بسم الله الرحمن الرحیم
(1) I was trying to calculate our Zakat obligation, we have land in Dubai, that is partially paid to the master developer, who are the owner, as we do not have physical possession of the land as it is not fully paid by us. We are in the legal process to recover our paid amount, as the development has been halted and they have not fulfilled their part of the obligation in the development due to the downturn in an economy. Therefore, my question is should any land that is not fully paid which is not in our possession, is it applicable for Zakat, even on the amount that is partially paid?
There is no Zakat on the land as your intention is no longer to develop the land. However, there is Zakat on the money you are claiming back, as this is your money although you do not currently have physical possession. You may give its Zakat now or after you recover the money. The costs to recover the money can be subtracted.
(2) We also have lands that have been fully paid, however, this land, we are unable to sell. Since I am not getting any offers, due to the market conditions, what value should I attribute to this land for Zakat obligation? Should it be the full amount we have paid or an estimated amount for a sell price that I think we could or could not achieve?
The current market value of the land should be used irrespective of whether it is more or less than the purchase price or the price you expect. The market value is the amount for which something can be sold on your Zakat date.
(3) I am thinking of providing salaries to scholars as currently they earn very small amount and feel that they should be better compensated for the work that they do to enhance their living standard and support for their children. As their current earning in most cases is not adequate to their living costs or comparable to teachers in the secular sector. Are these payments applicable from Zakat or not?
Zakat cannot be used for salaries. This is because Zakat is an unconditional donation without any conditions or expectation of services. You may donate Zakat to them directly unconditionally if they are poor and are eligible to receive Zakat. You may also provide Zakat to poor students who can then pay appropriate fees to the institute, thereby enabling the institute to remunerate their staff appropriately. Staff who work full time should be remunerated adequately and should not under normal circumstances require any Zakat funds.
(4) I recently visited some Madrasas in India and I saw children sleeping on a concrete floor, with a thin blanket and without pillows. Is providing bunk beds with mattress and pillows to these children is that Zakat applicable or not?
If the children are mature and poor, or if they are young and their parents are poor, you can purchase beds and mattresses and other goods with Zakat funds on the condition that tamlīk (full ownership) occurs. The items must be owned individually and personally by the recipients and not the Madrasah. This is because a condition for the validity of Zakat is that it must be owned by the recipient who must be a person.
As mentioned in the previous answer, you can also give Zakat to poor students who can then pay appropriate fees to the institute, enabling the institute to look after their needs properly. It is also possible for the poor students and/or their parents to give the Madrasah the permission to collect Zakat on their behalf for fees purposes. We would advise this to be undertaken in writing. This would enable you to give the Zakat money to the Madrasah representatives who will be collecting on behalf of the poor recipients.
(5) Our Zakat calculation is made based on our Assets, by the end of our fiscal year in December. Islamically, as we operate on a Lunar Calendar which period should we follow to distribute our Zakat January to December or Ramadan to Ramadan?
Fix a date based on the lunar Islamic calendar and undertake your calculations accordingly based on the same date every year. It does not have to be Ramadan to Ramadan. It can be any date, for example 15 Muharram, 1 Ramadan, 25 Safar.
(6) My father mentioned to me that you have suggested a scheme where we are funding the students for Madrasah, because in the current form our funding is not Zakat compliant. As I understand, we are paying for the running cost of the Madrasah’s electricity, teachers’ salaries, food and other necessities. Is that correct? And he suggested that we charge the students a fee per annum and if they cannot pay then we pay for them and consider this as Zakat please clarify more details on how and what the scheme should consist of.
This has been answered above in answers 3 and 4. To repeat, Zakat cannot be used for general expenditure. It must be given in the ownership of a poor person. Once a poor person receives the Zakat, he can use it for fees or as he wishes. At this point, the fees is no longer Zakat as far as the Madrasah is concerned, and therefore it can be used for the aforementioned costs. As mentioned above, the Madrasah can act as agents on behalf of the poor people and collect Zakat on their behalf. However, we would advise this is documented in writing for each recipient and monitored, as this should not be misused to transfer Zakat into non-Zakat funds to build grand buildings and for other unnecessary expenditure.
(7) We have stock in our business, do we calculate it as cost price or expected sale price? We also have stock that is slow moving and non-moving, what value should we aportion to this type of stock?
Use the market value of the stock as per the Zakat date, irrespective of whether this is less or more than the cost price or the price you would like to receive. The same applies to slow moving and non-moving stock, use the market value of the day.
(8) What is your opinion on creating a Waqf? Can the Capital for example £10m used purchase the property that would provide an income which will then be given for the sole purpose of Zakat charity? Can the £10m be considered as the Zakat fund and then provides a Zakat income or is it just the income itself that can be considered. I am sure it is just the income but would like to ask?
Creating a Waqf (perpetual endowment) is a very good concept. It should be noted that there is no limit to what a person can make Waqf during his lifetime, however, once something has been endowed, this is irreversible. The ultimate beneficiaries of a Waqf are the poor people and a person should specify in the absence of an Islamic government the charity of his choice who will ultimately manage the Waqf. It therefore follows that the Waqf will not be subject to inheritance nor Zakat, because as soon as a person makes a Waqf, his ownership ceases. Accordingly, you cannot intend to discharge Zakat via the Waqf endowment. Although your ownership ceases, it is permissible for you to stipulate that you and your children, for example, are to benefit from the endowment as long as you all live. Any such stipulation cannot be perpetual because it contradicts the core component of Waqf (perpetual endowment). Therefore, after this period comes to an end, the poor people will then benefit from the endowment and its income. In the interim, if you decide to derive income from the endowment, this is permissible if you have stipulated this in the Waqf. This income can be used as you wish including to discharge Zakat.
Allah knows best
21 Ṣafar 1440 / 31 October 2018
Approved by: Mufti Shabbir Ahmed and Mufti Muhammad Tahir