Zakat is not due on the value of a house you live in, a flat you rent out, or land you hold for use, inheritance or an undecided future. It is due, at 2.5% of market value every year, on property bought with a firm intention of selling for profit, because that property is trading stock. Rent is ordinary cash: whatever remains with you on your zakat date, above the nisab and after debts, is zakatable with the rest of your money. Those rules come from the International Islamic Fiqh Academy's 1985 resolution on real estate and from a consistent line of fatwas issued by Darul Ifta, Darul Uloom Deoband. This guide applies them to the family home, a flat on rent, a plot in a builder's scheme, an under-construction booking and a farm, and ends with the nisab in rupees for October 2026.
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The rules, property type by property type
The table below is the whole article in one view; every row is expanded in the sections that follow. Where a row depends on your intention at purchase, the test is the intention you actually had when the money changed hands, not the one you would prefer now.
| Property | Zakat on the asset's value? | Zakat on income from it? | Basis |
|---|---|---|---|
| House or flat you live in | No | Not applicable | Not trading stock; personal use asset (Deoband fatwa 67320) |
| Flat, shop or land given on rent | No | Yes, on rent still held at your zakat date | IIFA Resolution 2 (2/2) 1985; Deoband fatwa 162932 |
| Plot or flat bought to resell for profit | Yes, 2.5% of market value each year | Not applicable until sold | Hanafi rule on goods bought for trade (Deoband fatwa 67320) |
| Plot bought with no clear plan, or for children | No | Yes, on the cash once it is sold | Deoband fatwas 162602 and 162932 |
| Plot bought to resell, intention later changed to building a home | No, from the change onward | Not applicable | Deoband fatwa 162932 |
| Under-construction flat, instalments paid to builder | No, the builder owns the money paid | Not applicable until possession | Deoband fatwa 150717 (istisna analysis) |
| Agricultural land | No | Ushr on produce is debated for Indian land; see below | Deoband fatwa 177028; Islamic Fiqh Academy (India) 6th seminar |
Why the intention at purchase decides everything
Classical Hanafi law, which Indian darul iftas apply, treats gold, silver and grazing livestock as zakatable in themselves, and everything else as zakatable only when it is held for trade. Property falls in that third group. Darul Ifta Deoband states the rule in fatwa 67320 by quoting the Durr al-Mukhtar, then applies it: land a father gave his son for residence carries no zakat, while a plot bought with a firm intention of selling, where that intention persists, is a business item on which zakat is due every year at one-fortieth of the market price on the day of payment.
Two refinements matter in practice. First, the intention must be firm and must exist at the time of purchase. Fatwa 162602 deals with a man who bought plots in building societies as a hedge against cash losing value, with no clear plan, possibly for his children, possibly to sell if he needed money: no zakat on those plots. Second, a change of intention away from trade ends the obligation, but a change toward trade does not create it. Fatwa 162932 answers four variations: a plot bought with no intention and later put up for sale carries no zakat until it is sold and the cash is in hand; a plot bought to build a house or to let carries none; a plot bought for trade whose owner changed his mind within the year carries none from then on; and where two partners bought one plot, the partner who intended trade pays on his share each year while the other pays nothing until the sale proceeds arrive.
The consequence is that most Indian property is not zakatable: the flat you live in, the ancestral house in the village, the plot your father bought in 1998 because the price looked good, the second flat let to a tenant. What is zakatable is property held specifically to flip, and the cash and rent that any property generates. Mixed motives at purchase, such as sell or build or gift, take the asset out of the trade category. Be honest about which case you are in: a buyer who has listed the plot with brokers and is waiting for a price is a trader; one who tells the family the plot is for a daughter's wedding or a retirement house is not.
Rental property: zakat on the rent, not on the flat
The International Islamic Fiqh Academy of the OIC addressed rented real estate at its second session in Jeddah in December 1985. Resolution 2 (2/2) records that no clear text obliges zakat on real estate or on leased non-agricultural land, and resolves that zakat is not due on the assets themselves, while it is due on their yield at one-fortieth, 2.5%, after a year has elapsed from the date of actual receipt, if the other conditions of zakat are met. Deoband reaches the same result for the Indian case in fatwa 162932: a plot bought to build and let carries no zakat, and once the house is let, zakat falls on the rent under the ordinary rule for cash.
Almost nobody tracks a separate year for each month's rent. Rent lands in a bank account, mixes with salary, and is spent or saved. The workable method, which the zakat calculation guide recommends for every asset, is to fix one lunar date, count all the cash you hold on that date including accumulated rent, deduct debts due, and pay 2.5% on the net figure if it clears nisab. Rent spent on maintenance, municipal tax or school fees before the date is simply gone and is not zakatable. Rent moved into a Shariah fund or gold is counted there instead; our guide to zakat on mutual funds, shares and EPF covers that side.
A worked example in rupees
Take a two-bedroom flat in Howrah worth Rs 65 lakh, let at Rs 18,000 a month, so Rs 2,16,000 a year. The owner paid Rs 14,000 in municipal tax and Rs 22,000 on a geyser and painting, spent most of the rest on the household, and holds Rs 90,000 in the bank on the first of Ramzan, his zakat date. Zakat on the flat's Rs 65 lakh value: nil. The Rs 90,000 is counted with his other cash, gold and fund units; if his net zakatable wealth is Rs 6,40,000, he pays Rs 16,000, of which the rent accounts for Rs 2,250. Had he bought the flat to resell within a couple of years and still intended to, the Rs 65 lakh would enter the sum and add Rs 1,62,500 a year, which is the real cost of holding property as trading stock.
How this differs from income tax on house property
Income tax and zakat look at the same flat through different lenses. Under the Income Tax Department's published treatment of income from house property, tax is charged on the net annual value of a let-out property, which is the gross annual value less municipal taxes paid, with a 30% standard deduction under Section 24(a) and a deduction for loan interest under Section 24(b), whether or not you kept any of the rent; a self-occupied home has nil annual value. Zakat has neither deduction but is charged only on what you actually still hold on your zakat date, and instalments due are deducted as debt rather than interest. Our comparison of zakat and income tax explains why the two systems rarely tax the same rupee.
Plots and flats bought to sell: trading stock at market value
The property that is zakatable in full is the kind a developer, a land trader or an investor holds to flip: a plot bought in a township scheme to sell when the road comes, a flat booked at launch to exit at possession. Deoband's fatwa 67320 is specific about valuation: on the day you pay zakat, take the market price of the plot on that day and pay one-fortieth. It is not the purchase price and not the circle rate; where there is no ready market, a reasonable estimate from local brokers is what a mufti will accept. Prices have been moving: the Reserve Bank's House Price Index release for the April to June 2026 quarter, published on 24 August 2026, puts all-India residential prices up 3.6% year on year across the eighteen cities it tracks.
A worked case: a plot on the Hyderabad outskirts bought for Rs 30 lakh in 2023 with a clear intention to sell, now valued by two local brokers at Rs 42 lakh. Zakat for the year is 2.5% of Rs 42 lakh, Rs 1,05,000, payable from any cash the owner has, because the obligation is on the owner, not on the plot. Three years at those values means more than Rs 3 lakh in zakat before the plot is sold, the discipline the rule imposes on speculation. If the owner has no cash, the fatwas do not excuse payment; the choices are to sell a part, borrow without interest, or take a mufti's guidance on paying arrears at sale.
Under-construction flats and builder instalments
A large share of middle-class Indian property is bought off plan, with money paid to a builder in stages against construction milestones and possession two or three years away. Deoband's fatwa 150717 analyses this as istisna, a contract to have something made to specification for future delivery. Under istisna the instalments the buyer pays become the builder's property, so zakat on that money is the builder's obligation, not the buyer's: money you have paid is out of your zakat base from the date of each payment. The flip side appears in fatwa 54195: savings you are holding to pay future instalments are still your money, and if they reach nisab on your zakat date they are zakatable. A buyer whose zakat date falls a week before a Rs 10 lakh milestone payment pays zakat on that Rs 10 lakh; a buyer who paid it a week earlier does not.
Two cautions. A flat booked off plan to resell at possession is trading stock in intention, but until possession the buyer owns only a contractual right, and a mufti should be asked whether anything is due on that right. And if the instalments are funded by a conventional home loan, the zakat analysis does not change but the riba does; see our guide to buying a home without interest in India.
Agricultural land: the ushr question for Indian farms
Agricultural land is never zakatable on its value. The obligation on farmland is ushr, a levy on the produce: one-tenth where the crop is watered by rain or a river, one-twentieth where it is irrigated at cost by well, tube-well or pump. Whether ushr applies to land in India at all is a live disagreement. Darul Ifta Deoband's working position, stated in fatwa 171526 on a potato crop, is that Indian lands are generally neither ushri nor kharaji, so ushr is not obligatory on the harvest, but that paying it as a precaution is better, at the rain-fed or irrigated rate, in kind or in cash value. Fatwa 177028 records the disagreement behind that position: some scholars hold Indian land is neither ushri nor kharaji, while others treat land held by Muslims generation after generation, with no non-Muslim ownership in between, as ushri with the full levy due. Once produce is sold, the cash is ordinary money and enters the normal zakat calculation if still held at year end.
The Islamic Fiqh Academy (India) took a firmer line at its sixth seminar at Umerabad, Tamil Nadu, in December 1993 and January 1994. Its resolution on lands on which ushr and revenue are levied holds that it is incorrect to say all Muslim-held land in India is liable for neither ushr nor kharaj, lists categories of Indian land that are ushri by consensus, and concludes that as a matter of abundant caution all land in Muslim hands should be treated as subject to ushr. A farming family in Malda or Malappuram therefore has two defensible positions: no obligation with a recommendation to pay, or an obligation on the produce. Either way the rate is on the crop, assessed at harvest, not on the land.
| Irrigation | Rate on gross produce | Example: 40 quintals of paddy |
|---|---|---|
| Rain, river or canal flow without purchased water | One-tenth (10%) | 4 quintals, or its market value in cash |
| Tube-well, pump, purchased water or bought diesel | One-twentieth (5%) | 2 quintals, or its market value in cash |
| Produce sold and cash held to the zakat date | 2.5% on the cash, with other wealth | Depends on cash remaining |
Nisab in rupees and how to add property to the rest of your zakat
Nisab is the wealth floor below which zakat is not due, defined by weight in gold or silver and converted to rupees on your zakat date. Two conventions are in use in India: 85 grams of gold and 595 grams of silver, or 87.48 grams and 612.36 grams in the tola-based convention. The India Bullion and Jewellers Association, whose published rates most jewellers quote, listed 999 gold at Rs 1,45,944 per 10 grams and 999 silver at Rs 2,08,750 per kilogram at its evening fixing on 19 October 2026, before GST. On those figures the gold nisab is roughly Rs 12.4 lakh to Rs 12.8 lakh and the silver nisab roughly Rs 1.24 lakh to Rs 1.28 lakh; recompute on your own date. Which threshold applies to mixed wealth is a question for your mufti, but on the silver figure a household with Rs 90,000 of rent in the bank plus modest gold jewellery is already above nisab.
- Fix one lunar zakat date and keep it; the first of Ramzan and the first of Muharram are the common anchors.
- List every property you own and write next to each the intention you had at purchase: residence, rental, inheritance, undecided, or resale for profit.
- Exclude every property not bought for resale: the home, rented flats, inherited land, undecided plots and farmland.
- For each property bought to resell and still held with that intention, add its market value on the zakat date.
- Add all cash on the date, including accumulated rent and the proceeds of any property sold during the year. A tenant's security deposit you hold is counted as cash and deducted again as a debt, so it nets to nothing; advance rent that is yours to keep is simply cash.
- Add gold, silver, fund units and shares, following the rules in our guides on jewellery and on mutual funds.
- Deduct debts due, including property instalments falling due imminently; money already paid to a builder under istisna is neither an asset nor a deduction.
- If the net figure clears nisab, pay 2.5% of the whole figure where it reaches eligible recipients; our guide on where to pay zakat in India compares IndiaZakat, the Zakat Foundation of India and local distribution.
Our view
The rules on property are among the most settled in zakat law and the most misapplied in Indian households, in both directions. Families with a rented flat sometimes pay 2.5% of its value every year, which is charity but not zakat and can run to lakhs that were never owed; others hold plots bought explicitly to flip and pay nothing. The honest position is the one in the table at the top: nothing on the home, the rented flat or the inherited land; 2.5% of market value each year on anything bought to resell while the intention lasts; and 2.5% on rent and sale proceeds still held as cash on the date. The rule rewards long-term holding and penalises speculation, which is deliberate. Where intention is genuinely unclear, write down what you intended when you bought, ask a mufti with the facts, and do not reconstruct a more convenient intention afterwards. Facts checked against iifa-aifi.org, darulifta-deoband.com, ifa-india.org, incometaxindia.gov.in, rbi.org.in and ibjarates.com on 19 October 2026.
Frequently asked questions
Is zakat applicable on the house I live in?
No. A house or flat used as your residence is a personal use asset, not trading stock, and carries no zakat on its value however much it is worth. Darul Ifta Deoband's fatwa 67320 confirms that land or a house held for residence is not a business item. The same applies to a second home your family uses and to the ancestral house in your village.
Do I pay zakat on rental income in India?
Yes, on the rent itself, not on the flat. The International Islamic Fiqh Academy's 1985 resolution and Deoband's fatwas place zakat on the yield of rented property at 2.5% once a year has passed, while the property's value is exempt. In practice, count whatever rent remains in your accounts on your fixed zakat date with your other cash, deduct debts, and pay 2.5% if the total clears nisab.
Is zakat due on a plot of land bought as an investment?
It depends on the intention when you bought it. A plot bought with a firm intention to resell for profit is trading stock and is zakatable every year at 2.5% of its market value on the day you pay. A plot bought with no clear plan, as an inflation hedge, for children, or to build on later carries no zakat on its value; zakat is due only on the cash once it is sold, per Deoband fatwas 162602 and 162932.
Do I pay zakat on instalments paid for an under-construction flat?
Generally no. Deoband's fatwa 150717 treats a flat booked against a specification and future delivery as istisna, under which the money paid to the builder becomes the builder's property and the builder bears any zakat on it. Savings you are still holding to pay future instalments remain yours and are zakatable if they reach nisab on your zakat date, per fatwa 54195.
Is there zakat on agricultural land in India?
Not on the land's value. The obligation on farmland is ushr on the produce: 10% of the crop where it is rain or river fed and 5% where it is irrigated at cost. Darul Ifta Deoband holds that Indian land is generally neither ushri nor kharaji, so ushr is recommended as a precaution rather than obligatory, while the Islamic Fiqh Academy (India) resolved in 1994 that all Muslim-held land should be treated as subject to ushr as a precaution.
What is the nisab for zakat in rupees in 2026?
It changes daily with bullion prices. On IBJA's evening rates for 19 October 2026, 999 gold at Rs 1,45,944 per 10 grams puts the gold nisab at about Rs 12.4 lakh to Rs 12.8 lakh depending on whether you use 85 or 87.48 grams, and 999 silver at Rs 2,08,750 per kilogram puts the silver nisab at about Rs 1.24 lakh to Rs 1.28 lakh. Recompute on your own zakat date using that day's rate.
Sources
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- International Islamic Fiqh Academy, Resolution No. 2 (2/2): Zakah on Real Estates and Leased Non-Agricultural Lands (28 December 1985)
- Darul Ifta Deoband, fatwa 67320: zakah on a flat bought with the intention of selling
- Darul Ifta Deoband, fatwa 162932: zakat on plots, four cases of intention
- Darul Ifta Deoband, fatwa 162602: zakah on plots bought as an investment with no clear intention
- Darul Ifta Deoband, fatwa 150717: zakat on an under-construction flat paid in instalments, istisna analysis
- Darul Ifta Deoband, fatwa 54195: zakat on savings held to pay for an under-construction house
- Darul Ifta Deoband, fatwa 171526: ushr on produce of Indian land, rain-fed and irrigated rates (Urdu)
- Darul Ifta Deoband, fatwa 177028: are Indian lands subject to zakat or ushr (Urdu)
- Islamic Fiqh Academy (India), 6th Fiqhi Seminar, Umerabad: Lands on which Agriculture Cess (Ushr) and Revenue is Levied (31 December 1993 to 3 January 1994)
- Income Tax Department, Government of India: income from house property (Sections 22 to 24)
- Reserve Bank of India, press release 2026-2027/958: All-India House Price Index for Q1:2026-27 (24 August 2026)
- India Bullion and Jewellers Association, daily gold and silver rates (19 October 2026 evening fixing)
