Selling Air Tickets & Hotel Bookings On Installments

[Umer]

Demanding profit on loan is Riba (Sood) and is Haram in Sharia.

In this particular arrangement, there is no loan transaction, rather a service is being sold in installments and for deferred payment of this service, you are charging extra. It is a sale-purchase transaction, not a loan arrangement. Therefore, there is no element of riba in this transaction.

[Shahzad]

Thanks a lot for your prompt response!

Now we have another situation, some of the customers don’t pay their instalments within due date.

Could we charge them late payment penalty?

If yes then should we charge a fixed amount penalty or the percentage of due amount? Also per day or once?

Thanks!

[Umer]

Yes, you can charge them penalty for late payment. The mode of calculation may vary depending on the business model and relevant industry practices.

On a related note, late payment surcharge can also be charged even in a loan arrangement.

[Shahzad]

Thanks a lot! JaZak Allah!