Rule 25. It is Ehtiyat, if not a strong viewpoint, to pay Khums on the net savings resulting from receiving Khums, Zakat, expiation, Mazalim

Rule 26. If one has some property which is not subject to Khums or whose Khums has already been paid and if it increases or grows and such increment is separated from the original like the young of animals, fruits, milk etc., or such increments as could be considered separable by common sense, according to Ihtiyat there will be Khums on such an increase. Also, in the same way there will be pay Khums on inseparable increments like the growth of trees of fattening of sheep, provided, such increments could be considered an increase in one's property.

If the market price of something goes up without a substantial increase in the original, if the original was purchased for business purposes, such a price increase will be subject to Khums. If it was not purchased for business purposes, it will be subject to Khums according to necessary Ihtiyat. If it is sold for a higher price than it was bought, there is no Khums on the difference. However, that difference will be included in the income of the whole year.

Rule 27. Those who own cattle have to pay Khums at the end of the year for the profit from the cattle such as from their wool, ghee, milk and young. If some cattle are sold during the year their price will be subject to Khums, provided, it remains in one's possession until the end of the year. The same will apply to other animals.

Rule 28. If one establishes a garden and plants trees therein to make profit out of their fruits, there will be no Khums on the garden as long as either taxed money or a money free of tax or taxable money from the previous year's income was spent for this establishment. It is necessary to pay Khums on what was spent on the garden. If before the end of the year its (gardens) income has been spent on the garden, it is necessary to pay Khums on the cost of improvements made to the garden after the yearly expenses have been deducted. Also, it is necessary to pay Khums on separable increments, like fruits, leaves and wood which is to be sold. Also it is necessary to pay Khums on inseparable increments as mentioned before. It is necessary to pay Khums on trees planted during the second year even though they were taken from taxed trees, and also on plants growing on their own, provided, they have some value. In brief, whatever new property comes into being will have to be taxed at the end of the year after the deduction of the yearly expenses, and there is no Khums on the increase of the price in this case. If it is sold for more than what was spent for it, the extra money will be subject to Khums, as being a part of the yearly income. If the improvement in the garden enables it to be used for business purposes, it is necessary to pay Khums on the increased price of the garden at the end of the year, even though it has not been sold.

Rule 29. If the price of a substance which is purchased for business increases during the year but is not sold on account of unawareness of this increase, expectation of further increase or for other reasons and at the end of the year the price returns to normal, there will be no Khums on that increase. If that increase remains until the end of the year and the substance was not sold for no valid reason and after the end of the year the price decreased, one will be liable for the Khums of such increase.

Rule 30. There are two factors to note about deductible annual expenses: (a) Expenses to make profit. (b) Annual necessities. Expenses to make profit includes the cost of labor, rent of the premises, governmental taxes and depreciation of instruments used for profit making. Annual necessities are those which one spends in a reasonable way for one's own living and that of one's dependents. They include charities, expenses for pilgrimage, gifts, reasonable prizes, expenses for guest, payments of one's liabilities because of vows or expiations, payments of debts, compensations of damages done to other people's property, intentionally or mistakenly, transportation costs, employments, books, furniture, weddings for children, circumcision for children, regardless, the legal status of such expenses is preferable, necessary, permissible or abominable. It is necessary that such necessities should have already been paid for. Thus, if one acts in a miserly manner it will not affect the tax due on what had been saved. In the same way, if someone volunteers to pay for either all of someone necessities, such payments will not be deducted from the savings. It is also necessary that what is spent on these annual necessities be reasonable. Whatever is spent foolishly, extravagantly or unreasonably will be subject to Khums. Evidently, if an expense has some legal desirability, that will be deductible, even though it would be a very rare occurrence in the case of an individual such as establishing a Mosque, and or entertaining numerous guests for a person of low Income.

Rule 31. The beginning of the year is the time when a certain profit comes into being; thus, each profit has its own year. However, it is allowed for a person to determine a certain date as the beginning of his accounting year; he must finalize his account exactly one year from that time, even though he may have different sources of income such as business, rents, agriculture, etc., he must pay Khums on whatever has been saved after deducting his yearly expenses. He is also allowed to have a separate accounting year for each kind of income.

Rule 32 If one needs some capital to invest to make a living for himself and his dependents and obtains some money which is not more than his yearly necessities, evidently, such money will be considered as part of his yearly necessities. He is allowed to invest such money as his capital to make his and his dependents living; his profits will only be taxable if it exceeds his yearly expenses. If he obtains some money which exceeds his yearly necessities, he will still be allowed to lake an amount equal to his yearly necessities from such money and use it to make a living for himself and his dependents; there will be no Khums on that amount. The remainder and the profit exceeding his necessities will be subject to Khums. Those who do not need a capital for business to make their own living and that of their dependents are not allowed to deduct an amount from their yearly income as capital for a business without paying Khums first. The rules about the capital for business also apply to whatever one needs for his profession like agricultural or medical equipments. Sometimes it is necessary to pay Khums on the cost of such tools and sometimes it is not. When it is necessary to do so, if at the end of the year the price decreases, only the current price will be subject to Khums.

Rule 33. If during a year one's capital decreases, he is allowed to compensate the loss from the profit of that year. However, he is not allowed to compensate such loss from the income of the coming years. The same rule applies to depreciation of equipments.

Rule 34. In regard to the yearly necessities, it makes no difference whether the substance of the income or the profit is consumed, like food and drink, or the substance remains, still, in all cases, they are deductible. If one has some property before starting to make profit, the price of such property is not deductible, it will he considered as though it is not part of the yearly necessities.

Rule 35. It is allowed for one to deduct his ycarly necessities from the profit of that year even though he may have some property other than his capital for business. It is not necessary to deduct the yearly necessities from the other property or business capital or divide it on both.

Rule 36. At the end of the year whatever is left from what had been bought as yearly expenses will be subject to Khums according to Ihtiyat. However, expenses made for certain items that are only needed for a certain length of time and whose substance still remains without being needed any longer, will still be subject to Khums, such as seasonal clothing and jewelry which women do not use during their old age.

Rule 37. If an item of yearly necessities is purchased with taxed money and while using it during the year its price increases, one is not allowed to deduct its price at the time of its use. What is deductible is its price at the time of purchase.

Rule 38. If whatever is strode as a ycarly necessity, purchased with taxed money, remains until the second year, there will be no Khums on the increase of the price, and one is not allowed to compensate from the income of the second year if the price decreases. If one buys something with the substance of a year's profit then discovers that such an item was not needed, in this case, he has to pay its Khums.

Rule 39. It is a Mustahab Ehtiyat that Khums should be paid for the purchase price of such an item if its current price has decreased. The same rule applies if one purchases something to make profit and with the knowledge that such an item will not be needed, such as certain items of furniture or jewelry which people may buy for the future or gardens and houses which may be bought to make profit. In all such cases, their present value will be taxable, not their cost, even though their present value might be less. The same rule applies if such things are bought on credit and are paid from the year's income. Only their value of the end of the year will be taxable. It is a Mustahab Ehtiyat to take into consideration in all cases the cost.

Rule 40. One item of the yearly necessities is the expanses for Hajj, no matter it is obligatory or optional. If Hajj becomes due during a certain earning year and one does not fulfill this duty, even though it is on account of disobedience, the amount to be spent for Hajj is subject to Khums and it will not be considered as part of the yearly necessities. If Hajj becomes obligatory for one because of what one has saved for several years, whatever is saved during those years will be taxable, but not the savings of the year which completes the required amount of money for Hajj, to be performed in that year. Hajj will only be necessary if after paying Khums the remainder will still be enough for its expenses. If hajj is not performed in that year because of disobedience, it becomes necessary to pay Khums on the money that was supposed to be spent from the income of that year on Hajj.

Rule 41. If one has gradual earNings with which in the first year he buys land to build a house, in the second year some material and further material during the third year, such expenses will not be deductible; they are considered to be future necessities.

Rule 42 If one hires himself out, his wage will be considered as part of his yearly income and his future salary the income of the coming years. If one sells the product of several years from his garden in advance, the total amount will be considered as the income of the year when the deal was made and will be taxable after the expenses and depreciation of the garden have been deducted.

Rule 43. If one pays some money as Khums in advance and at the end of the year wants to finalize his account, if what he has paid is from the income of the same year, that also will be considered taxable.

Rule 44. Paying debts is deductible, whether the borrowing may have taken place during the earning year or before it; whether the payee was able to pay it before or not. However, if one docs not pay ones debts until the end of the year, Khums will be due before the deduction of the payable debt unless the debt itself was part of the ycarly necessities and was incurred after the income was received. In such a case, one is not without grounds to consider it as a deductible item. Also, there is no difference whether the debt is a religious due such as Khums, Zakat, vows, expiations, other liabilities conditions included in contracts etc. or of other types. In all such cases, if such debts are paid during the earning year they will be deductible, even though they were borrowed during previous years. If they are not paid in the earning year, they will not be deductible even though one may have committed a sin by not paying them on due time.

Rule 45. If one buys things, not of the yearly necessities, on credit or borrows money to increase his capital and has an existing asset equivalent to the debt and such an asset is not of the yearly necessities, he is not allowed to pay his debt from the income of the accounting year. His income must be taxed, then his debt paid or he may pay his debt from his non-taxable property.

Rule 46. If one turns over his capital several times, sometimes losing money and sometimes making profit, if the loss takes place after the gain or at the same time, he may compensate the loss from the gains. If the result is neither profit nor loss, there will be no Khums, but if the profit exceeds the loss, he has to pay Khums for the remaining profit. If the loss exceeds, there is no Khums. If the gain comes into being after the loss, off-setting is lawful in this case. The same rule applies if one invests his capital in different merchandising items; in some of which he losses and in others gains. Also, the same is the case, if some of his capital is destroyed or is spent on his necessities or even if he has spent for his necessities some other money after making some profit; i.e. it is lawful to off-set the loss from the income. The same also applies to cattle owners. If they sell some cattle for their yearly necessities, some die or are stolen, at the end of the year they may off-set their loss from their profit and pay Khums if any taxable items are left. If the off-setting cannot be managed from the profit of the whole year, there will be no Khums.

Rule 47. If one has two ways of earning like business and farming, and if he gains in one and loses in the other, he may off-set his losses from the profit and pay Khums from the rest.

Rule 48. If one loses some property which was not used as a means of living nor was it of his yearly necessities, in this case too, off-setting it against the yearly income is objectionable. Evidently, it is not allowed.

Rule 49. If one's home or some of his property which is part of his yearly necessities is destroyed such as furniture, clothes, car etc., in this case too, obtaining relief from the ycarly income is objectionable. Evidently, it is not allowed. However, one is allowed during the earning year to build a house or buy what was destroyed, provided, they are part of the yearly necessities. This will be considered a way of handling one's deductible yearly necessities.

Rule 50. If one buys some profit bearing item and the contract gives him the option to annul it, but then such contract, for some reason becomes binding and the seller asks him to annul the contract in question and he also agrees for such dismissal, Khums will still be due on the profit unless the contract in question because of its nature is doomed to be annulled as it is true in most of the contracts that include the option of dismissal upon the refund of the price.

Rule 51. If some property is purchased in exchange with the substance of a property from which Khums is not paid and the buyer says to the seller, " I purchase this property in exchange for this property" , if the Sharia authorities approved the Khums due on it the deal is valid and the buyer is responsible to pay Khums of the property he has purchased and if the authorities did not approve the deal is not valid to the degree proportionate to the amount of Khums due on the property, and if the property is still existing the authorities will demand the seller for Khums if the property is not existing any more the authorities will demand from either the purchaser or the seller.

If the profit obtained from such property would be some grains which after being planted would be existing in the form of some farming produce, only the grains in question would be subject to Khums, not what stands in the field in the form of a planted farm. In the same way Khums will be due only on the eggs which have been hatched to fouls. If the profit of a property would be the branches of some trees that one has planted them to become independent trees, one has to pay Khums for the trees. In general, if the increase is in the form of reproduction, the original will be subject to tax, if it is in the form of growth, the product will be subject to Khums.

Rule 52. If one finalizes his account and pays the Khums for his taxable property but after the payment discovers that he has paid more than he had to pay, in such a case, he is not allowed to deduct such over payment from the tax of the coming year. However, he is allowed to ask for a refund from the recipient, provided, the substance paid is still existing or the recipient has full knowledge of the situation, even though what is given to him has already been consumed or destroyed.

Rule 53. In the case of the agricultural products, if at the end of the accounting year only some of them are ready for consumption but not the others, one has to pay only Khums for that which is ready, and finalize the account of the rest at the end of the coming year. If a product that is not yet ready for consumption at the end of the accounting year may have some existing roots of due market value, it is necessary to pay Khums for such product. For instance, if at the end of the accounting year some of one's wheat plantations would have already produced ears and some of them have not yet produced ears, in such a case, one has to pay Khums for the whole product. However, if the ears only appear during the next year, it will be considered as part of the profits of the following year.

Rule 54. If one's means of living is obtaining gems of the sea by means of diving or digging out minerals, he is only required to follow the relevant rules of the minerals and the valuables taken out of the sea. He does not have to consider what he obtains also subject to Khums as being part of his annual income.

Rule 55. A working woman has to pay Khums for her savings, provided, her living expenses are paid by her husband or her earning is more than her expenses, in case, the husband does not maintain her. The same rule applies to whatever things of value that she may receive from her own earning or from other sources. In general, all responsible people have to have an accounting year and pay Khums for their taxable earnings.

Rule 56. Evidently, maturity and freedom from mental-illness are of the conditions that must exist in order to consider the owner of all the different categories of the valuable properties responsible to pay Khums. A child and one who is suffering from mental-illness have to pay Khums only after maturity and recovery according to Ihtiyat, they must pay Khums for whatever they owned during the absence of the said conditions and their guardians have not yet paid.

Rule 57. If one buys with the money of the income of a certain year something which is not part of his yearly necessities and the price of such item increases, he has to pay its Khums. If such item is purchased on credit and one has to pay for it from the taxable property, only what is paid for it will be subject to Khums and there will be no Khums on the amount of some increase in such item's price, if any, as long as the item is not sold. If one knows that the price of the item in question was paid from the money on which Khums was due, but doubts whether the purchase took place during an accounting year, so that he would have to pay Khums for what is increased in the price of the item as well, or it was after the accounting year in which case one has only to pay Khums for the price paid, in such a case, according to Ehtiyat, one should reach an agreement with the legal authorities.

Rule 58. If one has not paid Khums for several years during which money has been earned and different valuables have been purchased, he has to pay Khums for his belongings with the exception of his yearly necessities. In the case of one's yearly necessities the following rules must be followed: If an item is paid for from the income of the year of purchase, there will be no Khums on it, if it is paid for from the income of the years before, such items will be subject to Khums. In the latter case, it makes no difference whether in the year of purchase there was no income or it was only enough for one's necessities.

Rule 59. An accounting year starts whenever an income is received, however, one is also allowed to change the beginning of his accounting year and start a new one by paying Khums for all the taxable incomes that he has, before such decision. It is also allowed to maintain one's accounting year according to any calendar he may choose.

Rule 60. At the end of the year it is necessary to pay Khums for all the unconsumed food materials that were stored for the yearly necessities. However, if there is some outstanding loan that was borrowed for one's yearly necessities and the amount of loan is equal to the value of the unconsumed rood material, there will be no Khums on them. If such items remain for the coming year and the loan is also paid in this year, the remaining items of unconsumed food materials will be considered as part of the income of this year. Thus, Khums will be paid accordingly. The same rule applies to the item purchased not for the yearly necessities, but there would be an outstanding loan of equal amount to the price of such item and the loan would be taken for one's yearly necessities.

Rule 61. If one vows to spend half of his income of a certain year for a legal cause, he must act accordingly, and the amount spent is deductible, provided, it is spent during the accounting year. If the said amount is not spent during the year of income, it will be subject to Khums as well as the other half of one's income after deducting his yearly necessities.

Rule 62 In case one's capital is an amount of money which he finds it the same after using it in a business, besides the asset and expenses, one has to pay Khums only for the asset, but there is no Khums on the expenses such as rents, etc. However, the money paid as a goodwill should be dealt with according to he situation, for some items one may get more than what he has paid for some times equal or less.

Rule 63. The money paid as Khums for the savings of the previous years will not be considered as the expenses of the year in which such Khums is paid.

Rule 64. If at the end of the year one's savings is existing as outstanding loan, if it is possible to collect them, he has to pay the Khums. If it is not possible, he has the choice of either to pay Khums and collect the loans in the coming year or wait until the loans are collected, then pay Khums. The amount collected will be considered as the income of the previous year, not of the year when they are collected.

Rule 65. Khums becomes due as soon as some income is received, but it is allowed not to pay it until the end of the year for the sake of precaution to have enough money for one's yearly necessities. If the money spared for the above reason is lost, one will be responsible tor its Khums. The same rule applies when such money is misused or given as unnecessary presents, etc. It is a Mustahab Ehtiyat to pay Khums if one knows that he will not need to take such precautionary measures.

Rule 66. If one dies during the year, the deductible amount will only be those spent up to the time of his death, not what is spent up to the end of the year.

Rule 67. If the heirs know that the deceased had not paid Khums of the legacy, it is necessary, to pay Khums for the whole Legacy. If they know that the deceased had some taxable property, in this case also it is necessary to pay such Khums from the whole legacy like the other kinds of debts.

Rule 68. Believing that one has made some profit, if he pays some amount as Khums, then discovers that no Khums was due on him, he may ask the recipient for refund if what is given to him as Khums is still existing with him or it is already spent out, but the recipient is aware of the situation. If one pays Khums at the beginning of the year thinking that he will not need more money for his necessities, but later discovers that more money is needed or some unexpected need may emerge, in this case, he will not have the right to ask for refund, even though what is given to the recipient would still be existing with him.

Rule 69. All kinds of Khums becomes due on the taxable objects, but the owner has the choice to pay from the same object or the price for the same. After the end of the year one is not allowed to use the property on which Khums is due unless Khums is paid. According to Ehtiyat, even some parts of such property also can not legally be used although the amount of Khums is still existing with the remaining unused parts. If one first obtains permission from a legal authority for such purpose, he is allowed to use it, but he will be responsible for the amount of Khums.

Rule 70. It is not an offense to have partnership in business with a person who does not pay Khums because of his disbelief in Khums or because of his ignorance or disobedience. The other partner will not be held responsible for him and it will be sufficient for him to pay Khums of his share of income.

Rule 71. Although after the end of the year it is unlawful to use a taxable property, but if it is used in a contract it will have no effect on the validity of the contract, except for the amount of Khums in such property, the Sharia authorities demands Khums from either party if the substance of the property on which Khums was due is not existing any more.