Question 36: Salam alaikum, my father lent money to this man a few years ago, and at this time it seems that he will not be able to pay back the amount and he is in debt to others as well. Will it be permissible to include that sum of money as zakat and deduct the amount from what is payable this year?
Answer: Walaikumussalam Brother,
Normally the money we lend to others to use, we are expected to give zakat on it either when we get it back or before if we want to. This is the case when we lend money to someone who is not denying the loan and is expected to be able to return it.
But If he is denying the loan or is unexpected to return the load due to fianancial inability or severe difficulty, then in that situation, we regard that loaned amount as effectively lost, until and if we get it back. If we do eventually get that loan back, despite the odds against ever getting it back, then we keep the money with rest of our money and give zakat from after one year passes on it or at next Ramadan.
So this seems to he the case in your father’s situation. He does not have to give zakat on the money he lend to the other man unless and until he returns it and then treat it like rest of the wealth. But the money given to the other person cannot be regarded as zakat given to that person as it was no more than a loan in the beginning and is like any money we happen to lose. Losing money is a trial from Allah how we behave towards that person, towards Allah who gave it in the first place, etc.
So, the father is required to give zakat now on the savings he has now like the usual 2.5% zakat considering the Nisab and hawl etc.
I pray Allah rewards your father for the loan he gave, and that Allah returns more than that to him with blessings and makes it easy also for the man who borrowed it and cannot return it, ameen.