If I have put a director’s loan into my company, do I have to still pay zakat on that loan?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Loan receivables are Zakatable assets. Although Zakat is not payable immediately before receiving it, you can still pay Zakat on the outstanding amount each year. However, if you decide not to pay at the current time, it will be necessary to pay Zakat on the loan upon receipt for each outstanding year.
In respect to your company’s Zakat calculation, the loan will be treated as a current liability and deductible from your gross Zakatable assets value.
And Allah Ta’ālā Alone Knows Best
Mufti Faraz Adam al-Mahmudi,
The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.
Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer.
The Shari’ah ruling given herein is based specifically on the scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Consideration is only given and is restricted to the specific links provided, the author does not endorse nor approve of any other content the website may contain.