This is the well-known position of the madhhab, and it is the first view. Its proponents cite textual evidence and rational consideration.
As for the textual evidence: it is narrated from Uthman—may Allah be pleased with him—that he would deliver a sermon and say: “O people, this is the month in which zakah is due on your wealth. Whoever has a debt should pay it off, then pay zakah.” (1) Uthman—may Allah be pleased with him—was one of the Rightly Guided Caliphs whom we have been commanded to follow.
As for rational consideration: zakah is only obligatory as a means of mutual support, so that the wealthy may assist the poor. Whoever is in debt is poor, in need of someone to give him enough to settle his debt.
Moreover, if we were to make zakah obligatory upon him, zakah would effectively be taken from this wealth twice: once from the debtor and once from the creditor.
There is no difference between a deferred debt and one that is presently due; they are alike. That is, if he has a debt whose due date will not come for another ten years, while the wealth in his possession would fall below the minimum taxable threshold once the debt is deducted, then no zakah is due from him.
For example, a man owes ten thousand dirhams, due after ten years, and presently has ten thousand dirhams in his possession. We say: No zakah is due from him.
The second view is that debt has no effect in preventing zakah. Whoever possesses the minimum taxable threshold must pay zakah on it, even if he has a debt that reduces it below the minimum taxable threshold, consumes the entire minimum taxable threshold, or exceeds it.
They cite the following evidence:
- The general texts indicating that zakah is obligatory on everything that reaches the minimum taxable threshold.