Quran and Hadith on Economics
Sources of Income Permissible In Islam
As per Islamic teachings, other than the explicitly identified impermissible sources of
income, every other source of income is permissible in which the benefits are enjoyed
by all the concerning parties on just basis.
Allah in Holy Quran says:
“Do not devour one another’s property wrongfully, nor throw it before the judges in
order to devour a portion of other’s property sinfully and knowingly.” (Al-Baqarah:
188)
“Do not devour another’s property wrongfully – unless it be by trade based on
mutual consent.” (Al-Nisa: 29)
Sources of Income Prohibited In Islam
a) Bribery (Al-Baqarah: 188).
b) Usurping others’ property (Al-Baqarah: 188).
c) Fraud (Al-Imran: 161).
d) Stealing and robbery (Al-Maida: 38).
e) Income from sources of vulgarity (Al-Noor: 19).
f) Gambling (Al-Maida: 90).
g) Wine and its business (Al-Maida: 90).
h) Interest (Al-Baqarah: 275).
Moral Directives of Islam in Conducting Business
Moral Conduct in Entrepreneurship
“And measure full when you measure. And weigh with an even balance. This is better
and its end is good.” [Al-Bani-Israel: 35]
“They who hoard up gold and silver and spend it not in the way of Allah, unto them
give tidings (O Muhammad) of a painful doom.” [Al-Tauba: 34]
“You resort to oaths as instruments of mutual deceit, so that a person might take
greater advantage than another; although, Allah puts you to the test through this.
Surely, on the Day of Resurrection, He will make clear the truth concerning the
matters over which you differed.” [Al-Nahl: 92]
“Who so desires the reward of the world, then with Allah is the reward both of the
world and of the Hereafter. And Allah is Hearing, Seeing.” [Al-Nisa:134]
“And that the man will not get, but what he endeavors. And that his endeavor shall
soon be seen.” [An-Najm: 39-40]
“O Believers! Whenever you lend money for a particular period, write and someone
among you must write it justly. And the one who can write must not refuse.” [Al-
Baqara: 282]
Prophet Muhammad (pbuh) said: “Whosoever sells a defective product without
disclosing its defect to the purchaser, shall earn the permanent anger of Almighty
Allah and the angels continuously curse such a person.” [Ibn-e-Maja]
Prophet Muhammad (pbuh) said: “The seller and the buyer have the right to keep or
return the goods as long as they have not parted or till they part; and if both the
parties spoke the truth and described the defects and qualities [of the goods], then
they would be blessed in their transaction, and if they told lies or hid something, then
the blessings of their transaction would be lost.” [Bukhari]
Prophet Muhammad (pbuh) has exhorted that we should refrain from taking oaths
unnecessarily; for although, it helps in the sale of one’s products, it reduces the
blessings. [Bukhari & Muslim]
Prophet Muhammad (pbuh) said: “If anyone would like Allah to save him from the
hardships of the Day of Resurrection, he should give more time to his debtor who is
short of money, or remit his debt altogether.” [Muslim]
Prophet Muhammad (pbuh) said: “May Allah’s mercy be on him who is lenient in his
buying, selling, and in demanding back his money [or debts].” [Bukhari & Tirmidhi]
Prophet Muhammad (pbuh) said: “A time will come upon the people when one will
not care how one earns money, i.e. legally or illegally.” [Bukhari]
Prophet Muhammad (pbuh) said: “The flesh and body that is raised on unlawful
sustenance shall not enter Paradise. Hell is more deserving to the flesh that grows on
one’s body out of unlawful sustenance.” [Ahmad]
Prophet Muhammad (pbuh) said: “The truthful and trustworthy businessman will be
in the company of Prophets, saints and martyrs on the Day of Judgment.” [Darimi &
Tirmidhi]
Prophet Muhammad (pbuh) said: “And what is most likely to send people to
Paradise? Being conscious of Allah and good manners.” [Bukhari, Tirmidhi &
Ahmed]
Islamic Teachings and Unethical Trade Practices
“Allah will deprive usury of all blessing, but will give increase for deeds of charity.”
[Al-Baqara: 276]
“Woe to those that deal in fraud. Those who, when they have to receive by measure
from men, exact full measure. But, when they have to give by measure or weight to
men, give less than due. Do they not think that they will be called to account?” [Al-
Mutaffifin:1-4]
Keeping the commodities of general use in possession and not supplying them in the
market for the sake of increasing the price is prohibited. [Ahmed-Bin-Hanbal]
Prophet Muhammad (pbuh) said: “No one hoards but the traitors (i.e. the sinners).”
[Abu Da’ud]
Prophet Muhammad (pbuh) said: “The importer [of an essential commodity] into the
town will be fed [by Allah], and the hoarder will have [Allah’s] curse upon him.” [Ibn
Majah]
Prophet Muhammad (pbuh) said: “Allah’s Messenger cursed the one who accepts
interest and the one who pays, and the one who records it, and the two witnesses;
and he said: They are all equal.” [Muslim]
The Apostle of Allah (pbuh) cursed the one who pays bribes and the one who takes
bribes. [Abu Da’ud]
Prophet Muhammad (pbuh) said: “Do not harbor envy against one another; do not
outbid one another [with a view to raising the price]; do not bear aversion against
one another; do not bear enmity against one another; one of you should not enter
into a transaction when the other has already entered into it; and be fellow brothers
and true servants of Allah.” [Muslim]
Trying to buy commodities before they reach market is prohibited because market
will decide the price. [Muslim]
Futures and Forward Trading: Islamic View
Prophet Muhammad (pbuh) said: “He who buys food grain should not sell it until he
has taken possession of it.” [Muslim]
Analogical Deduction in Matters: Islamic View
Prophet Muhammad (pbuh) said: “What is lawful is evident and what is unlawful is
evident, and in between them are the doubtful things which many people do not
know. So he who guards against doubtful things keeps his religion and honor
blameless, and he who indulges in doubtful things indulges in fact in unlawful things,
just as a shepherd who pastures his animals round a preserve will soon pasture them
in it. Beware, every king has a preserve, and the things Allah has declared unlawful
are His preserves. Beware, in the body there is a piece of flesh; if it is sound, the
whole body is sound and if it is corrupt, the whole body is corrupt.” [Bukhari &
Muslim]
Benefits of Honest Conduct in Partnership
Prophet Muhammad (pbuh) has said that Almighty Allah proclaims: “I am a one
third partner of a two man partnership until one of them acts dishonestly to his
partner, and, in such an event, I then leave them.” [Abu Da’ud]
The importance of Paying One’s Liability
Prophet Muhammad (pbuh) said: “After the major sins which must be avoided, the
greatest sin is that someone dies in a state of debt and leaves behind no asset to pay it
off.” [Darimi]
Job Responsibility of Employee: Islamic View
Prophet Muhammad (pbuh) said: “The honest treasurer who gives willingly what he
is ordered to give, is one of the two charitable persons, (the second being the
owner).” [Mishka’at]
Responsibility of Employer: Islamic View
Prophet Muhammad (pbuh) said: “Give the labor his wage before his sweat dries.”
[Ibn-e-Majah]
Prophet Muhammad (pbuh) said: “Those are your brothers [workers under you] who
are around you; Allah has placed them under you. So, if anyone of you has someone
under him, he should feed him out of what he himself eats, give him clothes like what
he himself puts on, and do not put so much burden on him that he is not able to bear,
[and if that be the case], then lend your help to him.” [Bukhari]
Prophet Muhammad (pbuh) said: “I will be foe to three persons on the Last Day: one
of them being the one who does not give dues to the servant he employs even after he
has fulfilled his duty.” [Bukhari]
Justice and Honesty: Islamic View
“O believers! Stand firmly for justice, giving witness for Allah, may be therein your
own loss, or of your parents or of your relations. Against whom you be a witness, he
be a rich or be a poor, in any case Allah has more power than anyone over them,
therefore follow not passion lest you may be far away from justice; and if you distort
or turn your face, then Allah is aware of your doings.” [Al-Nisa: 135]
“O believers! Stand-up firmly by the Commandments of Allah, bearing witness with
justice and let not the enmity of any people incite you that you should not do justice.
Do justice that is nearer to piety and fear Allah, undoubtedly, Allah is aware of your
doings.” [Al-Maida: 8]
Gender and Ethnic Discrimination: Islamic View
“O people! We created you from one man and one woman and made you divided in
branches and tribes so that you may recognize one another. Undoubtedly, the most
respected among you in the sight of Allah is the one who is more pious. Verily, Allah
is knowing, Aware.” [Al-Hujurat: 13]
Directives of Islam to an Earning Individual
Encouragement for Welfare Spending
“…Remember, the example of those who spend in the way of Allah is like that of a
grain, which sprouts into seven ears, producing a hundred grains in each ear. Allah
[by His mercy] increases manifold [the rewards of such deeds] for whom He wills.
And Indeed, Allah is extremely bountiful [in rewarding His servants], fully aware [of
your circumstances and deeds].” [Al-Baqara: 261]
“Those needy ones who are wholly wrapped up in the cause of Allah, and who are
hindered from moving about the earth in search of their livelihood especially deserve
help. He who is unaware of their circumstances supposes them to be wealthy because
of their dignified bearing, but you will know them by their countenance, although
they do not go about begging people with importunity. And whatever wealth you will
spend on helping them, Allah will know of it.” [Al-Baqara: 273]
“Look, you are being called upon to expend in Allah’s Way, yet some of you are being
niggardly, whereas the one who is niggardly is, in fact, being niggardly only to
himself. Allah is Self-Sufficient. It is you who are the needy. If you turn away, Allah
will replace you by another people, and they will not be like you.” [Muhammad: 38]
“(O Prophet!) Tell those of My servants who believe that they should establish prayer
and spend out of what We have provided them with, both secretly and openly, before
there arrives the Day when there will be no bargaining, nor any mutual befriending.”
[Ibrahim: 31]
“Have you seen him who belies the rewards and punishments of the Hereafter? He it
is, who drives away the orphan and does not urge giving away the food to the poor.”
(Al-Ma’un: 1 – 3)
“Those who blame Muslims who give charity willingly and laugh at those who get
nothing but with their hard labor, Allah will punish them for their laughing and for
them, is the painful.” [Al-Tauba: 79]
Prophet Muhammad (pbuh) said: “Spend, and do not count, lest Allah counts against
you. Do not withhold your money, lest Allah withholds from you. Spend what you
can.” [Bukhari & Muslim].
Prophet Muhammad (pbuh) said: “The Lord’s commandment for every one of His
slaves is, ‘Spend on others, and I will spend on you’.” [Bukhari & Muslim]
Attitude of the Giver of Charity
“Those who spend their wealth in the way of Allah and do not follow up their
spending by stressing their benevolence and causing hurt, will find their reward
secure with their Lord. They have no cause for fear and grief. To speak a kind word
and to forgive people’s faults is better than charity followed by hurt. Allah is All-
Sufficient, All-Forbearing. Believers! Do not nullify your acts of charity by stressing
your benevolence and causing hurt as does he who spends his wealth only to be seen
by men and does not believe in Allah and the Last Day. The example of his spending
is that of a rock with a thin coating of earth upon it. When a heavy rain smites it, the
earth is washed away, leaving the rock bare. Such people derive no gain from their
acts of charity. Allah does not set the deniers of the Truth on the right way.” [Al-
Baqara: 262 – 264]
Islamic View on Unscrupulous Consumption
“Give to the near of kin his due, and also to the needy and the wayfarers. Do not
squander your wealth wastefully; for those who squander wastefully are Satan’s
brothers, and Satan is ever ungrateful to his Lord.” [Al-Bani-Israel: 26 – 27]
“Do not keep your hand fastened to your neck nor outspread it, altogether
widespread, for you will be left sitting rebuked, destitute.” [Al-Bani-Israel: 29]
“Those people, who when they spend, are neither extravagant nor miserly but keep
the golden mean between the two (extremes).” [Al-Furqan: 67]
Prophet Muhammad (pbuh) said: “When you eat, drink, give charity and wear
clothes, let no extravagance or pride be mixed up with what you do.” [Ibn Maja &
Nasai]
Stinginess and Wealth Accumulation: Islamic View
“Those who do not spend their wealth that has been given to them by Allah must not
think that it is good for them; indeed it is bad for them.” (Al-Imran: 180)
“… Allah does not love the arrogant and the boastful, who are niggardly and bid
others to be niggardly and conceal the bounty which Allah has bestowed upon them.
We have kept in readiness a humiliating chastisement for such deniers (of Allah’s
bounty).” [Al-Nisa: 36-37]
Prophet Muhammad (pbuh) said: “Avoid doing injustice to others, for on the Day of
Judgment, it will turn into manifold darkness, and safeguard yourself against
miserliness, for it ruined those who were before you. It incited them to murder and
treating the unlawful as lawful.” [Muslim]
Prophet Muhammad (pbuh) said: “There are two habits which are never present
together in a believer, i.e. miserliness and bad manners.” [Tirmidhi]
Prophet Muhammad (pbuh) said: “When someone is made rich but he does not pay
Zakat for his wealth, then on the Day of Judgment his money will be turned into a
poisonous snake with two black spots on its head. It will coil around his neck and bite
his cheeks and say: ‘I am your wealth, I am your treasure’. Then the Prophet recited
verse Al Imran: 180.” [Bukhari]
Paying Zakat
“Say your prayers (Namaaz) and pay Zakat.” [Al-Muzammil: 20]
“Establish prayer and dispense the purifying alms (Zakat) and bow in worship with
those who bow.” [Al-Baqara: 43]
Entrepreneurship Versus Dependency
Prophet Muhammad (pbuh) said: “The upper hand is better than the lower hand (i.e.
he who gives in charity is better than him who takes it). One should start giving first
to his dependents. And the best object of charity is that which is given by a wealthy
person (from the money which is left after his expenses).” [Bukhari]
Social Responsibility: Islamic View
Prophet Muhammad (pbuh) said: “If any Muslim plants something or sows seed
from which a man, a bird or an animal eats, it counts as a charity for him.” [Bukhari
& Muslim]
Communal Development: Islamic View
Prophet Muhammad (pbuh) said: “The best charity is that which is practiced by a
wealthy person. And start giving first to your dependents.” [Bukhari]
Prophet Muhammad (pbuh) said: “To give something to a poor man brings one
reward, while giving the same to a needy relation brings two: one for charity and the
other for respecting the family ties.” [Ahmad, Ibn Majah, Nasai & Tirmidhi]
Utility and Satisfaction: Islamic View
Prophet Muhammad (pbuh) said: “Wealth is not in having vast riches, it is in
contentment.” [Bukhari & Muslim]
