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Yes, you can deduct a personal loan given to your sibling from your Zakat, provided certain conditions are met.
A personal debt due within the next 12 lunar months qualifies for a deduction from wealth for Zakat. The following are the key conditions for deducting a personal loan from your Zakat:
Any personal loan expected to be repaid in the next 12 lunar months is eligible for deduction, including full or partial repayments made during this period.
For the deduction to be valid, there must be a genuine intention to repay the loan within the specified period. If you plan to repay the debt within the next 12 months, you can deduct it. However, without a clear payment plan, it would not be appropriate to do so.
If, after making the deduction, the loan remains unpaid as initially planned, you will need to adjust your Zakat in the following year. Any amount previously deducted will be added back to your wealth when calculating the Zakat due.
If the loan is not repaid, you will have to pay Zakat on the amount you deducted, as it will be considered unpaid debt. Your Zakat payment in the following year should reflect the correct wealth.
It is essential to ensure the loans deducted are realistically payable within the specified time frame. If repayment is uncertain, it is wise to avoid making deductions until you are confident in repayment.
This approach ensures proper fulfillment of your Zakat obligations while accommodating legitimate personal debts.
And Allah knows best!
WRITTEN BY
Atta-ur-Rehman
Atta-ur-Rehman, a specialist in Fiqh from Fazal-Jamiat-ul-Uloom-ul-Shariah, Jama'at ul-Umar Karachi, is an expert in Islamic jurisprudence. His expertise spans various aspects of Shariah, including Zakat, financial rulings, family laws, and ethical guidance in everyday life. With a deep understanding of Islamic principles, he provides a reliable insights into matters of faith, worship, and personal obligations.