Zakaat - Rules and modern issues

Zakaat on loan

Zakaat on the amount given as loan is Compulsory on the lender, provided he/she has wealth that meets the prescribed criterion of Zakaat.  If the loan period is long, then Zakaat has to be given for every year of it.  However, there is an allowance that the Zakaat can be given when the loan is repaid.  There is no sin in this delay.  However, it is also valid if someone gives the Zakaat yearly for a loan which is not yet repaid.

If there is no hope of repayment of loan, for e.g. if the borrower refuses to pay the loan and there is no proof or if the borrower is unable to repay the loan, then Zakaat is not Compulsory on that loan.  As mentioned by ‘Allama Ibn Hamaam (May Allah shower His mercy on him) in Fath Ul Qadeer, Vol. 1, Pg. No. 176.