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Zakat On Service Sector
Assalamualaikum
sir i’m a Chartered Accountant…i receives payment from my clients on regular basis…so do i need to pay the Zakat as and when i receives payment like u said it is type of production or should i wait for year end nd then claculate my profit after that zakat is to be paid on that profit only ?coz it is not possible to bifurcate the expenses i made on receipt wise basis…
Furthermore business income is exempt upto 2.5Lacs in india so how will i calculate that exemption if i pay zakat on every receipt..
Jazakallah khair
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7 Replies
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Zakat On Service Sector
updated 2 years, 9 months ago
3 Members
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7
Replies
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Hopefully following response will help you understand the law of Zakat with much clarity. In case of any confusion, please feel free to ask a follow-up question:
Discussion 58129 • Reply 58137
Following points specific to your case are important to mention here:
– The Zakat on production (earning) becomes due as soon as that earning happens and it is due on gross earning. However, one can calculate it on yearly gross earning and can pay it in installments as well. You can use tax exemption of 2.5 lacs as Nisab for earning and calculate the zakat on yearly gross receipts (on the amount above 2.5 lacks exemption).
– The only expenses that can be deducted from gross receipt are those which are incidental to that particular form of earning and are substantial in maintaining that particular form of earning (For Details: Discussion 50336 • Reply 50354).
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Shukraan…
sir plz clear 1 more thing..We use to make our yearly Profit nd loss A/c in which we take all the incomes on gross basis..from that income we use to less all the related expenses like salary to staff,office rent, electricity charges, depreciation nd many more…
so whether these are allowable expenditure or not nd can i pay tha Zakat on that final figure(Gross income- all theses expenses)…
some expenditures are actually paid nd some are virtually like depreciation..
Jazakallah khair
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nd i think rate would be 5 % ??
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If you subtract expenses from your gross income then it becomes net income. Production zakat is due on gross income, not the net income. However, as Ghamidi sahab explained in the video shared above, if a certain expense is considered essential in that income (for example, salary of a person who actually performs the accounting tasks for a client) then it can be considered means of production and will be exempt from zakat. This is an ijtihadi matter so the actual application will have to be determined by you depending on your case. In my personal view, I would not deduct electricity charges, rent, etc.
If your business requires financial investment as well as labor then your zakat would be calculated at 5% of gross, and if it requires only one and not the other then 10% of the gross.
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sir can u plz elaborate the financial investment little more..
like other than manual labour we provide many things to staff like laptops,stationery, refreshments etc which in itself is a huge amount collectively..
so whether these would be considered as financial investment or not…basically these are the means to perform accounting task
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nd i got the point…i think you’r saying thay we should pay Zakat on the gross profit and not on Net Profit in accounting terms 😊😊
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Yes, production zakat is on gross profit.
Financial investment means that you have your own money invested in your business.
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