Zakah on Trade Goods

Question

Salam Alaikum

If a person has ordered some merchandise which he will sell for profit but it has not arrived yet and is thus not in his possession does he pay zakat on it?

JazakAllah

Usman Ali

Answer

Wa Alaykum Al-Salam

If a tradesman has made an advanced payment for goods but has not received the goods by the day his Zakah year is complete, he is not obliged to discharge Zakah on them goods on that day and neither on the amount he has paid in advance because he does not own that anymore. This is because zakah is only necessary when one has complete ownership of the goods and possession of the goods is condition for complete ownership. It is mentioned in Al-Bahr Al-Raa’iq,

‘A man bought a product for trade which values at two hundred dirhams, he made the payment in advance but did not receive the product in his possession and his year came to an end, then the slave died in the possession of the seller, the seller has to pay zakah on two hundred’

It is clear from the above that the zakah of the advanced payment has to be paid by the seller and not the buyer. As for the goods he has not received, due to the absence of complete ownership (al-milk al-kaamil), he is not obliged to pay zakah on them. Imam Ibn Nujaym further clarifies,

‘The word ‘al-milk’ has been mentioned unconditionally therefore it refers to ‘al-kaamil’ which means the product must be in his possession and at his disposal. Therefore, zakah on that which the buyer bought for trade is not obligatory upon him until possession.’

Once the complete ownership has been established, the preferred opinion is that zakah will have to be paid for the past and this is why the person may decide to include it in his zakah at year end even though he has not yet established complete ownership of the goods because he will have to pay zakah on it once he does establish complete ownership. Imam Ibn Nujaym clearly comes to this decision in his discussion on this matter,

‘Therefore, the meaning of their statement, ‘zakah is not obligatory’ refers to before his possession (of the product) and as for after possession, then zakah of the product is obligatory for that which has past similarly to al-dayn al-qawi (loan)’

This means that zakah on the goods that he has paid for in advance but not yet received is obligatory upon him but not due to be discharged until he has complete ownership of the goods. If he does not receive all the goods at once but rather bit by bit, then zakah becomes due when he has received an amount that is equal to a fifth of the nisaab of zakah and Allah knows best.

Zahid Hussain Al-Qadiri
26th Ramadan al-Kareem 1438AH