Is zakat obligatory on all that a person owns, such as bank balances and lands, or is it only obligatory on what exceeds the debt he owes?

The majority of scholars hold that debt prevents the obligation of zakat on hidden assets (gold, silver, cash, trade goods). So, if the debt consumes the nisab (minimum threshold) or reduces it, there is no zakat. Likewise, debt prevents zakat on visible assets according to Ahmad and some scholars, differing from Al-Shafi'i in his later opinion. The preponderant view is that of the majority, who cite the action of Uthman (may Allah be pleased with him) who ordered that debts be paid before zakat in the presence of the Companions, without any of them objecting.

If the debt does not reduce the nisab, it is deducted from the zakatable wealth to the extent of its value, and the remainder is subject to zakat. If the payer of zakat has other non-zakatable wealth exceeding their basic needs, it is considered as an offset for the debt, so that zakat can be paid on the zakatable wealth. Basic needs are: housing, clothing, and transportation.

Example: If the zakatable wealth is 550,000 Riyals and the debt is 360,000 Riyals. - If there are non-zakatable assets (such as houses, cars, factories, and machinery) equal to the value of the debt, then zakat is paid on 550,000 Riyals. - If the non-zakatable wealth does not cover the entire debt, then the remaining debt is deducted from the zakatable wealth. For instance, if there is 100,000 Riyals of non-zakatable wealth, then 100,000 is deducted from the debt, and the remainder (260,000) is deducted from the zakatable wealth, making the zakat due on 290,000 Riyals. - If there is no surplus beyond basic needs, the entire debt is deducted from the zakatable wealth, so zakat is paid on 190,000 Riyals.