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Zakat on stocks
Two cases, depending on intention. If you buy stocks to resell them, they are trade goods: zakat at 2.5% of their market value (International Islamic Fiqh Academy, resolution No. 28 of 1988; AAOIFI No. 35). If you hold them for yield, zakat applies to your share of the company's assets that are subject to it: cash, investments, inventory, trade receivables (resolution No. 121 of 2001; AAOIFI No. 35, art. 4/2/4).
What Halal Bourse does
For each company in your portfolio, the calculator reads these items from the latest annual report filed and computes the zakatable share, then applies it to the value of your positions. Without a balance sheet read, it applies an estimate (25%, 30% or 100% as a precaution) that you choose.
Purification and zakat
Zakat does not replace purification: the company's share of impermissible income (interest received) is given away separately, in full. Each company's file indicates it.
Frequently asked questions
- Do you pay zakat on the full value of your stocks? Yes if you buy to resell. If you hold for yield, only on your share of the company's zakatable assets, read from its balance sheet.
- What about stocks in a retirement savings plan? Nothing is due as long as you do not have full ownership of them (Fiqh Academy, resolution No. 143).
- Does zakat purify impermissible income? No: the interest received by the company is given away separately, in full, outside zakat.
Other pages
Sources: AAOIFI, Shariah Standard No. 35; International Islamic Fiqh Academy, resolutions No. 28, 121, 143 and 237; al-Bukhārī 1503, 1509 and 1510 (verified on sunnah.com). General information, neither a fatwa nor investment advice.
General information: neither investment advice nor a fatwa. Verdict calculated by published rules, from financial statements read automatically and not reviewed by a human. Read the methodology