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Zakaat on the cost price of trading stock or on the selling price?

Q: Does one pay zakaat on the cost price of trading stock or on the selling price of the trading stock? E.g. I sell cars. I paid R10,000 for the car but I am selling the car for R25,000. The book value of the car is R20,000. Do I pay Zakaat on R10,000, R20,000 or R25,000?

A: One will pay zakaat on the market value of the stock of trade. Market value refers to the price that the consumer (i.e. the public) generally pays to obtain the item regardless of whether one purchased it for a higher price or lower price and regardless of whether one is selling it for a higher price or lower price.

(أو نية التجارة ) في العروض إما صريحا ولا بد من مقارنتها لعقد التجارة كما سيجيء أو دلالة بأن يشتري عينا بعرض التجارة (الدر المختار 2/267) (فتاوى محمودية 14/130) 

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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