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Zaka’h on stored furniture&valuation of assets

By: admin

Question

When I left my country a few years ago we put out furniture (carpets, fridge, cooker, etc) in my Father’s storage room. The intention was that we will resume using them when we get back. Now after about 5 years I am not sure if we are to go back there for living. The furniture still remains idle in the storage area.

Should I pay Zakat for the furniture? If yes, should I consider their value at the time of purcahse or should I consider their value at the present time (as an old second hand furniture)?

If it helps, the furniture was given to us as gift and we didn’t pay for it.

Thanks

Reply

In principle, all part of wealth that is in one’s personal or business use is exempt from Zaka’h. However, if some part of one’s assets that was previously utilized in one’s personal or business use is no longer used by the person, then Zaka’h will have to be paid on that part of the assets.

As for the determination of the value of these assets, it seems that except for land and any other non-depreciable long term assets, all other assets should be valued on the basis of their original cost less the estimated depreciation on these assets.

For instance, suppose the original (estimated) cost of your furniture was Rs. 100,000/= and the estimated effective life of this furniture was ten years. In this case, according to the formula given above, the value of the furniture should be:

Rs. 100,000 – (10% of 100,000) X 6 = Rs. 40,000

Zaka’h should now be paid on the furniture at the rate of 2.5% of Rs. 40,000.

It should be noted that the method of valuation of assets for the purposes of Zaka’h is not prescribed by the Shari`ah and the Muslim state can recommend any such method for this valuation which it deems more effective and appropriate. Furthermore, in the absence of any mandatory state legislation in this regard, the individual may adopt any method of valuation, which he considers more appropriate and practicable.

Hope this helps.

UIUK team

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