Question: There is a diamond shop near Mumbai where many Muslims work. The business model is such that, for example, if you buy a diamond worth ten thousand rupees, you will receive five percent of the money back every week for fifty-two weeks. In this way, after fifty-two weeks, you will have your ten thousand rupees back along with the diamond and a profit. The shopkeeper says this is done for advertising purposes, and the money spent on advertising is given back to customers in this way to keep the business running and promote it. Is it permissible to buy items this way according to Islamic law?
Answer: If we consider this transaction as a sale, it does not appear to be a legitimate sale. Money is given for an item, but the money is then returned over time, making it not a typical purchase. In a legitimate sale, money is paid, and the item is taken. If the seller offers a facility, such as allowing someone to pay in installments, that would be fine, but here the money is taken once and then returned with additional profit, and goods are also provided for free. Therefore, this is not a sale but resembles an investment or a loan transaction, which involves earning profit on a loan and resembles a usurious practice. The conclusion is that this is an interest-based transaction, so it is not permissible to buy items this way.
Respondent: Sheikh Maqbool Ahmed Salafi Hafizahullah
Jeddah Dawah Center, Saudi Arabia
English Interpreter: Hasan Fuzail
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