IJSSH 2016 Vol.6(6): 485-488 ISSN: 2010-3646
DOI: 10.7763/IJSSH.2016.V6.696

The Actual Cost Price in Sale of Murabahah

Ibrahim Nuhu Tahir
Abstract—This paper critically analyses business transactions that involve product costing methods that have been controversial in the past and have continued to be so in the present. An important factor is the advancement of modern technology which has brought about new activities and responsibilities which emerge on a daily basis. The controversy is regarding a sale known to economists and Muslim jurists as the sale of Murabahah. The analysis in this paper addresses the cost price which the mark-up or profit will be based on. This cost price is the most important pillar in this contract. The scholars categorized what can or cannot be considered as the cost into three categories which the paper will address as category 1, 2 and 3: In category 1 the jurists agree by consensus that it should be included in the cost, in category 2 they agree by consensus that it should be excluded from the cost price where they all agree with it to be excluded, and in category 3 where controversy lies. The analysis in this paper focuses on the last category and aims to clear the controversy. The differing opinions are critically assessed using the primary sources of knowledge in Islam as well as sound logical reasoning. The paper concludes with a clear stand towards those doubtful affairs in relation to the cost price of the item to be sold on Murabahah basis. The paper then outlines recommendations on how Islamic Banks can utilize and benefit from these types of businesses. Insha Allah their implementation will facilitate achieving success in the Islamic banking system in the future.

Index Terms—Murabahah, ribh, musawamah, cost price, mark up.

Ibrahim Nuhu Tahir is with the Kulliyyah of Economic and Management Science, Department of Economic, IIUM, Selangor, Malaysia (e-mail: ibrahimnuhu@iium.edu.my).

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Cite: Ibrahim Nuhu Tahir, " The Actual Cost Price in Sale of Murabahah," International Journal of Social Science and Humanity vol. 6, no. 6, pp. 485-488, 2016.

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