pay Zakat on the lump sum i have received. jazakallah.

A: First of all one must ensure that they make a note of how much they are contributing and how much they have taken away by the time the Zakat calculation comes.

Secondly, it is worth noting that the people taking part in a “committee” scheme are all at some point either a “creditor” or a “debtor”. Therefore the money contributed can either be a loan they are giving to other members or a loan they are repaying back.

For Zakat purposes the treatment of money raised through the “committee” scheme is as follows:

-1) If the person has been contributing towards the fund but he has not taken anything from it yet: then on his Zakat day he will pay Zakat on all the money he contributed up to that point.

2) If the person has taken some of the money from the fund, he will have to check the following:

– has he taken more money from the fund than he contributed? in which case the extra amount acquired is a loan and therefore he will be able to deduct that amount

Example: Bakr contributed £1000 but he has taken from the fund £1500. On his Zakat day He will deduct £500 from his Zakat calculation provided that this amount will be repaid into the comitee fund within the 12 lunar months.

– has he taken from the fund less than he contributed? in which case he will have to pay Zakat on the remaining contributed amount in the fund.

Example: Zayd contributed £1000 into the fund. He has taken only £200 from it by the time his Zakat day comes. He will have to pay Zakat on the remaining £800.

And Allah knows best!

Reviewed on 30/11/2021

Q: I have children from a previous marriage and I pay a set monthly child maintenance for them. Is it permissible for me to deduct the next 12 months payments amount from the Zakat liabilities when doing my Zakat calculations?

A: Child maintenance can be a requirement of shariah or a requirement of the law of the country.

If a person is required by shariah to provide child maintenance, then there are two possible scenarios:
1) From a legal perspective (i.e. decision made by the court) one is also required to pay: In this case, he can only deduct payments which have fallen in arrears and the current monthly payment which is due. But he cannot deduct future monthly payments as they are not demandable yet.

2) From a legal perspective he is not required to pay but he has come into an agreement with his partner to pay the maintenance: No amount can be deducted unless the current guardian of the child had to buy necessary items on credit for which the father is now responsible to repay.

If a person is not required by shariah to provide with child maintenance:
3) From a legal perspective he is required to pay: The same as point number 1 will be applicable.

4) From a legal perspective he is not required to pay but he has come into a friendly agreement to pay for maintenance: In this case he will not be able to deduct anything; including the cost of items bought on credit by the current guardian of the child.

Please approach your local scholar to find out whether you are required by shariah to provide for child maintenance.

And Allah knows best!

Mufti Billal Omarjee

Q: I am just wondering under the deductible liabilities, what kind of bills fall in to this category? Like water and electricity? what about car insurance and car tax etc

A: Anything which became outstanding prior to your Zakat day which you haven’t paid yet.
And any bills that is due to be paid in the same month of your Zakat day e.g. if your zakat day is on the 15th and you have a bill that will be debited from your account on the 25th.

And Allah knows best!

Mufti Billal Omarjee

Q: I have paid off 3/4th of my car. I have monthly payments. Do I deduct what I still owe or the monthly payments. Deduct one monthly payment or 1 year of payments?

A: You can deduct up to one year worth of the loan repayment after interest.

And Allah knows best!

Mufti Billal Omarjee

How do we know if a recipient of Zakat is poor or needy?

The opinion of the Hanafi school of jurisprudence is that Zakat is given to someone whose Zakatable assets are below the nisab value whilst also not having any surplus assets i.e. extra house, extra car, extra mobile etc.

According to the other schools i.e. Malikis, Shafi’is and Hanbalis, someone without enough wealth to pay for necessities of life, is eligible to receive Zakat. This is irrespective of the fact that the amount they currently have in their possession is below or above the nisab value.

And Allah knows best!

Reviewed on: 09/11/2021

If I have an interest free credit card that I use, can I deduct the amount of credit from my savings amount?

A: You can deduct the amount you owe and will be repaying within the next 12 month. you cannot deduct the amount of credit which you haven’t used.

And Allah knows best!

Reviewed on 09/11/2021

Can I deduct utility bills from my business Zakat calculation?

A: Any current and outstanding utility bill is deductible.

And Allah knows best!

Mufti Faraz Adam

Can I deduct next month’s utility bills from my Zakat calculation?

In principle, you may only deduct debts which have been incurred. Next month’s rent is not yet incurred nor demanded. Therefore, you cannot deduct this at present from your Zakat calculation.

And Allah knows best!

Reviewed on 30/11/2021

Can I deduct next month’s rent from my Zakat calculation?

A: In principle, you may only deduct debts which have been incurred. Next month’s rent is not yet incurred nor demanded. Therefore, you cannot deduct this at present from your Zakat calculation.

And Allah knows best!

Reviewed on 09/11/2021

Can I deduct my student loan from my Zakat calculation even though I am currently studying and not repaying it?

A long-term debt which is not due to be repaid now or in the next 12 months cannot be deducted right now. For example, despite the scholarly debate on the impermissibility of conventional student loans, a student who did take out a student loan cannot deduct the debt during his studies as that is not currently payable.

And Allah knows best!

Reviewed on 30/11/2021

Can I deduct debt arrears from my Zakat calculation?

A: All arrears and overdue payments can be deducted from one’s Zakat calculation.

And Allah knows best!

Mufti Faraz Adam

Q: Can I deduct a debt payable in full within the next 12 months from my Zakat calculation?

A: Incurred expenses to be settled in full within 12 lunar months can be deducted from one’s Zakat calculation.

And Allah knows best!

Mufti Faraz Adam

If interest is involved, such a loan is prohibited in sharia. However, if a business borrowed money from a bank, only the capital repayments can be deducted and not the interest element of the forthcoming lunar year.

And Allah knows best!

Reviewed on 23/11/2021

Can corporation tax be deducted in my Zakat calculation for my business?

Unpaid tax in relation to a previous financial year can be deducted from one’s cash balance when calculating Zakat due.
However, any money being saved to pay for taxes in relation to the current financial year cannot be excluded.

And Allah knows best!

Reviewed on 22/11/2021

Can capital gains tax be deducted from my Zakat calculation?

A: Outstanding Capital Gains Tax can be deducted from one’s Zakatable assets even before HMRC inform you of the Tax due if you can work out the amount of Tax due .

And Allah knows best!

Reviewed on 09/11/2021

Can a solar year be used for Zakat calculation?

A: According to the AAOIFI Sharia Standards, a solar year can be used. In such a case, Zakat should be paid at a rate of 2.577% to incorporate the extra days of the solar calendar.

And Allah knows best!

Q: Can a proxy or estimate be used for Zakat calculation on shares purchased as a long-term investment?

A: National Zakat Foundation’s (NZF) recommendation to Muslim shareholders is as follows:

Ideally, a complete calculation and review of the balance sheet should take place to determine precise Zakat liability on any Sharia compliant shareholding. However, due to the technicalities and difficulties in this, a person may use a proxy of 25%.

When using the proxy, calculate 2.5% of 25% (0.625%) of one’s entire shareholding and pay the sum as Zakat.

This proxy cannot be used by shareholders of private limited companies. Likewise, a small company or start-up which is known to have only cash assets, should not use this proxy. Limited companies, startups and general partnership companies may contact NZF to work out their Zakat liability.

Note: The previous NZF recommendation of 40% is no longer applicable. Each year the proxy is revised to keep up to date with the most accurate representation of the composition of listed companies.

And Allah knows best!

Reviewed on 29/11/2021

Can a conventional bank loan be deducted from my Zakat calculation?

A: The capital repayment due for the forthcoming lunar year from a long-term bank loan can be deducted. Any interest element is prohibited and cannot be deducted.

And Allah knows best!

Mufti Faraz Adam

Are outstanding invoices deductible for my business Zakat calculation?

A: Outstanding payable invoices can be deducted from the Zakat calculation if they are to be settled within the next 12 months.

And Allah knows best!

Mufti Faraz Adam

Are future expenses and bills deductible from my Zakat calculation?

A: Expenses not incurred yet but will incur in the future cannot be deducted at present. For example, next month’s rent or next month’s utility bills cannot be deducted right now.

And Allah knows best!

Mufti Faraz Adam

Are current liabilities deductible from my business Zakat calculation?

A: Incurred expenses to be settled in full within 12 lunar months can be deducted from one’s Zakat calculation.
And Allah knows best!

Mufti Faraz Adam