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How is Zakat calculated on stocks? Is it a percentage of the value of the stocks, or the profit

Answered according to Hanafi Fiqh by Qibla.com

Answered by Shaykh Muhammad ibn Adam al-Kawthari

How is Zakat calculated on stocks? Is it a percentage of the value of the stocks, or the profit you made during the year?

Answer:
In the Name of Allah, Most Gracious, Most Merciful

When your fixed date of calculating Zakat arrives, you will take into consideration the following:

1) Gold or/and silver

2) Cash

3) Stock

All of the above should be added as one amount. Thus, when you calculate your Zakat, the profits made during the year will be included in the cash. The remaining stock must also be taken into consideration according to the current market value of the goods.

After totaling all your assets, you may subtract the amount which you owe to others. Whatever remains after subtraction, 2.5% from it will be paid as Zakat.

For more details regarding Zakat, you may want to refer to my recently published booklet titled Simplified Rules of Zakat.

And Allah knows best.

Muhammad ibn Adam al-Kawthari

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