Fiqh Al Zakah by Dr. Yusuf al Qardawi

Section 1: Zakatability of exploited assets.

Section 2: Computation of this zakah.

Section 3: The consideration of nisab.

Exploited assets are defined as forms of wealth used to produce exchangeable services or goods that are sold for profit without exhausting the exploited assets themselves. They include assets rented for profit, such as residential buildings, means of transportation, jewelry, and other material used for rental purposes. Also in this category are livestock raised for milk, wool, or meat, and factories, plants, or equipment used for producing goods. In chapter six, I discussed livestock products and concluded that they must be treated like honey, whereby one-tenth is charged on the net output, but the producing animals are exempted. Therefore, I will not include a discussion of livestock in this chapter.

The difference between assets used for exploitation and those used for trading is that the former remain as permanent capital, while the latter change hands. Exploited assets used in the industrial, transportation, and service sectors represent a large portion of the contemporary economy.

Two extreme opinions exist among jurists. There are those who expand the concept of zakah to include all or most assets, and those who limit zakah to only a few kinds of wealth. Those who tend to limit the zakatability argue that:

1. The Messenger of God (p) defined the zakatable assets, and did not mention among them these exploited ones such as buildings, rented animals, and productive machinery. The principle is that people must not be obligated to pay any charge without a clear text. There is no such text.

2. Jurists throughout the history of Islam and in all its various countries did not obligate zakah on those assets.

3. We have on hand scholarly opinions that negate the zakatability of exploited assets. Jurists have stated that residential homes, craftsman's tools, transportation animals, home furnishings, etc., are all exempt from zakah. This means factories, buildings, cars, planes, and ships are not zakatable, regardless of their size, value, or income.

When the earnings of these assets are received, retained for one year, and exceed nisab, they are then zakatable, like money.

Restricting the kinds of assets that are zakatable is a well-established stance in jurisprudence. It is defended by Ibn Hazm and later by al Shawkani and Siddiq Hasan Khan, to the extent that some jurists exclude trading assets and fruits and vegetable from zakat. The author of al Rawdah al Nadiyah argues for this opinion, ''Imposing zakah on assets that are agreed on as non-zakatable, such as residential buildings, real estate, and animals, simply because they are rented for profit without being exchanged in trade, was unheard of in the first generations of Islam, not to mention their lack of support from Qur'an or Sunnah."1

On the other side there are jurists who expend the category of zakatable assets and establish the zakatability of exploited assets like factories and buildings. This is the position of some Malikites, Hanbalites, and the followers or al Hadi among Zaidis. It is also the view of some contemporary scholars, including Abu Zahra, 'Abd al Wahhab Khallaf, and 'Abd al Rahman Hasan, as we shall see in this section. In my opinion, this approach is more valid, for the following reasons:

1. God obligates a defined due on each asset: "and in their wealth there is a defined due," "Out of their assets take a sadaqah." The Prophet (p) also exhorts us to "Pay the zakah on your assets." These texts do not distinguish between the different kinds of assets.

Ibn al 'Arabi disproves the opinion of the Zahiris, who negate the zakatability of trade assets for lack of a correct text. "The verse 'Out of their wealth take a sadaqah' is general," he says. "It includes all kinds of wealth, regardless of classification, name, and purpose. Whoever wishes to impose any restriction on this generality is asked to bring proof."2

2. The reason for which zakah is imposed with respect to assets is growth, as noted by jurists who look for the reasons behind Shari'ah rulings in order to use them in analogy. (They include practically all jurists of the Islamic nation except a few Zahiris, Mu'tazilities and Shi'ites.) Consequently, zakah is not obligated on houses inhabited by owners, clothes, jewelry, craftsmen's tools, or horses used for fighting, by unanimous agreement. This is also why zakah is waived from camels and cows used as personal transportation, and from every asset that does not grow on its own or by human action.

Since the reason for the zakatability of an asset is its growth, then if growth exists, an item must be zakatable.

3. The objectives of the legislation of zakah imply that zakah must be imposed, because owners of exploited assets need to be sanctified and purified, the poor and needy need relief, and Islam and its state have many uses for the proceeds of this form of zakah. Al Kasani explains the reasoning behind the obligation of the one-tenth charge on the produce of the earth, "The payment of the tenth to the poor is an expression of gratitude for Grace, a relief for the incapable and poor so they can perform their religious and social role. It is also needed for the purification of the payer's soul from miserliness and sin, and the sanctification of his or her spirit and wealth." Is it reasonable to claim that farmers need this sanctification, purification, and expression of gratitude, while owners of factories, buildings, ships, and planes do not, although the latter usually has higher income that the former?

1. The fact that the Prophet (p) does not mention a certain asset as zakatable is not in indication of non-zakatability, because the Prophets only mentions growing assets common in Arab society at his time, such as camels, cows, lambs, wheat, barley, dates, raisin, and silver money. Muslims throughout generations obligated zakah on many assets by analogy to these mentioned by the Prophet, because of the general terms used in the texts, and in consideration of the objectives of zakah. Some examples are:

A. Al Shafi'i says in al Risalah about the zakatability of gold, "The Messenger of God (p) imposed zakah on silver. Afterward, Muslims collected zakah on gold, either by virtue of a text from the Prophet that did not reach us, or by analogy, since gold is used by people as a determinant of value for their exchange, before and after Islam."3 The possibility that there is a saying that did not reach al Shafi'i is very remote. The only reason, then, is analogy, as stated by Abu Bakr bin al 'Arabi in Sharh al Tirmidhi: "The Arabs' trade at the time of the Prophet used silver currency, so the Prophet mentions it to mean all money used. His mentioning of silver was understood as inclusive of all kinds of money, but when people in later generations started asking for a specific text on everything, God shut in their faces the door of guidance and they deviated from the track of their predecessors."4

B. There is no clear text about the zakatability of trade assets. In spite of that, Ibn al Mundhir reports that they are zakatable by ijma'. Only the Zahiris disagree.

C. 'Umar ordered zakah on horses because he realized that they had become valuable wealth. Abu Hanifah agrees with 'Umar on this issue as long as the horses are retained for growth and pastured naturally.

D. Ahmad obligates zakah on Money on the basis of the report from the Companions and by analogy to grains and fruits. He further obligates zakah on all minerals by analogy to gold and silver, and by virtue of the general verse, "And out of that which We have produced for you from the earth. . ." E. Al Zuhri, al Hasan, and Abu Yusuf obligate a one-fifth charge on pearls. amber, and other extracts from the sea, by analogy to rikaz and minerals.

F. All known schools of thought utilize analogy in the rules of zakah. The Shafi'ites, for example, use analogy in the zakatability of food items although the sayings mention only a few of these items by name.

2. The claim that no Muslim jurists impose zakah on exploited assets is refuted on the basis that the concept of retaining the asset and exploiting it for production or rental is a modern innovation that did not exist at the time of the great Muslim jurists. Yet we find their statements indicate that such assets would be zakatable.

3. The fact that jurists exempt residential houses and craftsmens tools from zakah cannot be extended to include buildings exploited for rent and factories or plants established by industrial growth. Riding animals of the past are by no means similar to modern cars, planes, and gigantic ships, while personal home furnishings of the past differ substantially from today's furniture rental businesses. Our predecessors did not err when they decided that furniture and tools are not zakatable; they applied strictly and rationally the rules for zakatability to the circumstances of the age in which they lived.

The author of al Hidayah rationalizes the exemptions of such items "because they are utilized for essential needs and also do not grow."5 The author of al 'Inayah comments, "Each of these two traits is alone an obstacle to zakatability. Residential quarters are indispensable for people as is clothing. As for growth, it may either be a characteristic of the item itself, as in the case of gold and silver, or it may be merely by designation, as in the case of business inventory."6

Jurists unanimously agree that a house taken as a residence by its owner is not zakatable. This exemption is a expression of Islamic justice, especially when compared with most contemporary real estate taxes, which usually do not give such consideration.

It is essential to point out that the rationalization or the exemption of housing, clothing, tools etc., from zakah on the basis that they are non-growing and utilized for essential needs, is itself an indication that any of these items becomes subject to zakah if it is used for growth and for non-essential needs.

Zakatable growing assets discussed in previous chapters are of two kinds:

First are assets whose zakah is calculated on the principal and its increments together one every year, such as zakah on livestock and trade assets. In this case, the asset and its increment are integrated very closely, and the rate of zakah is two-and-a-half percent.

Second are assets whose zakah is calculated only on the growth or increase once the harvest is obtained. The asset may be materially fixed, such as land, or non-fixed, such as bees. The rate of zakah on this kind of asset is ten percent or five percent as we have seen earlier in this book.

If buildings and factories are zakatable, on what basis must zakah be calculated and how are these assets to be treated with regard to zakah?

Many people may think that preceding jurists did not discuss the zakatability of rented houses because the practice was not common in the past. This justification is generally valid, but one may find a few jurists who expressed the view that such houses are zakatable, although they have different ways of calculating zakah. Some suggest that rented houses be treated like trade inventory, appraised every year and zakated on the appraisal value at a rate of two-and-a-half percent, while others calculate zakah on the income these assets bring in, to see if it reaches nisab and fulfills other conditions for zakatability.

This view requires an appraisal of the asset used for income such as rented buildings, airplanes, ships, etc., every year. Zakah is then charged on the basis of this appraisal plus whatever net earnings remain at the end of the year, at a rate of two-and-a-half percent. This view is shared by jurists from Sunni and Shi'i schools of thought.

Ibn 'Aqil, a great, sharp-minded Hanbali jurist, exposses this view, as quoted approvingly by Ibn al Qayim in his book Bada'i al Fawa'id: "Ibn 'Aqil, in application of Ahmad's belief in the zakatability of jewelry used for rent, says that zakah must also be applied to buildings designated fro rent and every assets or commodity that is used for rental purposes." Ibn al Qayim continues, "Ibn 'Aqil points out that this view is the logical extension of our treatment of jewelry. Jewelry, according to our school, is not subject to zakah, but if jewelry is used as a rental item, zakah becomes obligated. If the designation for rent obligates zakah on an item that was originally not zakatable, this must apply to all non-zakatable items, i.e., the zakatability of an item depends on its state. Gold and silver are zakatable, but when they are made into women's ornaments designated for personal use, zakah is abolished on them. If again that same piece of jewelry changes its state into a rental item, zakah is imposed on it again. This necessarily indicates that buildings, animals used for riding, utensils, and furniture become zakatable when they are rented out."7

In my opinion, this view of Imam Ahmad is very strong. It is based on the important principle that zakah is not obligated on non-growing assets or on assets used to fulfill essential needs, and is obligated on growing assets, An asset that generates rental income is undoubtedly a growing one. Lawful jewelry used as ornamentation does not grow, and also fulfills a need for the woman who wears it, but if it is used for rental purposes it becomes a growing asset subject to zakah. This opinion is also shared by Malik, according to Ibn Rushd.8

If we apply this principle to buildings, furniture, cars, ships, planes, machinery, and industrial equipment, we can find the answer to their zakatability. If any of these is assigned for personal use, zakah is not obligated, but when they are used for rental or for generating income, they become zakatable. Zakah on them is similar to that on trade assets as far as nisab and rates are concerned. "This means that owner of such assets must appraise their buildings, cars, etc., add to the appraisal value other cash capital and loans to others, and pay 2.5% on the total. The claim of exemption from zakah on the basis that these are fixed assets like the exempted store fixtures of merchants is disproved by the fact that the productive capital itself is these fixed rental assets. They are the ones that generate gains and profit. Exemption from zakah covers assets that are not themselves used for growth but help other assets to produce, such as buildings where industrial equipment is placed. The industrial equipment is the productive asset.

On the other hand, land and structure in rented buildings, hotels, and cimas are themselves the productive assets.

The author of al Bahr al Zakhkhar writes that the Hadawis, who are Zaidi Shi'ites, obligate zakah on all items used for making profit, on the basis that the verse "Out of their wealth take sadaqah" is general and applies to these assets. These assets are intended for income generation, and must be treated similarly to trade assets and zakated if they reach nisab.9 The author of Matn al Azhar and its commentators, also Zaidi, adopt the same opinion regarding all assets whose benefits renew without exhausting the asset itself. Thus zakah, according to them is not obligated on horses, mules, donkeys, houses, etc., except when they are used for trade or productive exploitation.

Al Hadi is reported to have said that if a person purchases a horse for the purpose of selling its reproduction, the horse and its offspring are all zakatable. Al Mu'ayyad Abu al 'Abbas and Abu Talib say this is "because all become like trade assets." Al Mu'ayyad continues, "The same applies to the silkworm." Al Huqaini says the same also applies to the person who has purchased a tree in order to sell its fruits. It is also said to be applied to cows and sheep bred for their reproduction, milk, and dairy products and wool.10

The author of al Bahr al Zakhkhar states as evidence supporting this view:

1. The generality or the texts regarding the obligation of zakah.

2. The similarity between assets used for production and exploitation and trade assets; both are forms of wealth intended for profitable growth.10

Scholars who tend to restrict the obligation of zakah, such as al Shawkani and Siddiq Hasan Khan, object to this opinion. This is no surprise, because they also object to the zakatability of trade assets and vegetables. Their argument concentrates on two points:

A. The text of the saying "No zakah is obligated on a Muslim's slaves and mares" is general in its exemption of horses from zakah. This exemption includes cases in which horses are used for renting or for trade.

B. The obligation of zakah on assets known to be exempted such as houses, buildings, and riding animals, simply because they are being rented, was unheard of among the Companions and the generations that followed them, not to mention its lack of support from Qur'an and Sunnah. In spite of the fact that they used to hire and rent their houses, orchards and animals, it never occurred to any of these people to pay, at the end of the year, a 2,5% tax on their real estate or animals, They passed away with their peace of mind unbroken by such harsh obligations, until the end of the third century of Hijrah when this form of zakah was claimed on the basis of mere analogy to trade assets, which itself is dubious. Moreover, this analogy is itself incorrect because in renting one exchanges the benefit of the asset, while in trade one exchanges the asset itself.11

In brief, this view says that people are not obligated to say anything in principle, except when there is clear evidence that requires then to do so. In the case on hand, such evidence does not exist. Nothing is reported from the precedent-setting scholars, no verse or saying talks about it. As for the analogy to trade assets, it is erroneous because of the difference between them.

One can argue that the saying "No zakah is obligated on a Muslim's slaves and mares" founds the exemption on the basis that these items are for personal use that satisfies essential needs for services and transportation. The great majority of scholars, as early as the third generation, obligate zakah on them if they are designated for trade.

Ibn al Mundhir even mentions that there is ijma' on this. The wording of the saying never prevented such understanding, The lack of reports from the Companions concerning the zakatability of rented and productive assets may be attributed to the rarity of such incidents at their time. The use of fixed assets for productive purposes or rent was not so common as to make it important enough for people to give their opinions about it. The author of al Bahr al Zakhkhar notes that the claim that Hadawis contradict ijma' on this issues is baseless, because there are no reports from our predecessces on this issues either way.12 The author of Sharh al Azhar comments, "I believe that the view of al Hadi does not contradict ijma', because the Companions and the Followers either discussed this issue and differed on it or agreed on an opinion [nothing is reported] or did not discuss this issue at all. No harm is done by discussing it a new and expressing opinions on it."13

The analogy between productive rented assets and trade assets makes some sense because each is a growing capital that produces income, and the owners of each are businessmen who intend to invest their capital in income generating activities for the purpose of profit. The difference between exchanging the utility of the item or exchanging the item itself is not substantial enough to warrant different treatment. One may even argue that a person who exchanges only the utility and preserves the principal has more guarantee of profitability than the person who exchanges the item itself.

However, if we think deeply we may find a few differences between these two forms of assets.

First of all, the best definition of trade assets is anything obtained for the purpose of resale for profit, as stated in the saying from Samurah in which the Prophet (p) used to command them to pay zakah on that which they prepare for sale. It is obvious that buildings and factories are not prepared for sale by their owners but rather for rent and productive use. Contractors and building merchants buy buildings or build them for the purpose of resale.

Secondly, if we consider each owner of an assets that is productive and profitable a merchant, even though his or her assets are not themselves intended for sale, owners of agricultural land and or lands must be included implying that they are required to appraise the value of their land and trees each year and pay zakah at the rate 2.5%. This is not acceptable and contradicts the ample evidence that we have.

Thirdly, the productive use of these assets may be halted sometimes for any reason, such as a lack of raw material or market. In those cases, how can the owner pay his or her zakah? Owners of trade assets can sell some of them or pay zakah in kind. Are owner of real estate required to sell in order to be able to pay zakah? This is an obvious hardship which is not required in Shari'ah.

Fourthly, from the practical point of view, the required yearly appraisal is subject to many non-objective elements in addition to price and changes and depreciation because of wear and tear. It is a cumbersome practice that requires hiring specialized experienced people and involves the payment of substantial expenses that may end up being paid from the zakah itself.

For these reasons, I select the view that zakah on buildings and factories must be taken on the basis of their income, which coincides with the other two opinions, which differ only in whether the percentage of zakah is two-and-a-half, ten, or five percent.

Ahmad is reported to have said that zakah is obligated on the rent of rented houses whenever the rent is received. This is quoted by Ibn Qudamah.14 In the writings of the Malikites, Zarruq states in Sharh al Risalah that "There are two opinions on the zakatability of assets used for income, such as rental housing. One, zakah is due on their value received when sold, and two, zakah is due on their income when it is acquired."15

This second opinion is important and has its roots in older views from some Companions and Followers.

All those who say that earned funds are zakatable when acquired (without the passage of one year) apply the same rule with regard to zakah on income earned from the output of factories and rental income of cars, buildings, planes, equipment, furniture, and the like. We shall see in the text chapter that this is the opinion of Ibn 'Abbas, Ibn Mas'ud, Mu'awiyah, al Nasir, al Baqir, and Daud. It is also attributed to 'Umar bin.'Abd al 'Aziz, al Hasan al Basri, al Zuhri, Makhul, and al Awza'i.16

The evidence for this opinion is the generality of the saying ''One-quarter of onetenth is obligated on minted silver." Some jurists add the same argument given by al Hadi, the analogy of assets designated for renting or production and assets designated for sale, on the grounds that selling the benefit of the item is like selling a commodity.

But this analogy implies that rented assets' nisab should be the same nisab of money, two hundred dirhams, and the rate should be 2.5%, as stated by the author of al Hasir Fi Madhhab al Nasir.17 Notably, according to this view, the condition of the passage of one year does not apply.

This opinion agrees with the second trend among the precedent-setting jurists in that zakah is due on earned income from exploited, rented, and productive assets, but it suggests that the applicable rate is that of agriculture, one-tenth or one-twentieths by analogy to agricultural land. There is similarity between owner of land who collects its fruits and produce, and the owner of a building or factory who collects its rent or output.

This is the opinion of the late scholars Abu Zahrah, 'Abd al Wahhab Khallaf and 'Abd al Rahman Hasan, which they expressed in a lecture on zakah in Damascus, 1952.18 They classify assets into three categories:

1. Assets acquired for the satisfaction of personal and family needs, such as houses inhabited by the owner, foodstuffs stored at home for daily use, etc. These ar not zakatable.

2. Assets acquired for the purpose of making profit with them or with their help. These assets are usually stored in vaults or storage places. They are unanimously zakatable.

They include the items mentioned by the Prophet (p) as zakatable. Other items are added to this category on the basis of similarity.

3. Assets that are sometimes used for growth or profit and sometimes for personal needs, such as jewelry and domestic animals. Jurists differ on the zakatability of these items.

The application of this classification to the kinds of assets we have in our time must necessarily lead us to include in zakatability items that are used today for growth and profit but were not at the time of our great predecessors. The three scholars mention two kinds of these assets.

First, industrial equipment, plants, and machinery that represent productive capital, because they are the assets that produce income. These machinery and plants are not like tools of the blacksmith or carpenter who works with his hands. These three scholars reach the conclusion that plant and equipment are zakah table because they are Zakah on Exploited Assets 245

productive and growing. Jurists in the past did not obligate zakah on the tools of craftsmen because these tools were very primive, not much more than basic hand tools; production was in fact dependent upon the ability and skill of the craftsman himself.

On the other hand, today's plants and factories are the productive growing capital.

Consequently, we conclude that craftsmen's tools which the owner uses personally are exempted from zakah because they are essential for his or her personal needs, but plants and machinery are zakatable. No one can claim that by stating this we stand against the opinion of preceeding jurists, since they never expressed an opinion on factories they never saw. If they had seen them, they would have given the same ruling. We are merely applying their standards and criteria to modern times.

Second, buildings designated for rental and not personal residence of the owner are growing assets and not assets that satisfy essential personal needs of their owners.

Accordingly, we divide residential houses into two categories, houses that are residences of their owners, which are zakah-free as stated by the jurists, and houses designated for renting. Those are zakatable. In this manner we do not contradict the opinions of preceding jurists, who did not obligate zakah on houses, because they meant only houses occupied by owners. Rental housing was rare; it was an exception and not the rule. Today rental housing is a well-known and profitable form of investment, which must be zakated as a growing asset, especially since zakah is imposed on similar assets, like agricultural land. Justice requires that these two similar kinds of assets be treated similarly.

It is fair to mention that Ahmad used to pay zakah on the income of a few stores he rented, although that was his only source of income. (See Manaqib al Imam Ahmad by Ibn Abi Za'la, p. 224.) "We have seen that the Prophet (p) imposes zakah on mobile capital at the rate of a quarter of one-tenth, and we also find him imposing zakah on the income and not the principal of productive capital, because the principal is indivisible so one must collect from its output. Then the rate of zakah on the output becomes one-tenth or one-half of a tenth, in accordance with rates decreed by the Prophet (p) which distinguish between fixed and mobile assets. We conclude that productive assets of our time must also be zakatable, with the same distinctions between fixed and mobiles assets. On the mobile items, the rate of zakah must be one-quarter of one-tenth, while on the fixed it should be one-tenth or one-half of one-tenth, taken out of its income." "This means that zakah on rented buildings and fixed industrial assets is taken out of their income and not out of the principal at the rate of one-tenth or one-twentieth. When it is possible to know the net income after deducting costs, as is the case in business corporations, zakah is calculated on the net income at the rate of ten percent. The Prophet took ten percent from crops watered by rain or natural springs, as if he were taking it from the net. When it is difficult to determine the net income, zakah is calculated at the rate of one-twentieth of the growth."19

This is the opinion of these three great scholars, who spent their whole lives studying and teaching Islamic jurisprudence. Their opinion can only be described as the opinion of one most experienced, and I believe it is correct ijtihad, based on sound analogy.

The view of these three respected scholars is consistent with the second trend established by our predecessors in charging zakah on the income of buildings and factories. The only difference is in the rate applied. This opinion is most persuasive, since it is based on the sound analogy between the income of fixed assets and that of agricultural land. This is my selected view with the following remarks:

This opinion includes factories and buildings among zakatable assets, without providing general criteria that can be applied to all similar productive capital. This era of ours witnesses other forms of profitable investment, such as cattle and poultry farms and transportation rental firms. All these forms of invested capital are similar to factories and buildings and should be treated like them, without distinction between the different forms invested capital may take. we have noted that the Prophet (p) collected zakah from honey, which is the output of bees, a mobile asset, unlike buildings.

Also, the similarity between rented houses and agricultural land is not free of dispute. The claim that there is no difference between an owner who gets income from his agricultural land and an owner who collects income from buildings is rejected on the grounds that zakah on agriculture is not based on ownership of the land, but on ownership of the crops themselves, which can occur even though the land is rented. The sound analogy must be between the owner of rented land who gets only its rent, and the owner of a rented building who also obtains rent. Such an analogy must certainly be preceded by a discussion of the zakatability of rent on agricultural land, which was done in the preceding chapters, and the conclusion reached that is must be zakated.

Lastly, the analogy between buildings and agricultural land is not accepted, because agricultural land is a perpetual source of income that is not exhausted as years go by, while buildings have a certain number of years at the end of which they will be dehabitated and possibly demolished. This difficulty in analogy can be overcome by accepting the exemption of capital depreciation used in today's taxation systems, whereby a certain amount is deducted every year from the income of fixed assets, with the purpose of accumulating sufficient amount to acquire a new asset at the end of the old one's productive lifespan.20 With this consideration of depreciation or amortization, the buildings and machinery that have a finite lifespan can become similar to agricultural land, whose lifespan is not finite.

The three renowned professors do not discuss the issue of nisab on the income of buildings and factories. How much should this nisab be? Is it like that of crop and fruits, i.e. five wasq, or is it like the nisab of money? It seems that nisab should be set as similar to that of money, as long as owners of buildings and factories receive their income from rent in monetary form.

Since the flow of income is always time related, the question of the time for the accumulation of income arises. Should we apply nisab on the monthly, weekly, or yearly income? It seems that the yearly interval is the most suitable period of time for the consideration of nisab, especially since incomes of individuals and states, as well as rental proceeds, are usually estimated and considered on a yearly basis. It is mentioned that some of the scholars who believe that earned income is zakatable when acquired believe also that if the yearly rent reaches nisab, it must be zakated when rent is obtained.

Consequently, monthly earned rent and income will be treated like fruits that are collected periodically and then all the collections are added together, which is the opinion of the school of Ahmad. The author of al Mughni says, "Fruits collected on several pickings are added together as long as they are of the same year's harvest, whether they all ripen together or not, and when the first harvest comes, the second growing of the same plants during the year must be added to the first, like in the case of palm trees that carry fruit twice a year. Both harvests are added together."21

My opinion is that zakah must be calculated on the basis of net income, after deducting expenses and costs such as wages, maintenance, taxes, etc. Additionally, debts that are due to others and personal and family expenses are deductible, according to the opinion of 'Ata and others. 'Ata says to "Deduct your expenses and pay zakah on the rest." This is also supported by Ibn al 'Arabi in his Sharh al Tirmidhi.

Undoubtedly, there exist people whose only source of income is the rent from a house, the earnings from a small craftshop, or something similar. Such incomes may belong to an old retired person, a widow, or orphaned children. Are these and similar owners whose only source of income is rent of output derived from fixed assets allowed a certain amount as a deduction for their cost of living. Or must zakah be calculated on the gross income?

It is obvious that an exemption of a minimum cost of living is consistent with the justice of Islam, so long as such a minimum is determined by experts who are righteous.

Zakah must be calculated on the residual only if it equals nisab. This opinion is substantiated by two points:

1. Jurists consider assets which are needed by owners to satisfy basic needs as exhausted and, with respect to zakah, non-existing. They give the example of water for thirsty person. A thirsty person can make ablution with soil [tayammum] in spite of the presence of water, because as long as the water is exhausted by the thirst of the person, it cannot be counted.

2. Sayings mentioned earlier ordain estimators of dates and grapes to make it easy on the owners. The Prophet told them to "discount one-third, and if you do not discount one-third, then discount one-fourth," This discount from the total zakatable quantity is a consideration for what they eat to fulfill their needs. It might even be easier and simpler in calculation to discount one-third or one-fourth, in compliance with the spirit of these saying.