Establish regular prayer and give Zakah (Al-Quran
73:20)
Complete
Guide to
Zakah
Understanding
&
Calculation
1. Meanings of Zakah
2. Benefits of Zakah
3. Retribution for not
giving Zakah
4. Payer of Zakah
5. Nisaab
6. Zakah on Debts
7. Recipient of Zakah
8. Some Important rules
relating to recipients of Zakah
9. Zakatable Assets
10. Zakah on Gold and Silver
11. Zakah on Cash
12. Zakah on trading assets
13. Intention of Zakah
14. The principal of Tamleek
15. Agency and Zakah
16. Zakah Calculator
Now the complete detail is as following
What is Zakah?
Lexically,
the word Zakah covers two meanings.
1.
Purification
2.
Growth and increase
In
the terminology of the Quran and Sunnah, Zakah is the portion of asset that is
made mandatory to be spent in the ways specified by Allah Ta’ala.
Benefits of Zakah
Zakah
has two straightforward benefits.
Firstly,
the payer himself gets purified from inner germs of the spiritual diseases.Secondly,
Zakah helps those who are not able to fulfill their needs independently. For
e.g. orphans, widows, handicaps, poor people etc.
Allah Ta’ala says
in Surah Taubah:
Take
sadaqah (obligatory alms) out of their wealth through which you may
cleanse and
purify them, and pray for them. Indeed, your prayer is a source of
peace for them.
And Allah is (All-) Hearing, (All-) Knowing. (103)
At-Taubah
9:103
This verse has
explicitly mentioned the first benefit i.e. purification of inner self. The
second benefit is not mentioned in this verse. It points to the fact that the
real purpose and objective of paying Zakah is the purification of one’s own
self, though the second benefit exists in its inference. (Ma'ariful Quran)
Retribution for not giving Zakah
Allah Ta’ala says in the Quran:
“As
for those who accumulate gold and silver and do not spend it in the way of
Allah, give them the ‘good’ news of a painful punishment” (34) on the day it
(the wealth) will be heated up in the fire of jahannam,
then their foreheads and their sides and
their backs shall be branded with it: “this is what you had accumulated for
yourselves. So, taste what you have been accumulating.”(35)
At-Tawbah 9:34-35
The holy prophet (PBUH)
said:
"Every nation that
does not give Zakah, Allah Ta’ala will afflict them with a drough"
Narrated Abu
Huraira: Allah’s Messenger (PBUH) said,
“The
person whom Allah has bestowed with wealth, yet does not give its Zakah, on the
Day of Judgment, his wealth will be turned into venomous bald serpent with two
black spots over the eyes (or two poisonous glands in its mouth) which will
wind around his neck and bite his jaws and say: ‘I am your wealth, I am your
treasure.’ “Then the Prophet (PBUH) recited the holy Verse: “Let not those who
covetously withhold….” (to the end of the Verse).
Sahih Al-Bukhari
Hadith 1315 and 4199
Payer
of Zakah
Zakah
must be paid by the one who is:
1-
Muslim
2-
Major (Baligh)
3-
Sane
4-
Sahib-un-nisaab (owner of wealth above the level of nisaab1)
Above-mentioned
four conditions are described respectively in the following lines:
• Zakah is not obligatory on a non-Muslim as Zakah is an ibadah (an act of pure worship) and a non-Muslim is not obliged to carry
out the ibadah of Islam.
• The Zakah payer must be sane. In this regard, two situations must
be distinguished:
i.
The child who at maturity is insane. In this case, the insane person upon
regaining his intellect is exempt from payment of Zakah for the duration of his
insanity. Liability for Zakah attaches to him from the time he regains his
sanity and accordingly his Zakah year is calculated from such date.
ii.
The person although sane at the time of maturity subsequently thereto becomes
insane. In this case, if the insanity lasts for a whole year, the insane person
is exempt from Zakah for this period, and his Zakah year is therefore deemed to
commence from the date of recovery of sanity. On the other hand, if the
insanity remains for a part of the year, then he is liable for the Zakah of
that year.
• Nisaab is described in the following lines.
Definition
of Nisaab
Nisaab
is the threshold or line, which separates
those who are duty bound to give Zakah from those who are not. In other words, Nisaab is the minimum amount of wealth whose owner
is deemed to be wealthy in the conception of Shari’ah and Zakah is obligatory
on him.4 For example, one who owns 87.48 grams of gold or 612.36 grams of
silver or its equivalent amount of cash or trading assets etc. is called Sahib-un-nisaab and it is obligatory on him to pay Zakah
(i.e. 2.5% of his total zakatable assets) to those who deserve Zakah. A
detailed description of those that are eligible to receive Zakah is described
in the coming topic “Recipient of Zakah”
Zakah on debts
Debts
can be classified into two types:
1. Receivables
i.e. owed to oneself e.g. Loans given to somebody.
2. Payable to
others e.g. Money borrowed from somebody.
Debts receivable from others
There are
different types of debt receivables. The ruling of Zakah for each kind of debt
receivable is different from the other. It is therefore pertinent to first
understand all these types of debts receivable.
Types of Debts Receivable
Imam
Abu Hanifah (R.A.) has classified debts into three categories, namely:
1.
Trade Debts
2.
Non-Trade Debts
3.
Other Debts
1.
Trade Debts are called dain
qawiyy)یوق نيد( in the terminology of Islamic Jurisprudence. These debts are those
that arise in respect of:
(a)
Trading stock sold and delivered in the ordinary course of business;
(b)
Moneys lent and advanced;
(c) The loan of
gold and silver.
For example, a
trader sells goods (on credit) to another for purchase price of Rs.5,000/-; or
A lends B Rs. 10,000/-. The ruling for this class of debts is that the
creditor, upon receiving the amount owing to him, is obliged to pay Zakah for
the entire preceding period of credit.
2.
Non-Trade Debts are called dain
mutawassit )طسوتم نيد(. These debts are those that arise in respect of the sale of goods
other than the trading stock. For example, the purchase price of the sale of
personal clothing, or motor vehicle or land.
The preferable
view, which is one of the two views narrated from Imam Abu Hanifah, in the case
of such debts1 is that Zakah is not payable for the
preceding years but is only payable for the Zakah year calculated from the time
of repayment of the debt.
3.
Other debts are called dain
Zaeef )فيعض نيد(. These debts are those that do not arise from the sale of goods
or property. For example, debts receivables in respect of inheritance, dowry,
rentals, wages, and provident fund payments.
The ruling for
this class of debts is that Zakah is not payable unless full amount is paid and
one Zakah year passes thereon after payment. No Zakah is payable for preceding
years.
Debts payable to others
Zakah
payer, in order to be sahib-un-nisaab, must be free of debts. If he is indebted to his creditors, then
the amount of his debts must be deducted from the total value of those assets
on which Zakah is levied. The balance remaining will be subject to Zakah. If
there is no balance remaining, no Zakah is obligatory.
Note
It should be kept
in mind, that the ruling mentioned above regarding the treatment of debts
payable is related to the person who is not a corporate businessman. However,
if some one has a corporate business, then the ruling is that, only those debts
are to be deducted from zakatable assets that have been utilized in purchasing
fixed assets such as machinery etc. On the other hand, if debts of a corporate
businessman are utilized in purchasing zakatable assets such as inventory etc.,
then they will not be deducted from the total value of the assets on which
Zakah is levied.
Recipients of Zakah
The Holy Quran has
fixed eight categories of recipients in verse 60 of the Surah Taubah. The Arabic text of the verse along with its
translation is as follows:
“The Sadaqat
(prescribed alms) are (meant) only to be given to the poor, the needy, to those
employed to collect them, to those whose hearts are to be won, in the cause of
the slaves and those encumbered with debt, in the way of Allah and to a
wayfarer. This is an obligation prescribed by Allah. Allah is All Knowing,
Wise.” (60)
“Allah has not
assigned the right to distribute Zakah to any Prophet or any body else. He
Himself has ordered about it and has fixed eight categories (of recipients). If
you qualify as being from amongst these, I will give you your right.”
In the following
lines, each of these eight categories have been described briefly.
The
eight categories of Recipients of Zakah
1, 2) The poors, the needy (Fuqara and Masakeen)
The
Fuqara and Masakeen3 are
extremely poor persons. The eligibility of receiving Zakah under this category
is restricted to either of the following three kinds:
a.
Those who do not own any property or assets at all, or
b.
Those who do not own any property or assets in excess of basic necessity (For
e.g. House, furniture and effects, personal clothing, servant, tools of trade),
or
c. Those who own
property in excess of basic necessity, but the excess is below the value of nisaab.
These
three kinds of people can receive Zakah and they are also not obliged to pay
it. However, it must be kept in mind that the above mentioned three kinds are
different from the following two classes:
a.
Those who own, in excess of basic necessity, property or assets on which Zakah
is levied (such as gold, silver, cash, inventory) whose value after deduction
of debts, equals or exceeds the value of nisaab. They are obliged to pay Zakah, and cannot receive it.
b. Those who own,
in excess of basic necessity, property or assets on which Zakah is not levied
(such as diamonds, land which is not purchased for trade, etc) which equals or
exceeds the value of
nisaab. They are not
obliged to pay Zakah but at the same time, cannot receive it.
3) Collectors of Zakah (Al-‘Aamileen)
Al-‘Aamileen are those persons who are appointed by the Islamic State, or
Muslim ruler, for the purpose of collecting Zakah. Zakah can be given to them
as the salary for their efforts in collecting Zakah, even when they are Sahibun
Nisaab or rich.
In
regard to the rest of the seven categories of recipients, need is defined as a
requirement and a rich person cannot be a recipient of Zakah. This is not the
case with Al-‘Aamileen because the head of the Islamic State is responsible for the needs
and welfare of the poor within his jurisdiction. He is therefore deemed to be
their agent.
The Al-‘Aamileen, as employees of the head of state, are
likewise agents of the poor and needy. It follows that the Zakah obligation is
discharged as soon as the Zakah is paid by the Zakah payers to the Al-‘Aamileen. And the salary given to them is as if,
given by the poors themselves. It is exactly like the case when a person, who
is eligible to receive Zakah, hires an attorney and pays his fee from the Zakah
he received.
4) Those whose hearts are to be won (Al-Mu’allafatu-Al-Quloob)
This
category of recipients refers to the poor and needy Muslims (Fuqara and Masakeen) who are given Zakah for the express purpose of strengthening their
hearts and making them more inclined towards the Islamic practices. Non-Muslims
are excluded in accordance with the general principle that they do not qualify
as recipients of Zakah.
5) The cause of (freeing) the slaves (Ar-Riqaab)
The word Riqaab is the plural of Raqabah, which literally means “neck”. In Arabic usage,
it is taken as a whole person, therefore refers to a slave.
The
majority of the jurists are of the view that the word Raqabah mentioned in the verse is confined to the Mokatab. Mokatab is that slave who enters into a contract with his master in terms of
which, the latter undertakes to free him against payment of a fixed sum of
money. The view of the majority of the jurists is for the reason that in paying
Zakah, the recipient must be made owner of the Zakah property. In addition,
Zakah cannot be paid as consideration for services rendered on the part of the
recipient.
In
the case of disbursing Zakah to free a slave, the master becomes the owner of
the Zakah in return for the slave’s freedom. The slave himself cannot own
property for want of legal personality. On the other hand, payment of Zakah to
the Mokatab makes the latter owner thereof.
6) Debtors (Gharimeen)
The
word Gharimeen is the singular of Gharim.
It means debtor. The verse refers to a
specific type of debtor, i.e. the one who is poor. A debtor can only be said to
be poor and thus eligible to be the recipient of Zakah if his net assets (the
difference between his assets and liabilities) is below nisaab.
7) The way of Allah (fi Sabilillah)
All
interpretations narrated by the Sahabah1 and
Tabi’een2,
regarding the word fi sabilillah, have expressively defined this word as either for Mujahideen or for pilgrims of Hajj. Imam Ibne Jarir and Imam Ibn e Kaseer, who restricted themselves to interpret the verses of the Holy
Quran in the light of Ahadeeth, have particularized the word sabilullah
with those Mujahideen
and pilgrims of Hajj who do not have enough resources to perform their respective
deeds.
On
the other hand, some Muslim Jurists such as Allama
Kasani,3 have generalized the interpretation and extended the meaning of sabilullah to all good acts enjoined by the shariah. However, these Jurists
have specifically described that the recipients must be poor and needy persons.
Therefore, the jurists are unanimous on the point that Zakah cannot be spent on
projects that would promote the interests of and be beneficial to the Muslim
Community e.g. building of hospitals, roads, bridges and the like.
8) Wayfarer (Ibn-us-sabil)
This
category refers to a traveler who, despite being wealthy at his place of
residence, is in need during his journey. It is permissible to give such
traveler Zakah to the extent of his needs. It is not permissible for such
traveler to take Zakah in an amount which exceeds his needs and requirements.
It is preferable for such traveler to borrow funds if he is able to do so than
to accept Zakah.
Some Important rules relating to the recipients of Zakah
• If someone owns cash, trading assets, gold and silver equivalent
to the value of 612.36 grams of silver, he/she is considered as wealthy in
Shari’ah, hence not eligible to receive Zakah.1
• If someone owns, in excess of basic necessity, an asset or property
on which Zakah is not levied (such as diamond, vacant land - not for commerce)
and the excess is equivalent or above the value of 612.36 grams of silver, he
is also considered as wealthy in Shari’ah. He cannot receive Zakah but at the
same time, is not obliged to pay Zakah.2
• If one has cloths or crockery that are not used for years but for
once or twice, then these cloths or crockery will be considered as an excess of
basic necessity. Hence if its value is equivalent or above the value of nisaab, the owner cannot receive Zakah.3
• The house in which one lives, the household furniture, servants,
personal clothing and a motor vehicle, all are basic necessities. The owner of
all these assets will not be considered as wealthy, no matter how expensive the
assets are. Rather he is entitled to receive Zakah, if he does not have any
zakatable asset equivalent to the value of nisaab.
• If a person has given some of his houses on rent and he does not
have any assets on which Zakah is levied, he can receive Zakah.5
• If a person has 20,000/- Rs. and he is indebted of 20,000/- Rs.,
he can receive Zakah. If, in the above case, he is indebted of less than
20,000/- Rs., then if the balance is equivalent or above to the value of nisaab, he cannot be given Zakah. And if the balance is less than the nisaab, he can be given Zakah.6
• Zakah cannot be given to a minor child of a rich person because
such minor is deemed to be rich by virtue of the wealth of his father. If the
child is major and needy, Zakah may be given to him irrespective of the
financial standing of his parents7.
• Zakah can be given to a minor child whose father is not rich, but
his mother is rich and wealthy because, a minor child is not considered rich by
virtue of the wealth of his mother.
• Zakah can be given to a poor woman whose husband is rich.1 Similarly, it is permissible to give Zakah to
a poor person whose child is rich.
• There is consensus of the Muslim jurists that it is not
permissible to give Zakah to non-Muslims.2 Other forms of voluntary charity (sadaqah naafilah) may be given
to them3.
• Zakah cannot be given to the children of Banu Hashim. These are descendants of the Prophet’s family (i.e. the
descendants of Hazrat Ali هنع للها يضر,
Hazrat Ja’far هنع
للها يضر, Hazrat Aqeel هنع للها يضر, and Hazrat Harith ibn Abd Ul Muttalib) and are commonly known as
Sayyids.
Zakatable Assets
Allah
Ta’ala has put the most minimum burden of monetary obligations on Muslims so
that paying Zakah becomes convenient for every sahib-un-nisaab Muslim.
Firstly,
it is not obligatory to pay Zakah on every asset. Rather only those assets are
the subject matter of Zakah that have the potential of growth or increase.
These assets may be broadly classified as follows:
1-
Trading assets.
2-
Cash & Cash Equivalent (like prize bonds, Travelers Checks etc)
3-
Gold and silver
4-
Livestock (goats, sheep, cows and camels)
5-
Agricultural output.
The principle governing the levy of Zakah is that only those
assets are zakatable, which fall within the definition of money, like silver
and gold. All other assets are not zakatable unless they are meant for trade
and resale.
Secondly,
only the balanced value of these assets at the end of the year is the subject
matter of Zakah. No Zakah is obligatory on the amount spent over the whole
year.
General
conditions for all zakatable assets
1-
Ownership The subject matter of Zakah must be in the complete ownership of
the payer. If someone possesses an asset but does not own it, Zakah is not
liable on it.
2-
Potential of growth The asset must have the potential of growth as the word Zakah
itself means “Growth” or “Increase”.2
3-
Asset must be in excess of basic
necessity The subject matter of Zakah should be other
than the basic necessities of a person. So the assets included in the basic
necessities e.g. crockery, furniture, car etc are not the subject matter of
Zakah provided that these assets are not purchased with the intention of sale.3
4- One year
must elapse over the asset
It
is necessary that one year elapses over the asset which is subject to Zakah.
It means that possession of nisaab value should be both at the beginning and end of a lunar
year. It is not necessary that a complete year passes on every single rupee.
Rather, when a person is sahib-un-nisaab
in the beginning and the end of the
year, then he will be considered as sahib-un-nisaab and
the fluctuating amount during the year will not be considered as the subject
matter of Zakah.
A
detailed clarification of the highlighted portion is as follows:
If
some one acquires a property before the completion of his Zakah year and he is
the owner of the wealth above the value of nisaab, then one of the following situations may arise:
a)
The addition during the year is not the same kind or category as the existing
property. For example, a person has gold or silver and thereafter during the
course of the year acquires sheep.
b)
The addition is of the same kind or category as that of the existing property.
This addition may be derived from the existing property, for example, profit
arising during the year from sale of trading stock; or acquired from another
source, for example, a person has cash and thereafter during the year acquires
further cash by way of inheritance.
In
case ‘a’, the year for the gold or silver and sheep will be calculated
separately.
However,
in case b, the subsequent acquisition will be added or joined to the existing
property for Zakah purposes and the Zakah for both will be paid together at the
end of the Zakah year for the existing property. In other words, Zakah years
will not be calculated separately for each subsequent acquisition in case ‘b’.
It
should be kept in mind that if the subsequent acquisition is made after the
expiry of the Zakah year, then a new year will be calculated. Similarly, if the
existing property is below nisaab, the subsequent acquisition cannot be added to the existing
property.
5- Asset
must be equivalent to Nisaab
Zakah
is not levied on total assets if they are below the level of Nisaab.3
Amount of Zakah
The
amount of Zakah payable is two and a half percent (2.5%), or 40th portion of:
1.
the value of gold and silver if it is equivalent to nisaab or above it.
2.
trading stocks, or its value at the time of obligation of payment of Zakah, if
the stock is equal to nisaab.
3.
cash on hand if equal to nisaab.
Zakah on gold and silver
• Gold and silver are subject to Zakah regardless of whether they
are owned for personal use or otherwise if the weight thereof equals the
prescribed nisaab and one year elapses thereon. Gold and silver are also always
liable to Zakah irrespective of the asset type (gold bar, jewellery, ingot,
coin etc.)4
• Zakah is not payable on any other kind of jewels, gems or precious
stones, such as diamonds, rubies etc. If these metals are, however, acquired
for business, then Zakah will be payable thereon as they would then constitute
trading stock.5
• If gold or silver is not pure, and some other commodity (such as
copper etc) is added to it, then if the major portion of the element is of gold
or silver, it is considered as gold or silver respectively and Zakah will be
obligatory on it. And if gold and silver is in minor proportion, then it is not
considered as gold or silver and no Zakah will be obligatory provided that it
is not purchased with the intention of sale. 1
• If a person has some gold and silver and the independent amount of
both of them does not reach nisaab, then if the combined value of gold and silver reaches nisaab of silver, the accumulated worth will be the subject matter of Zakah.
And if the combined value of gold and silver does not reach nisaab of silver, Zakah is not obligatory.2
• If gold and silver reaches nisaab
independently, then valuation of the combined
value is not needed. Rather, in this case, Zakah of gold and silver will be
paid independently from the other
• Someone has a complete nisaab
of silver. He got some more silver or gold
before the year completed. Zakah of that additional silver or gold will be
obligatory alongwith the completion of the year of the already owned silver and
gold4 i.e.
no additional or a complete year is required for Zakah being obligatory on that
additional gold and silver.
For
example, the Zakah year of a person ends on 1st
Ramadan. On 25th
Shaban he has some gold and silver of the
value of one hundred thousand rupees (Rs. 100,000/-). On 29th Shaban, he purchased additional gold valued
two hundred thousand rupees (Rs. 200,000/-). Now on 1st Ramadan, the value of zakatable gold and
silver of that person would be three hundred thousand rupees (300,000/-).
• A person has cash equivalent to the nisaab of silver. Some amount of more cash is achieved before the
completion of the year. Then the added amount of cash will be deemed as subject
matter of Zakah after completion of the year of the previous amount.
Zakah on cash
• Cash is fully subjected to Zakah. It includes bonds, travelers’
cheque, and other cash equivalents.
• If a person has cash equivalent to 87.48 gm of gold or 612.36 gm
of silver, Zakah is obligatory on him, for cash comes under the same ruling as
gold and silver in terms of paying Zakah.1
• If a person has some amount of cash, some gold, and some silver
and neither of the three individually reaches nisaab, then the value of gold and silver will be added to the amount of
cash, and if the combined amount reaches nisaab, Zakah is obligatory. If the combined amount does not reach nisaab, no Zakah is to be paid.2
• A person has cash equivalent to nisaab. He got some more cash a few days before completion of year. This
more amount of cash will be subject to Zakah after completion of the year of
previous amount of cash.3
For
example, the Zakah year of a person ends on 1st
of Ramadan. He has Rs. 30,000/- on 28th of Shaban. On 29th Shaban, he receives Rs. 5000/- more. Now the
zakatable cash of that person on 1st of Ramadan would become Rs. 35,000/-.
Zakah on trading assets
Zakah
is payable on trading stock if their market value is equal to or more than the
value of nisaab. 4
Definition of trading assets
Trading
assets are those, which are purchased with the intention of resale or capital
gain. Consequently, goods that have been purchased for personal use and not for
the purpose of trade are not subject to Zakah, irrespective of their value.5 Similarly, goods (other than gold and silver)
originally bought for personal use are not subject to Zakah if the purchaser
subsequently intends to sell them for trade and had not intended it at the time
of purchase. Once sold, however, their sale price would be subject to Zakah6.
Zakah on trading assets
Zakah
is payable on trading stock if their market value is equal to or more than the
value of nisaab. 4
Definition of trading assets
Trading
assets are those, which are purchased with the intention of resale or capital
gain. Consequently, goods that have been purchased for personal use and not for
the purpose of trade are not subject to Zakah, irrespective of their value.5 Similarly, goods (other than gold and silver)
originally bought for personal use are not subject to Zakah if the purchaser
subsequently intends to sell them for trade and had not intended it at the time
of purchase. Once sold, however, their sale price would be subject to Zakah.
Likewise,
a person may purchase goods for personal use with the intention that if he is
able to obtain a profit thereon, he would sell the goods in which event, no
Zakah is payable on such goods. On the other hand, if an asset is not purchased
and is owned by some other means e.g. inheritance or gift, then the asset will
not become the subject matter of Zakah. 7
In
short, trading assets are those that are:
(i)
purchased and
(ii)
purchased with the intention of sale.
If
any of these two conditions is missing, the asset will not be treated as a
trading one and thus will not be subjected to Zakah.
Following
are some situations relating to Zakah on trading assets:
• Nisaab of trading assets is same as that of cash i.e. if the value of the
assets reaches the value of 87.48 gm of gold or 612.36 gm of silver, then Zakah
is obligatory after the completion of year.
• If a person has a house that is leased, the value of the house
will not be subject matter of Zakah, as leasing a property does not render it a
trading asset. However, the rentals received will be the subject matter of
Zakah.2
• Since the machines in the industries are not trading assets,
therefore no Zakah is obligatory on them. However, if they are purchased with
the intention of resale, then Zakah will be obligatory. 3
• The products manufactured in an industry, as well as the raw
material, are subject matter of Zakah.4
• If a person has some trading assets that do not reach nisaab, and then if he has some other zakatable assets such as gold,
silver and cash, and the combined value of all zakatable assets reaches the
value of 612.36 gm of silver, then Zakah is obligatory.5
• It is permissible for the Zakah payer to estimate a bulk price of
the trading assets i.e. the market value of the stock–in-trade if sold in bulk
at the end of the Zakah year, for purposes of calculating Zakah.
Zakah on Shares
If
shares are purchased with the express intention for resale or capital gain,
then the entire value of the shares is subject to Zakah.
If,
however, the shares are purchased with a view to holding them as an investment
and receiving the dividend income, then the following must be borne in mind.
Ownership
of a company’s shares confers undivided ownership in the underlying assets of
the company. The holder is a proportionate owner of the business. All business
assets can be classified into two types for the purpose of Zakah.
1.
Fixed Assets e.g. Machinery, buildings, Furniture etc.
2.
Current Assets e.g. cash, stock in trade, receivables etc.
Fixed
assets are exempt from zakah whereas, current assets are subject to it. The
owner of the shares can deduct from the Zakatable value a proportion equivalent
to that of the liabilities and the fixed assets of the company. In other words,
it is permissible for the owner of the shares in this case that he does not take
into account the liabilities and non-zakatable assets such as plant and
machinery etc. The way to ascertain the proportion of zakatable assets to
non-zakatable assets of a company is to consult the balance sheet and profit
and loss account. These documents are available as part of the company’s annual
report.
