Zakat On Agricultural Production And Expenses Allowed For Deduction
The principle of Sunnah with regards to Zakat on production is as follows: ( i ) 5 % on all items which are produced by the interaction of both labour and capital , ( ii ) 10 % on items which are produced such that the basic factor in producing them is either labour or capital and ( iii ) 20% on items which are produced neither as a result of capital nor labour but actually are a gift of God . Therefore, the decisive factor in applying these percentages is the presence /absence of capital and labour. __ When production occurs, the zakat becomes due immediately on the gross amount ( irrespective of the fact when one actually pays it ). The only expenses that can be deducted from gross production/gross receipt are those which are incidental in acquiring ownership of that particular form of means of production and/or are substantial expenses in maintaining/sustaining that particular form of means of production , for example, mortgage payments or lease payments for acquiring ownership of the land which is the means of production itself. Please refer to the video below from 20:10 to 24:08 and from 25:36 to 25:57 https://youtu.be/f52U9MGiyWU?si=749q3Wq6CB8-VEXz&t=1210