Question:
Assalaamualaikum Sheikh Sajid. I pray you well. I usually pay my zakah in Ramadaan and am confused regarding the zakaah of my shares.
Answer:
باسم الله والحمد لله والصلاة والسلام على رسول الله وعلى آله وأصحابه ومن والاه
Wa’alaykumus Salaam dear brother. May Allah Almighty reward you for choosing the path of seeking knowledge and trying your best to worship Allah Almighty correctly.
The topic you have asked has been discussed in detail between the scholars (May Allah Almighty preserve them) and the details of their discussion is beyond the scope of this reply.
In summary however; the following applies:
Shares are purchased for different reasons with the two most common reasons being:
1. For the purpose of trade and…
2. For the purpose of investment.
The reason behind one’s purchase of a share dictates how one’s zakaah will be calculated and paid. This is as follows:
If a person purchased the shares with the intention of investment and not trade; the shares will be considered and counted as similar to a property or amenity that is rented out. Based on this analogy, zakaah will be calculated when zakah is due (after a lunar year) based only on the profit generated by the share without taking into consideration the value of the share that generated the share’s profit. This is similar to how a person would pay zakah on the rental income generated after a year without taking into consideration the value of the amenity that was a means of the rental income generation.
However, if the shares were purchased with the intention of trade; the shares shall then be considered and counted as similar to tradeable merchandise, and thus zakaah will be calculated when zakah is due (after a lunar year) based on the market price of the shares in hand.
I pray the above citation helps clarify that which is expected of you. If you require further clarification, please do not hesitate to write in.
And Allah knows best.
Your brother,
Sajid Umar
Assalaamu ‘alaykum wa rahmatullahi wa barakaatuh,
My apologies if this not the appropriate page for asking advice as it seems that this is only for a “comment” on the last advice that the sheikh replied to.
I have been wanting to go for umrah. Alhamdulillah, I somehow convinced my husband to go so we started saving for it. However, we were caused to be in a situation where my husband had to promise Our Lord that if He causes our daughter’s surgery to be a success, he will build a masjid. Alhamdulillah, He caused it to be successful.
We now have to cancel the umrah plans and put our savings towards the building of the masjid inshaa Allah. We believe that that project is more beneficial than us going for umrah, after all, alhamdulillah, we were able to go often when we lived in Riyadh. Is this a correct belief on our part?
Jazaakum Allahu khairaa.
Assalamualaikum. May Allah bless you and your family.
Since you have done Umrah already and your situation is as you have described; your concluding decisions are appropiate and acceptable in the context of Islamic Jurisprudence.
And Allah knows best.
Sajid Umar
I’m a bit confused to your answer about shares and investment. Can you clarify the below please…
If I have shares/stock on the stock market ie. London Stock Exchange, New York Stock Exchange, NASDAQ etc…do I have to pay zakat on the shares/stock I possess? So if my shares/stocks are worth less than what I had bought them for, do I still need to pay zakat on the current value? If the value is more than what I had bought them for, do I pay zakat only on the profit or the total value? I’m holding on to the shares/stock for the long term irrespective whether it goes up or down.
I hope the question is clear.