I have a shop in which there is equipment worth 80,000 riyals, and there are people who owe the shop debts totalling 80,000 riyals. There was a fire in the shop 6 months ago and new merchandise has been and renovations have been done, which together add up to 40,000, of which 35,000 has been borrowed in the name of the shop, to be paid back in instalments.
My first question is: should we pay zakaah on the total amount of equipment that was in the store before the fire? Total cost + debts – new stock and renovation.
My second question is: A full year has not yet passed since the renovations; should we pay zakaah on it or only on the whole shop and the debts that we are owed?.
The goods that are found in a shop fall into two categories:
1 – Those that are prepared for sale, whether they are real estate, food, clothes, or other kinds of goods that are sold.
2 – Those that are not prepared for sale, rather they are for producing goods or are to be used, such as manufacturing equipment, cars, furniture, cameras and computers, etc.
The first category are those that are called “trade goods” and these are the ones on which zakaah must be paid. As for the second category, they are known as fixed assets, and no zakaah is due on them.
In the answer to question no. 42072 we stated that it is obligatory to pay zakaah on trade goods, and we explained the nisaab (minimum threshold), and the fact that fixtures that are not prepared for sale are not subject to zakaah.
In the answer to question no. 22449 we explained that it is permissible to pay zakaah on trade goods in kind, and that it does not have to be paid in cash.
For information on how to calculate zakaah on trade goods, please see the answer to question no. 26236, in which it explains that zakaah is to be paid on the sale price, not the purchase price.
If the time for paying zakaah on your shop has come, then you should take stock of what you have in the shop, such as the goods that you have there, and add them to whatever you have of cash, and add that total to the debts that you hope will be paid back, then pay zakaah on the total at a rate of one-quarter of one-tenth.
As for the debts which you have no hope that they will be paid back because they are owed by people who delay payment or who are poor, then no zakaah is due on them until you take possession of them and start to reckon a new year from the day you receive them. In order to be on the safe side, when you receive them pay zakaah for one year only, even if several years have passed. See question no. 1346.
The debts that you owe are not to be deducted from the wealth on which you have to pay zakaah, according to the more correct scholarly view. See question no. 22426.
The goods that were lost in the fire are not to be added to the total of goods in the store.
As for the things that you put in the store after the fire, if they have to do with furnishings, décor and fixtures, then as we have stated above, no zakaah is due on them, so they should not be included among the goods in the store that are subject to zakaah. If they are goods that are for sale, then if you bought them with the shop’s funds and profits, then zakaah should be paid on them when you pay zakaah for the shop’s good even if one year has not yet passed. If you bought them with other money that does not belong to the store, then you should count one year from the time when you acquired the wealth with which you bought them.
We ask Allaah to compensate you with good and to bless you with a goodly provision.
And Allaah knows best.