Do I pay Zakāt on stocks, ETFs and funds?
It depends on why you hold them. If you actively trade shares to profit from short term price moves, you pay 2.5 percent on their full market value, because you are treating them like goods for sale. If you hold them for the long term for growth or dividends, you pay only on the zakatable share of what the company owns, such as its cash, money owed to it, and inventory. A widely used estimate for this is about 25 percent of the value. That figure comes from research by Mufti Faraz Adam and a team of scholars who studied the balance sheets of large listed companies. If your fund publishes its own zakatable ratio, you can use that instead.
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.