ZAKAAT ON MERCHANDISE
- Articles that are purchased for resale are referred to as merchandise. The Nisaab for Zakaat on merchandise is the same as that for cash, i. e. if the value of the articles is equivalent to the value of 87.48 grams of gold (7.5 tolas =1350 grains =2.8125 troy ounces ) or 612.36 grams of silver ( 52.5 tolas = 9450 grains=19.6875 troy ounces), or more, that it will be Farz to give Zakaat at the rate of 2.5% or one fortieth.
- Zakaat is Farz on the following items when drawing up a balance (calculating) sheet:
a. Stock in trade;
b. Goods in transit; (which have been paid for)
c. Cash on hand;
d. Outstanding cash and loans; (when repaid and if they are equal to Nisaab)
e. Cash at bank;
f. Savings account;
g. Fixed deposits;
h. Sundry outstanding; (when repaid and if they are equal to Nisaab )
i. Claims; (acknowledged )
j. Other savings – household balance; sundry cash.
- All these must be added as one amount, and after subtracting the creditors amount and/or any other liabilities, the balance which is the profit must be added to the capital. Zakaat must then be given on this combined figure.
- Zakaat should be given on the capital that exists at the end of the lunar year, which includes the profit, e. g. at the beginning of the year the capital is $2000-00. When the year ends a profit of $500-00 is shown. Zakaat must be given on $2500-00.
- If a bad debt is recovered and it is equal to or exceeds the Nisaab, then Zakaat on all the past years must be given.
- If one has various different types of merchandise then the total value of all the goods should be calculated. If it is equal to or exceeds the value of Nisaab then it will be necessary to give Zakaat.
- If at the beginning of the year one has the full Nisaab and during and year the amount decreases and by the end of the year possession of the full Nisaab is regained then it will be Waajib to give Zakaat on this amount.
- If one mixes Halaal and Haraam merchandise and the amount is equal to or exceeds the Nisaab at the end of the year then it will be necessary to give Zakaat.
- It is customary to write the price paid for the merchandise at stock figures. Zakaat should not be calculated on these stock figures. For Zakaat purpose current purchase value of the merchandise should be calculated.
- If a few persons are partners in a company and if share of any one of the partners is equal to or exceeds Nisaab then it will be necessary for that partner to give Zakaat.
- Stock for Zakaat purpose must be calculated according to the Islamic (lunar) year.
- Zakaat is Farz at the ruling price on shares held in a company at the end of every Islamic year. As machinery, land, fixtures and fittings, furniture, buildings etc. are exempted from Zakaat, one is allowed to subtract these from the total assets. This could be obtained from the company’s annual report, for example if one has shares worth $ 100-00 and the machinery, land etc., are worth 5% of the total assets of the company, then deduct $500 for machinery, land, fixtures and fittings, furniture and buildings (the
exempted Zakaat items) thereafter deduct the liabilities of the company proportionately to the percentage of shares held, and the Zakaat must be calculated on the balance.
- When Zakaat is given on a capital amount once, and thereafter if this same amount remains with the owner till the following year then Zakaat will be due again. Zakaat will be Farz repeatedly after every Islamic year has elapsed.