Zakāt on stocks & ETFs
For shares and funds, scholars agree the calculation hinges on why you hold them, not on the vehicle. A stock, ETF and mutual fund follow the same logic.
Active trader
If you buy and sell for short-term price gains, the shares are trade goods: pay 2.5% on the full market value on your zakāt date.
Long-term investor
If you hold for growth or dividends, you own a fraction of a real company, most of whose value is non-zakatable (factories, brand, goodwill). You pay 2.5% on a 'zakatable ratio', your share of the company's cash, receivables and inventory.
The zakatable ratio
Most people can't read balance sheets, so scholars allow an estimate of the zakatable portion. A widely used estimate is about 25% of market value (from research by Mufti Faraz Adam and a team of scholars who studied large companies' balance sheets); some Shariah-certified funds publish their own verified ratio. Use that when available.
Dividends
Dividend income is added to your zakatable wealth and assessed at 2.5% once held to your zakāt date.
In the app
Each stock/ETF line lets you choose 'active' (full value) or 'long-term' (a ratio you can edit). The default ratio is an estimate. Adjust it to your fund or your scholar's guidance.
Where the schools differ
How is a share valued for Zakāt?
| Position held by | Ruling |
|---|---|
| Contemporary ruling | Shares bought to trade are trade stock: Zakat on the full market value. |
| Contemporary ruling | Shares held for income are looked through to the company’s own zakatable assets, which is what the ratio estimates. |
The calculator marks which position produced your figure and lets you change it. See our method.
Positions differ. Confirm with your scholar.
Open the calculator at Investments →
Zakat Made Easy, Mufti Faraz Adam: the position this app follows, used with the author's permission.
These references corroborate the position; they are not an endorsement of this app.