Is Zakat obligatory on the compensation received from the termination of a land purchase contract, knowing that the penal clause agreed upon in the contract is higher than the compensation received?
If the buyer and seller agree upon a sale, and the contract fulfills its pillars and conditions, then the contract becomes binding, and it is not permissible to revoke it. It is recommended to accept a request for annulment (iqālah), based on the Prophet, peace and blessings be upon him, who said: "Whoever annuls a sale for a Muslim, Allah will annul his slip on the Day of Resurrection." If the other party agrees to the annulment on condition of an increase over the amount paid, that is permissible, because iqālah is considered a sale according to the preponderant opinion. Zakāt is not obligatory on the amount gained from the annulment and the added compensation unless a full year has passed over it and it reaches the nisāb (minimum taxable amount).
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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