Goods do not become trade goods unless two conditions are met

[masood]

Ibn Qudaamah (may Allaah have mercy on him) said: Goods do not become trade goods unless two conditions are met:

(i) That he takes possession of it by means of his actions, such as buying, marriage, khula' accepting a gift, a bequest, booty, or earning of permissible things.

(ii) That he intends when taking possession of it to sell it. If he does not intend when taking possession of it to sell it, then it is not trade goods, even if he forms that intention later on.

If he takes possession of it by inheritance and intends to sell it, it does not become trade goods. Similarly, if a settled person intends to travel, the rulings on travelling do not begin to apply to him unless he takes action.

It was narrated from Ahmad in another report that goods may become trade goods by virtue of intention, because Samurah said: The Messenger of Allaah (peace and blessings of Allaah be upon him) commanded us to pay zakaah from that which we had prepared to sell. Based on this, when a person forms the intention to sell it, it becomes trade goods. End quote from al-Mughni, 2/336.

The former is the view of the Hanbalis, Hanafis, Maalikis and Shaafa'is.

See: Badaa'i al-Sanaa'i, 2/12; Sharh al-Kharashi 'ala Khaleel, 2/195; al-Majmoo', 6/5; and al-Mawsoo'ah al-Fiqhiyyah, 23/271.

[masood]

The majority of scholars are of the view that it is obligatory to pay zakaah on trade goods, subject to two conditions:

1 - That he should have taken possession of it through his own actions, i.e., by buying it or accepting it as a gift, not by inheritance, because inheritance comes under the heading of things that a person acquires involuntarily.

2 - That he took possession of it with the intention of selling it. If he took possession of it with the intention of keeping it, then decided to sell it, he does not have to pay zakaah.

Ibn Qudaamah (may Allaah have mercy on him) said: An item is not regarded as trade goods unless two conditions are met:

1 - That he should have taken possession of it through his own actions, either by buying it or accepting it as a gift. It makes no difference whether he took possession of it in return for payment or not.

2 - He should intend at the time of taking possession of it that it is for trade. If he did not intend at the time of taking possession of it that it was for trade, then it is not trade goods even if he formed that intention afterwards.

End quote from al-Mughni (2/336).

Some scholars are of the view that it becomes trade goods when he forms the intention, even if he did not taken possession of it through his own actions. This was narrated from Ahmad (may Allaah have mercy on him).

Ibn Qudaamah said, after the words quoted above:

It was narrated from Ahmad in another report, that goods become trade goods as soon as one forms the intention to sell them, because of the words of Samurah (may Allaah be pleased with him): The Messenger of Allaah (peace and blessings of Allaah be upon him) commanded us to pay zakaah on that which we prepared for sale. Based on this, it makes no difference whether he took possession of it through his own actions or whether it was in return for payment or not, rather when he forms the intention to sell them, they become trade goods.

End quote from al-Mughni (2/336).

The first view is the opinion of the Hanbalis, Hanafis, Maalikis and Shaafa'is.

See: Badaa'i al-Sanaa'i (2/12); Sharh al-Kharashi 'ala Khaleel (2/195); al-Majmoo' (6/5) and al-Mawsoo'ah al-Fiqhiyyah (23/271).

Shaykh Ibn `Uthaymeen (may Allaah have mercy on him) preferred the second view, which was also narrated from Ahmad, but he differentiated between selling a car or land in order to earn money and make a profit, and selling them because one no longer needs them. In the first case zakaah is due, but not in the second.

Shaykh Ibn `Uthaymeen (may Allaah have mercy on him) said: The second view concerning this issue is that it becomes trade goods by intention even if he did not take possession of it through his own actions, and even if he took possession of it with no intention of selling it, because of the general meaning of the words of the Prophet (peace and blessings of Allaah be upon him): "Actions are but by intention and each person will have but that which he intended." This man formed the intention to sell it so it is trade goods.

For example, if he buys a car for his personal use, then he decides to use it as capital for business. In this case he must pay zakaah when one year has passed since he made that decision. If he has a car that he is using then he decides to sell it then it is not trade goods, because in this case he is not selling it for trade, but because he no longer wants it.

Another example is if he has land that he bought to build on, then he decided to sell it and buy a different piece of land, so he put it up for sale. This is not regarded as trade goods, because the decision to sell in this case is not to use it to raise capital but because he no longer wants it. There is a difference between the person who uses it to raise capital for business and a person who no longer wants this thing and wants to sell it. In the first case zakaah is due according to the most correct opinion, but no zakaah is due in the second case.

End quote from al-Sharh al-Mumti` (6/143).