Zakat on Stocks, Salary and Trade Goods: A Practical Calculation

Most zakat questions today are not about gold or camels but about a share portfolio, a monthly salary, and inventory in a shop. These three assets share one rule and differ in treatment. Here is the calculation, with numbers.

The shared rule

Zakatable wealth is what grows or is prepared for growth: cash, gold and silver, shares, trade goods, and debts you expect to recover. Three conditions apply: reaching the nisab, the passing of a full lunar year, and a rate of 2.5%.

The nisab equals the value of 85 grams of pure gold or 595 grams of silver; the silver nisab is lower and more favourable to the poor. See the detail in zakat nisab in gold and silver.

Shares: the intention decides

The ruling follows your intention in owning the share, not the type of company:

• Trading shares: bought to be sold on price movement. Their full market value on the due date is zakatable at 2.5%, exactly like trade goods.
• Long-term investment shares: held for dividends. What is zakatable is your portion of the company's zakatable assets (cash, inventory, receivables), not its factories, equipment or operating property. Where company data is unavailable, most fatwas allow either zakat on the distributed dividend, or zakat on an estimated proportion of the share value.

A common error: a portfolio down on paper does not remove zakat if its value on the due date reaches the nisab. Today's value counts, not the purchase price.

Salary: the year does not start each month

A salary is not itself a zakat pot; zakat applies to what is saved from it. Someone who spends the salary on living costs owes nothing.

Two accepted methods:

1. One date for the whole balance (simplest): fix one lunar date, for example 1 Ramadan, and each year pay 2.5% of the balance held that day, provided the capital reached the nisab and did not fall below it. This pays some months early, and paying early is permitted.
2. A separate year per instalment: record each saved amount and its date, and pay a year after it was saved. More precise, more bookkeeping.

Trade goods: at selling price, not cost

Trade goods are everything prepared for sale: shop inventory, showroom cars, property bought to resell. They are valued on the due date at the current selling price, not at cost. Add cash and recoverable receivables, deduct debts due now, and pay 2.5% of the remainder.

Operating assets are excluded: shelving, computers, the delivery van, machinery. They are tools of earning, not objects of growth.

What is and is not zakatable

Three worked cases

1. A mixed portfolio

On the due date an investor holds 40,000 in shares he trades, 60,000 held for dividends, 5,000 cash, and owes an instalment of 3,000 due now.

• Trading shares: the full 40,000.
• Investment shares: company data indicates zakatable assets of about 30% of value, so 60,000 × 30% = 18,000.
• Cash: 5,000.
• Total = 63,000, minus 3,000 = 60,000.
• Zakat = 60,000 × 2.5% = 1,500.

2. A clothing shop

Inventory at selling price 120,000, cash 15,000, recoverable receivables 10,000, operating assets 25,000, supplier debt due 20,000.

• Pot = 120,000 + 15,000 + 10,000 = 145,000 (operating assets excluded).
• Minus the supplier debt = 125,000.
• Zakat = 125,000 × 2.5% = 3,125.

3. A variable monthly salary

An employee saves between 300 and 700 a month and holds 6,200 on 1 Ramadan, while the local nisab that day is 5,300.

• The balance is above the nisab, so the whole balance is zakatable.
• Zakat = 6,200 × 2.5% = 155.
• Fixing 1 Ramadan as the annual date removes the need to track each payslip.

When the year restarts

If the wealth falls below the nisab during the year, the year restarts when it reaches the nisab again. Fluctuating above the nisab does not restart it.

Calculate it now

Use the full zakat calculator to combine cash, shares and trade goods in one pot, the money zakat calculator for a cash balance, the gold zakat calculator if you hold gold, then set your annual date on the Hijri calendar.