Question Summary:
Is Zakah due on deferred payments?

Question Detail:

If one has about R150 000 in jewellery and investments but has two cars on HP and a house that is bonded which is much more than the jewellery and investments, would zakaat be due?

Answer :

Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
If a person owes his creditors money on deferred payments, this will be considered as a long-term loan. According to the Fuqaha (jurists), a long-term loan is any amount of money which a debtor owes his creditors over the period of one year.
The ruling for a long-term loan is, the total amount of money a debtor owes his creditors by the end of the year will be excluded from the Zakah. In other words, this amount of money belongs to his creditors. Therefore, Zakah is not due upon this amount. Any other amount which is to be paid after the period of one year shall not be deductible from Zakah. For example, if a person has purchased a car for R100,000 on installments of R10,000 a year, he will pay Zakah on his savings subtracting R10,000 from his total savings of that year since these R10,000 become due upon him to his creditors by the end of this year. [1]
 
And Allah Ta’āla Knows Best
Abdul Hannan Nizami,
Student Darul Iftaa
Chicago, USA
Checked and Approved by,
Mufti Ebrahim Desai.