I have one plot of land and a flat. I have been told by a friend that I have to give Zaka’h on these assets also, in addition to other liquid assets. Till very recently I thought I need only give Zaka’h on cash and valuables etc. I have been told that Mr. Javaid Ghamidi1 is of the view that Zaka’h is permissible on residential plot of land also. I believe Jamia Ashrafia (Dioband) does not hold this view. If it so what is the reasoning for levying Zaka’h on land and house. I am not in a position to pay Zaka’h on these assets and will have to sell one of them to be able to do so.
Zaka’h, as we understand it, applies to:
All kinds of financial wealth besides that which is in one’s personal or business use, if its total value is not below the nisaab;2
All kinds of productions (whether of goods or services), if its total value is not below the nisaab; and
Cattle (Cows, buffalos, goats, sheep etc.) if their number is not below the nisaab.
The rate of Zaka’h on wealth is 2.5% of the total wealth, while in the case of production it varies with the methods used in production. If production is received through a combination of labor and capital, the rate is 5 percent of the total production. If production is received only through employment of labor or capital, the rate is 10 percent of total production. And if production is achieved without the employment of either labor or capital (like a windfall gain) then the rate is 20 percent of the total production.
I do agree with you that the “Jami`ah Ashrafiah” does not ascribe to the aforementioned view. The reason is that they have considered the items on which Zaka’h was levied by the Prophet (pbuh) to be the only items on which Zaka’h can be levied, while we consider the Prophet’s levies as guiding principles. For example, they take Zaka’h on agriculture as limited to agriculture only. While we take that to mean Zaka’h on “production”. Because of this difference, they believe that modern industry shall have to pay Zaka’h on its wealth. While we believe that it should pay Zaka’h on the same principle applied on the agricultural sector, i.e. on their production rather than their accumulated wealth.
Keeping the foregoing in mind, let us now take a look at your particular question:
If the piece of land is not under your personal (residential or business) use and is neither given on lease, then, in my opinion, you shall have to pay 2.5 percent of its total value as Zaka’h. In case it is in your personal (residential or business) use, then no Zaka’h shall be levied. If it has been leased (and is thus producing a service through employment of capital alone), then 10 percent of its rental value (as that may be assumed to be the value of the service produced) shall be deducted as Zaka’h.
In the same manner as described above, if the flat is in your personal or business use, no Zaka’h shall be levied. If the flat is rented out, 10 percent of the rent shall be deducted as Zaka’h, and if the flat is lying as idle wealth, then 2.5 percent of its value shall be given as Zaka’h.
I would also like to mention here that these issues are not a part of the Shari`ah, but an application of the guidelines given by the Shari`ah. It is, therefore possible that a difference of opinion exists regarding them.
Moreover, if it is not possible to pay Zaka’h on land (at the rate of 2.5%) and the land has been kept as an asset to be utilized for a particular purpose, one may keep a record of the total Zaka’h applicable on that land (or any other asset) and pay it at the particular time of its sale.
25th November 1998