How to Pay Zakat on Cash Investments? (Shafi’i)

Answered by Ustadh Shuaib Ally

Question: Assalam aleykum,

I have a relative who is investing an amount of money over the nisab level and the profit that he is making from the investment is not enough to meet his basic needs. He does not possess any other cash or wealth that might fall under zakaat.

Does he have to pay zakaat ? Can he or his wife (who does not possess a nisab) receive zakaat from a third person?

Answer: Assalamu alaikum wa rahmatullahi wa barakatuh,

I pray that you are in the best of health and faith, insha’Allah.

In the Shafi’i school, zakat is due on monetary investments that:

a.are over the nisab level and
b.have been in one’s possession for a year.

This is irrespective of whether or not a person’s:

a.source of income is currently steady
b.profit from the investment meets his current needs.

Zakat would thus be obligatory for a person in the scenario you described.

Can this Person Receive Zakat?

There are some situations in which a person can pay and receive zakat at the same time; they center on a person possessing the minimum zakatable amount for an entire year (requiring him to pay zakat), while also being in, for example, financial need (thus making him eligible for zakat). This could be one such situation, but such a determination would require a more intimate knowledge of your relative’s financial situation and commitments.
Source: Kanz al-Raghibin

Shuaib Ally