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Brother, we understand zakat is compulsory on the physical stock of gold in hand 2 1/2 % but UTI is coming out with the equity/fund scheme.

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)


One of our brothers/sisters has asked this question:

dear mr burhan
assalamo alaikum

i have a question in reference to zakat

brother, we understand zakat is compulsory on the physical stock of gold in hand 2 1/2 % but UTI is coming out with the equity/fund scheme. Holding the equity fund if there is an appreciation or a profit definitely we have to pay zakat but if there is no profit in the event whatever the equity of fund of market value would it be compulsory to pay the zakat.

please advise as early as possible as we planned to invest in equity/fund which is going to be closed by 10th march. your early reply will be highly appreciated.


a sister


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Zakah on savings equity fund

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.


If the total nett worth of any believer(man, woman or child) is more than the prescribed nisaab of 7.5 tolas of gold (app. 85 grams or app. Value US$1,000.00), then the person is liable to pay the obligatory annual zakah of 2.5% on their excess wealth which has been in their possession for a full calendar year. If ones total nett worth is less than the prescribed nisaab, then one does not have to pay any zakaah on their wealth. In principle, zakah is to be paid every year on the excess wealth of every believer after it has been in their possession for a period of one calendar year.


Beloved Sister in Islam, zakah is not based on the annual income of ones investments, but rather zakah is determined from the total excess wealth of an individual, regardless of whether one made a profit or a loss in that calendar year.

Thus if one invests in an equity-fund, it will without a doubt be considered part of their excess wealth, and absolutely regardless of whether there is a profit or a loss in the fund, they will be liable to pay 2.5% of its market value annually as zakah.


For example, lets say one invests $10,000.00 in an equity fund, and at the end of the year there is a loss of $1,000.00; thus the believer will still be liable to pay 2.5% of the balance US$9,000.00 as their annual zakah dues.


Whatever written of Truth and benefit is only due to Allahs Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.


Your brother and well wisher in Islam,





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