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 brother,

Please advise me on zakaat. Does one have to pay zakaat on stocks and bonds? Even if one is losing money on the stocks? Does one pay zakaat on the average value of stocks held during the year or just on the profit made that year? 

Brother Burhan,

I have questions regarding zakaat.

Does one need to pay zakaat on stocks and bonds? Even if the stocks are losing money? Does one pay zakaat on the profit from stocks or the total value(which includes the cost + profit) of the stocks? Please advise. Thanks.

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Answer:

Zakat on stocks and bonds

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 no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad(saws) is His slave-servant and the seal of His Messengers.

Stocks and bonds are definitely amongst the wealth of a person, and if the net worth of the person is more than the prescribed ‘nisaab’ (appx. US$1,000.00), then zakah is due from him at the rate of 2.5% of the market value of the stocks, irrespective if they are loosing money or making money. The zakah is not calculated from the earnings of the year (like income tax), but is calculated as 2.5% of the excess wealth of the person, which has been in his possession for one full calendar year.

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

Your Brother in Islam,

Burhan