Question:
If someone failed to pay zakat on salary for past years and used that money to buy land, should zakat be calculated only on the salary amount or also on the increased value of the land?
Answer:
If someone earns a monthly salary, that income is his wealth. For example, if someone earns 100,000 rupees per month, he should set aside 2.5% as zakat. Even if he does not distribute it immediately, he should at least record it separately.
If someone neglected this for ten years, he could calculate the total income during those years. Suppose over ten years he earned 4 million rupees. Zakat must be calculated on that income.
If part of that money was used to purchase land, then the land represents that portion of wealth. If 2 million remained as cash and 2 million was used to buy land:
- Zakat must be paid on the cash portion.
- For the land, zakat should be based on its current value, because that wealth has been converted into property.
If the land purchased for 2 million is now worth 5 million, zakat should be calculated on its present value. However, if zakat had already been paid before buying the land, then zakat would not apply again to the purchase itself.
But if zakat was not paid before the purchase, then the property represents wealth on which zakat is due.
So, zakat must be calculated accordingly.