Trade Discount as Charity

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Q: Is it permissible to give a trade discount and make intention for sadqa (charity)?

A:
When one gives a trade discount it is not like giving cash or its equivalent to the customer; hence this cannot be intended as Sadaqah. After giving a discount the end result is, according to the rules of Fiqh, that the customer is paying a reduced amount for the item, and has not received any cash back. For Sadaqah to be effective the recipient must receive cash or kind from the donor.

We suggest that should you intend Sadaqah in your trade then let the customer pay the full price and then refund him a portion of the price with the intention of Sadaqah. You don’t need to mention that it is Sadaqah. When he gets this cash amount, automatically the Sadaqah will become effective and you would have earned your reward.

And Allah knows best.

Mufti Siraj Desai