Is Zakat Required on Money Lent to a Needy Person?

Yes, Zakat is required on money loaned to a needy person.

When it comes to money that has been lent to a needy person, the rule can be somewhat nuanced:

• Zakat on Loaned Money:
• Zakat is due on loaned money, even if it hasn't been repaid by the end of the year.
• The loan remains part of your wealth, so if it is outstanding, Zakat is payable on it.
• Paying Zakat Before Repayment:
• You may choose to pay Zakat on the loaned amount before it is repaid.
• If you pay Zakat early, it counts for that year.
• Paying Zakat After Receiving Repayment:
• If you don’t pay Zakat until the loan is repaid, you must pay Zakat for each year the loan remains outstanding.
• This means calculating Zakat and paying it for every year the money was loaned and not returned.
• Bad Debts:
• If the borrower is unable to repay the loan, and it becomes a bad debt, Zakat is no longer due on that amount.
• The debt must be expected to be repaid for Zakat to be applicable.

This obligation serves as a reminder to manage wealth responsibly and fulfill the duties of charity prescribed in Islam.

For those looking to fulfill their charitable duties beyond Zakat, supporting initiatives that prioritize orphan care is a meaningful step. Pakistan Sweet Home stands as a trusted platform where your contributions can directly impact the lives of children who rely on community support to grow, thrive, and find hope.

And Allah knows best!

Other Zakat Questions You May Have

• Do I Owe Zakat on Money I'm Holding for My Brother?
• Is Zakat Due on All Forms of Currency?
• Is Zakat Due on Money I Intend to Gift in the Future?
• Is Zakat Due on Funds in a Shared Savings Pool or Kitty?
• Is Zakat Payable on a Loan with Delayed Repayment?
• Is Zakat Required on Expected Gift Money?