Why God has created Satan?

Allah the Almighty has created Satan not to seduce, but to test mankind.

Yet Allah did not create any shaitan first, the shaitan chose to be a shaitan and Allah allows him to test us.

When you say,"telling truth is good", why? Because telling a lie is bad. If there is no bad thing, good thing can not be compared, because we can say anything good, when any opposite thing like "bad thing" is existed. And such good and bad are here in this world so that Almighty God may test us which of us are good in deeds.

"He Who created Death and Life, that He may try which of you is best in deed: and He is the Exalted in Might, Oft-Forgiving"

(Al-Quran, 67:02)

The arabic "Al-Shaitan" means "the one who transgresses the limit"(like the one who does injustice, does wrong-doing, does not obey the commandments of Almighty God, whispers bad things in one's mind etc). Here jinn and human both can be satan.

Quran says,

"[The same] who(evil) whispers into the hearts of Mankind,-
Among Jinns and among men."

(Al-Quran, 114:5-6)

But while we say about satan, we specially say about a specefic evil and that is "iblis". The quran says that iblis had free will and he was with the group of angels for his good deeds and worship of Allah though he was a jinn(angels do not have free will of their own,they do those things,which God tells them).

But when the Almighty Allah has created the first human Adam(peace be upon him), then Allah ordered the angels and the jinns to bow down to Adam. This bowing down does not mean that angels and jinns are worshipping Adam, but it means that if they bow down,they agree the superiority of human being above all the creation including angels and jinns. But at that time a jinn(iblis) did not agree to bow down to Adam and challenged Allah that he is better than Adam, so for showing such boastfulness, Allah Almighty rejected him and that jinn did not ask forgiveness, rather it again challenged Allah that if he is given power, he will take all mankind from good to bad way and way to hell. Allah had set punishment for shaitan because of his such boastfulness and shaitan wanted that he will increase the number of his companion who will go to hell along with him also. So he asked Allah the power to seduce mankind. Allah Almighty wants to test us with good and bad. So Allah gives shaitan the permission to seduce us so that we can be tested for the examination for the hereafter.

But Allah again reminds shaitan that if any human being follows the commandments of Allah, shaitan can be able to do nothing of that person. So now it is upto us, either we follow shaitan, or obey God's commandments.

"When thou dost read the Qur'an, seek Allah's protection from Satan the rejected one. No authority has he over those who believe and put their trust in their Lord. His authority is over those only, who take him as patron and who join partners with Allah."

(Al-Quran, 16:98-100)

So it is also clear that Allah did not create any shaitan first, the iblis chose to be a shaitan.

=> Story of Satan in Quran is given below:

"11. It is We Who created you and gave you shape; then We bade the angels prostrate to Adam, and they prostrate; not so Iblis; He refused to be of those who prostrate.

12. [Allah] said: "What prevented thee from prostrating when I commanded thee?" He said: "I am better than he: Thou didst create me from fire, and him from clay."

13. [Allah] said: "Get thee down from this: it is not for thee to be arrogant here: get out, for thou art of the meanest [of creatures]."

14. He said: "Give me respite till the day they are raised up."

15. [Allah] said: "Be thou among those who have respite."

16. He said: "Because thou hast thrown me out of the way, lo! I will lie in wait for them on thy straight way:

17. "Then will I assault them from before them and behind them, from their right and their left: Nor wilt thou find, in most of them, gratitude [for thy mercies]."

18. [Allah] said: "Get out from this, disgraced and expelled. If any of them follow thee,- Hell will I fill with you all.

19. "O Adam! dwell thou and thy wife in the Garden, and enjoy [its good things] as ye wish: but approach not this tree, or ye run into harm and transgression."

20. Then began Satan to whisper suggestions to them, bringing openly before their minds all their shame that was hidden from them [before]: he said: "Your Lord only forbade you this tree, lest ye should become angels or such beings as live for ever."

21. And he swore to them both, that he was their sincere adviser.

22. So by deceit he brought about their fall: when they tasted of the tree, their shame became manifest to them, and they began to sew together the leaves of the garden over their bodies. And their Lord called unto them: "Did I not forbid you that tree, and tell you that Satan was an avowed enemy unto you?"

23. They said: "Our Lord! We have wronged our own souls: If thou forgive us not and bestow not upon us Thy Mercy, we shall certainly be lost."

24. [Allah] said: "Get ye down. With enmity between yourselves. On earth will be your dwelling-place and your means of livelihood,- for a time."

25. He said: "Therein shall ye live, and therein shall ye die; but from it shall ye be taken out [at last]."

26. O ye Children of Adam! We have bestowed raiment upon you to cover your shame, as well as to be an adornment to you. But the raiment of righteousness,- that is the best. Such are among the Signs of Allah, that they may receive admonition!

27. O ye Children of Adam! Let not Satan seduce you, in the same manner as He got your parents out of the Garden, stripping them of their raiment, to expose their shame: for he and his tribe watch you from a position where ye cannot see them: We made the evil ones friends [only] to those without faith."

(Al-Quran, 7:11-27)
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"36. Then did Satan make them slip from the [garden], and get them out of the state [of felicity] in which they had been. We said: "Get ye down, all [ye people], with enmity between yourselves. On earth will be your dwelling-place and your means of livelihood - for a time."

37. Then learnt Adam from his Lord words of inspiration, and his Lord Turned towards him; for He is Oft-Returning, Most Merciful.

38. We said: "Get ye down all from here; and if, as is sure, there comes to you Guidance from me, whosoever follows My guidance, on them shall be no fear, nor shall they grieve.

39. "But those who reject Faith and belie Our Signs, they shall be companions of the Fire; they shall abide therein."

(Al-Quran, 2:36-39)