Fatwa ID: 05141
Answered by: Maulana Syed Johir Miah
Question
I have two questions to ask you about the payment of Zakat.
1 – I bought a residential plot for Rs 5 lakhs, 10 years ago for the purpose of selling it at a profit.
I sold it for 40 lakhs. I am liable to pay long-term capital gains tax on this.
What is my liability for the payment of Zakat in these 10 years?
2 – My father kept 50 lakhs cash in a bank locker and kept paying the rent for the locker for 5 years. After which, he passed away.
I received the cash after 3 years, of my father passing away, after paying the rent for the locker.
a – What is the liability of Zakat for my father for the 5 years that he lived after keeping the cash in the locker?
b – What is my liability for the Zakat?
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
Zakat is necessary on land that is bought with the intention of resale, and this includes the intention of sale after development.[1]
If you purchased the land with the intention to sell it, then the land is Zakaatable.
The Zakat on the land may be calculated according to the purchase price. If the market value is higher, that will be advisable as that will be more beneficial to the poor.
If a person buys a plot or a piece of land then there are different scenarios.
If he brought it for re-sale then he has to give zakat on the market value of the plot every year. If he brought it for building a house or for his own personal use, then there is no zakat.
If he brought it and at the time of buying it, he made no intention regarding it, there will be no zakat. However, when he sells the land, the money attained should be added onto his other zakatable assets, and zakat is given thereupon. [2]
When calculating zakat on the plot of land, the zakat must be calculated according to the current market value of the plot each year and not on the purchase price. [3]
There is no Zakah on residential houses. The ruling of paying Zakah shall be applicable after it comes in possession. And until it is in the treasury of the government, it only belongs to the employee but he is not its owner.
No Zakah shall be wajib on the car that is for use. No Zakah is wajib on the value of plot, shop, and office; however, Zakah shall be wajib on the rent obtained from them or on the asset of business and profits. Zakah is wajib on shares and the profits derived from them.
The ruling of paying Zakah shall be applicable after it comes in possession.
Hence, the money which you received after 3 years, you would only pay Zakat on it for the years it was not in your possession, except only once you have possessed it and calculated with all your wealth and it surpasses the nisab, which in your case it does.
Only Allah knows best
Written by Maulana Syed Johir Miah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
[1] Quduri, Page57, Darul Kutub Al-Ilmiyyah, 1418 H.الزكاة واجبة في عروض التجارة كائنة ما كانت، انتهى.
[2] Aapke Masail p.371 v.3
[3] Ahsanul Fatawa p.299 v.4
