Book of Zakat

The Zakat of Merchandise

زَكَاةِ الْعُرُوْضِ

Stations

Glossary

Chapter on the Zakat of Merchandise

There is no zakat on merchandise until the person intends to trade with it, and it [has been at] the niṣâb for an entire year (ḥawl). ⁵⁰² Then he should assess it, ⁵⁰³ and if it has reached [an amount equal to] the niṣâb of gold or silver, whichever is less [at that time], he must pay zakat on its [full] value. ⁵⁰⁴

وَلاَ زَكَاةَ فِيْهاَ حَتَّى يَنْوِيَ بِهَا التِّجَارَةَ، وَهِيَ نِصَابٌ حَوْلاً كَامِلاً، ثُمَّ يُقَوِّمُهَا، فَإِذَا بَلَغَتْ أَقَلَّ نِصَابٍ مِنَ الذَّهَبِ أَوِ الْفِضَّةِ، أَخْرَجَ الزَّكَاةَ مِنْ قِيْمَتِهَا.

502. What Is a Ḥawl?

The ḥawl for the payment of zakat is a lunar year, and the zakat must be paid at the end of it.

Paying every solar year is not acceptable. We must familiarize ourselves with the lunar year, since all our acts of worship are based on it. Those who cannot take inventory on their stores every lunar year can do it every solar year and then correct for the difference by paying 3.1% more than the zakat which should have been paid at the end of the lunar year (i.e., by paying 2.577% instead of 2.5%).

503. Based on the market value on the zakat due date.

504. The zakat is usually taken out of the same type of property on which it is due, but in the case of merchandise, its value is paid in currency. This is for the benefit of the poor, who may not know what to do with the merchandise.

Some scholars argued that if the interest of the poor is served by receiving the merchandise, it may be given to them. This is part of a larger question, which is whether the value of the binding zakat can be paid instead of that which is binding by the Prophet’s designation. For example, if someone must give 1 sheep, can they instead give the value of that in currency? Also, if someone is required to pay 60 dirhams, can they instead give dates of equal value?

(A) + (+M, +S): No.

(a) + (-H): Yes. (For H only, this also applies to zakat al-fiṭr.)

[Currency and Merchandise Are One Type]

If a person intends for this merchandise to be private property (for personal use), there is no zakat on it. If, afterwards, he intends to prepare it [again] for trade, he should begin [counting] a new ḥawl for it.
⁵⁰⁵

وَإِذَا نَوَى بِعَرْضِ التِّجَارَةِ الْقُنْيَةَ، فَلاَ زَكَاةَ فِيْهِ، ثُمَّ إِنْ نَوَى بِهِ بَعْدَ ذٰلِكَ التِّجَارَةَ، اسْتَأْنَفَ لَهُ حَوْلاً.

If the person [also] owns gold or silver, he must add it to the value of his merchandise [that is prepared for trading] to complete the niṣâb.

وَإِنْ كَانَ عِنْدَهُ ذَهَبٌ أَوْ فِضَّةٌ، ضَمَّهُمَا إِلَى قِيْمَةِ الْعُرُوْضِ فِيْ تَكْمِيْلِ النِّصَابِ.

Imam Ibn Taymiyah (may Allah bestow mercy on him) supported a middle position, saying:

As for paying the value of zakat, the popular view of Mâlik and ash-Shâfi‘i is that it is not permissible. However, according to Abu Ḥaneefah, it is permissible. Aḥmad (may Allah bestow mercy on him) prevented it in some conditions and permitted it in others. The stronger view concerning this is that giving the value out without a need or a greater benefit is not allowed. (Majmoo‘ al-Fatâwâ)

The Zakat on Stocks and Shares

If they are used for trading (as in day trading), then they are treated like merchandise.

If they are used as long-term investments, then zakat is paid on the zakatable portion of the assets. For instance, in general, cash surplus and trade goods are zakatable, while factories and stores are not, so shares in companies that own retail stores will be mostly zakatable, whereas companies that mainly invest in manufacturing will have only small portions of their assets that are zakatable. Individuals may review the companies’ annual reports to determine what is zakatable; if this is not possible, they should ask experts about each particular company or mutual fund, to get an approximate estimate.

This position is in agreement with OIC – International Islamic Fiqh Academy (IIFA) resolutions 28 (3/4) and 121 (3/13).

505. This is the position of (a) + (Is-ḥâq, Abu Thawr, al-Karâbeesi).

(A) + (+H, +M, +S): If it was not originally acquired with the intention of selling it, adopting that intention later does not make it zakatable. Also, if it was acquired through inheritance, it is not zakatable.

(A): To be zakatable, the property must be acquired through one’s own action, even if that was simply the acceptance of a bequest or a gift. (a) + (Is-ḥâq): How it was acquired is of no consequence, so if one inherits a property but intends to sell it, it becomes zakatable from the time that intention is made (whether that is at the time of the inheritance or later).

Chapter on the Zakat of Merchandise

( Page : no 62)

Book of Zakat

زَكَاةِ الْعُرُوْضِ

Stations

Introduction

The Book of Purification

The Book of Prayer

The Book of Funerals

The Book of Fasting

The Book of Hajj and 'Umrah

Book of Zakat

The Book of Selling and Commercial Transactions

The Book of Bequests

The Book of Inheritance

The Book of Marriage

The Book of Divorce

The Book of Sadaq

The Book of Dhihar

The Book of Lian

The Book of Foods

The Book of Oaths

Book of Fatal and Non-Fatal Assault

The Book of Indemnities

The Book of Hudood

The Book of Jihad

The Book of the Judiciary

The Book of Testimonies

Appendix

Glossary

[Currency and Merchandise Are One Type]

Chapter on the Zakat of Merchandise