Zakat on Unlawful Wealth

Question

To an original capital of, say, one thousand rupees, one hundred [rupees] of interest were added, making eleven hundred rupees. Must zakat be paid on the interest money as well or not? Once in Moradabad Hazrat Madani ﵀ was asked: must zakat be paid on haram, stolen, bribe and similar wealth? Hazrat said (as far as I remember): since it is wealth, zakat must be paid.

Answer

If the haram wealth is separate and not mixed, ownership of it is not established, and there is no zakat on it either. If he mixes that haram wealth with halal wealth, this is istihlak (consumption of another’s property), which entails ownership; the answer of Hazrat Madani ﵀ is probably based on this.

Source: Fatawa Mahmudiyya

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