Purchasing Gold at Low Price & Selling on Credit for Higher Price

Islamic Rulings on Trade

Mufti Abu Muhammad ‘Ali Asghar ‘Attari Madani

Purchasing gold at a low price and selling it on credit for a higher price?

Q: What do the scholars of Islam say about the following matter: Zayd purchased gold from Amr for 800,000 rupees, and after taking possession of it, sold it to Bakr for 1.2 million rupees on credit for two years. It was agreed that these 1.2 million rupees would be paid in instalments. Is it permissible to do this?

اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ

A: It is permissible to buy and sell gold on loan in exchange for cash. There is no harm in doing this, as long as the price and the duration of payment are stipulated.

Payments can be made in many ways. Three common forms of payment are widely used: something being sold for cash; something is sold on credit and the full amount is paid as a lump sum at a later specified date; something is sold on credit, and the payment is made in instalments. All three forms are permissible. Therefore, from an Islamic perspective, there is no harm in the scenario mentioned in the question. Adding to this, the normal conditions that apply to buying and selling should always be observed.

وَاللہُ اَعْلَمُ  عَزَّوَجَلَّ  وَ رَسُوْلُہٗ اَعْلَم  صلَّی اللہ علیہ واٰلہٖ وسلَّم

Zakat on breeding birds for a living

Q: What do the scholars of Islam say about the following matter: I have various birds at home, such as parrots. I take their chicks and sell them. Is zakat necessary on them? If so, how much is necessary? If a person owns cattle, is zakat necessary on their offspring?

اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ

A: In the question asked above, the chicks that are taken from the eggs, or if one has an animal, like a cow, and it gives birth, their offspring will not be considered business assets. This is because they were not bought, rather, you bought the bird, the cow or ewe, and they gave birth whereas. business assets refer to goods that one has the intention of selling at the time of buying them, and in the above-mentioned case, it is not the birds or animals that were bought which are being sold. Rather, it is the egg or baby gained from them that is being sold. Therefore, there is no zakat due upon them. Likewise, there is no zakat due upon the birds or animals from which these eggs/babies are taken, as they were not bought with the intention of selling.

Note: For more details, refer to the fatwa on page 583 in “Kitab al-Zakat” of Fatawa Ahl-e-Sunnat.

وَاللہُ اَعْلَمُ  عَزَّوَجَلَّ  وَ رَسُوْلُہٗ اَعْلَم  صلَّی اللہ علیہ واٰلہٖ وسلَّم

Zakat on business goods

Q: What do the scholars of Islam say about the following matter: I own a shop where I buy one thing for 5 rupees and sell it for 10 rupees. Now, its rate has increased to 8 rupees, so in accordance with which rate will I calculate zakat?

اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ

A: When calculating zakat, neither will the purchase price be considered nor the selling price. Rather, the amount of zakat necessary will be calculated using the market value of goods on the day the Zakat year is complete.

In the above-mentioned scenario, as the market value of the item has increased, zakat will be calculated in accordance with its current market value. Mufti Amjad Ali A’zami رَحْمَةُ الـلّٰـهِ عَـلَيْـه writes: “For business goods, the value at the time a year has elapsed is what will be taken into account.”^[1]

وَاللہُ اَعْلَمُ  عَزَّوَجَلَّ  وَ رَسُوْلُہٗ اَعْلَم  صلَّی اللہ علیہ واٰلہٖ وسلَّم

Paid leave from work?

Q: What do the scholars of Islam say about the following matter: I work for a company which gives a month’s holidays, and also pays for these holidays. Is it permissible to take these wages?

اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ

A: Different companies have different policies in regard to the number of annual or monthly holidays, with or without pay. It is the norm in many companies to give a month’s holidays with pay. Therefore, if it is common in a company to give one month’s paid leave every year, then this money can be taken and there is no dislike in this. However, at the time of employment, it is necessary to stipulate the details of said holidays, and holidays will only be given in accordance to the permissible details and conditions that are specified.

Imam Ahmad Raza Khan رَحْمَةُ الـلّٰـهِ عَـلَيْـه writes the following about the permissibility of paid holidays:

Common holidays, like Friday, the two Eids, Ramadan, or whereupon a holiday on Tuesday is also common in madrasas, are also exempt from this ruling. A person is still rightful to be paid even without offering themselves for service on these days.^[2]

وَاللہُ اَعْلَمُ  عَزَّوَجَلَّ  وَ رَسُوْلُہٗ اَعْلَم  صلَّی اللہ علیہ واٰلہٖ وسلَّم

Zakat on buffalo housed in barns

Q: What do the scholars of Islam say about the following matter: We have a buffalo barn that has 50 buffalo. What is the ruling of zakat on these buffalo? We also buy feed for them.

اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ

A: If you bought the buffalo to sell them, then they are considered business stock, and zakat will be necessary in this case. However, if you have these buffalo for their milk and the purpose is to sell their milk; they are not considered business goods, and feed is also bought for them to eat, therefore, there is no zakat upon them in that case.

The reason for this is that zakat is only necessary on sāʾima animals, but this has its own conditions, one of which is for said animals to spend most of the year freely grazing whilst the intention is just to obtain milk from them or to fatten them up. If they do not spend most of the year freely grazing, but food is purchased for them and given to them, as is the case with buffalos housed in barns, they are not included among sāʾima animals and are therefore not zakatable.

However, if animals are bought with the intention of selling, just as many purchase cows, goats, etc., to sell during the days of qurbani, then due to being business goods, zakat will be necessary upon them. In this case, once an entire year has passed, 2.5% of their value on that day will be given as zakat.

وَاللہُ اَعْلَمُ  عَزَّوَجَلَّ  وَ رَسُوْلُہٗ اَعْلَم  صلَّی اللہ علیہ واٰلہٖ وسلَّم