No zakat is due on unlawful (haram) wealth
Question
I saw in one of the books of Hazrat Thanawi ﵀ — I do not remember which book it was — that zakat is wajib even on haram (unlawfully acquired) wealth, although no reward (thawab) will be given for it. Is this correct or incorrect?
Answer
Zakat is not obligatory on haram wealth over which ownership was never acquired at all; rather, it is obligatory to return that wealth or to give it away in charity (sadaqa), as stated in “Radd al-Muhtar”. If the text or book of Hazrat Thanawi ﵀ is at hand, one should reflect on what exactly he said.
Source: Fatawa Mahmudiyya
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