Distribution of gross and net profit in a partnership
MY BUSINESS PARTNER INVESTED A CERTAIN AMOUNT AND HE WANTS ONE PERCENT OF THE PROFITS. BUT THE PROBLEM IS MY SALE IS 25 LACKS, MY PROFIT IS 5 % AND I HAVE EXPENCES, SALARES AND RENT.
I TOLD HIM I WILL GIVE PROFIT ON MARGIN BUT HE TOLD ME HE WANTS THE PROFIT ON SALE NOT ON MARGIN. IS THIS HALAL?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
In a business partnership, upon mutual consent, the partners may agree to use either the gross profit or the net profit for profit distribution. Both methods are permissible.
And Allah Ta’āla Knows Best
(Mufti) Abdul Azeem bin Abdur Rahman
April 9th, 2015
The Shar’a ruling herein given is based specifically on the question posed and should be read in conjunction with the question.
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 Introduction to Islamic Finance (Mufti Taqi Usmani Hafidhahullah), page 46