Fatwa #1456416 September 2006South Africa
If the customer pays cash for the item, he pays R100. If he takes it on terms, He will pay R10 a month for 12 months=R120 in total
Question
1)A man sells an item on the following terms.
- If the customer pays cash for the item, he pays R100.
- If he takes it on terms, He will pay R10 a month for 12 months=R120 in total
Is the above deal permissible
2)A man buys an item from USA for $100 on the 1st of August . The exchange rate on 1st August is 1$=R5.The amount owing=$100 x R500=R500
- When paying on the 30th August, The exchange rate is 1$=R6.
According to international trade agreements, when the account is paid it has to be paid according to the exchange rate on the date of payment.
In the above case it is: $100 x R600=R600
- Is the extra R100 interest.
According to accounting principles, the extra R100 will be considered as a profit on sale in the books of the seller.
iF THE PERSON SELLING THE GOOD IS THE SUPPLIER IN THE USA allowed to show the extra money as a profit on sale or does he have to dispose of it.
If the purchaser allowed to pay the extra R100.
Answer
1. In principle, it is permissible to sell an item with a cash price or credit price. The credit price could be higher than the cash price. It is a condition that in this instance, the deal must be concluded on either price, cash or credit. It is not permissible to sell an item with an open cash and credit price. In that instance, the surplus amount will be primarily in lieu of time and be regarded as interest.
2. If the deal was concluded on $100, the seller is entitled to $100. The purchaser will have to pay $100 to the seller irrespective of the fluctuation in the dollar rate.
and Allah Ta'ala Knows Best
Mufti Ebrahim Desai