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  • Nisaab On Production?

    Posted by Muhammad Abdullah on April 4, 2021 at 3:30 pm

    Is there any nisaab/exemption on the production if the state had allowed? For example, a country has $10000 income tax exempt, in Islamic point of view, are we required to pay 10% Zakaat on the whole income or only beyond that $10,000 amount?

    In US, there is an option of “standard/itemized deduction” which lowers the taxable amount. Can we take its benefit while calculating Zakaat since after all it is for State and State has determined the Nisaab?

    Muhammad Abdullah replied 2 years, 10 months ago 2 Members · 2 Replies
  • 2 Replies
  • Nisaab On Production?

  • Umer

    Moderator April 4, 2021 at 6:23 pm

    (Will forward this for further clarification from Ghamidi Sahab)

    ____________________________________

    Nisab is basically something that an Islamic Government should prescribe depending upon socioeconomic circumstances of the country. However, in any case, it cannot set a higher Nisab than set by the Prophet (sws) Himself as Sunnah. But in the absence of any such government, it is Ghamidi Sahab’s ijtihaad that in case of a salaried individual, one can use tax exemption slab for salaried individuals as Nisab i.e. the lowest annual salary slab beyond which one’s income is chargeable to tax. But in its absence, one can opt for the same Nisab for production i.e. 653 kg of dates. Since zakat is applicable on gross amount but only when it reaches Nisab, which is different for both Year-end wealth and for Production; and here Govt. is not fixing any Nisab per se, but we are using that tax exemption as a Nisab based on ijtihaad, therefore, I don’t think it’s appropriate for us to actually deduct the amounts just like we deduct in case of Income Tax to arrive at Taxable Income.

    Please find summarized law of Zakat here:

    Discussion 4133 • Reply 4136

    There can be difference of opinion on whether Zakat percentage should be applied on amount only above Nisab threshold or on the whole amount as soon as it crosses the Nisab threshold. Please see these responses of Ghamidi Sahab in this regard:

    Discussion 988 • Reply 31187

    Discussion 988 • Reply 36937

    Please also refer to the video below from 21:58 to 24:18

    https://youtu.be/1HdOFN_2gPY?t=1318

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