Is There Zakât on Debts for Debtors?
Opinions differ. The Mâlikîs, Hanbalîs, and Hanafîs hold that debt reduces the zakatable wealth of the debtor by the amount of the outstanding debt. Accordingly, debts are deductible from assets subject to Zakât (Fiqh az-Zakât, 90-94). Shâfi’îs argue that Zakât is wealth under the payer’s control. Therefore, if one has nisâb for a Zakât-year one still pays Zakât on the zakatable wealth in one’s possession—even if one’s debts, were they to be deducted or paid, would consume one’s wealth entirely. That is, one pays Zakât on one’s eligible wealth, unless one chooses to pay debts before estimating Zakât dues. This concurs with the statement of ‘Uthmân ibn ‘Affân, third Caliph of Islam, who said in a Friday address (khutbah): “This is the month of your Zakât. Whomever of you owes debts, pay them back, that you may commence paying the Zakât on your assets” (Al-Amwâl, 437). (Incidentally, the month was either Ramadan or Muharram). In another version reported by Mâlik, ‘Uthmân reportedly said:
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