Stewardship & Charity

Do I have to pay Zakat on my stocks and shares?

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zakat on stocks

Do I have to pay Zakat on my stocks and shares?

Answer:

If you own stock in a company (or shares as they are called) then to determine their liability for Zakat you should look at the investment strategy you are using.

  • If you are using them for a long term investment (something you plan to hold for a year or more) then if they are more than Nisab,
    • A – If the company does not have any assets other than the dividends, then you will pay Zakat on the dividends distributed by those stocks (shares) when paid,
    • B – If the company holds assets (cash, receivables, inventory) then you will pay Zakat on the book value / net asset value as well as the dividends.
  • If you are an active trader, or have an active portfolio in a mutual fund, then you will pay Zakat yearly on the market value of the stock (share) or the portfolio, as well as the dividends.
  • If you sell these stocks (shares) during the year, you will add the amount received from sale to your liquid assets and pay Zakat according to general rules of Zakat.

This is the method prescribed the Fiqh Academy of the OIC and is generally prescribed by most scholars who are specialists in the field. There are other opinions, but we will cover those in a more extensive article.

Giving While Living: Part I

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dr-yaqub-MirzaWe are honored to bring you this guest post from Dr. M Yaqub Mirza, President & CEO, Sterling Management Group, Inc. and author of “Five Pillars of Prosperity: Essentials of Faith-Based Wealth Building” which is available on Amazon. This article is an excerpt from his book released here in two parts.

It is the practice of loving and giving that makes life worth living

A man came to the Prophet and asked, “O Allah’s Apostle! Which charity is the most superior in reward?” He replied, “The charity which you practice while you are healthy, miserly and afraid of poverty and wish to become wealthy. Do not delay it to the time of approaching death and then say, ‘Give so much to such and such, and so much to such and such.’ And it has already belonged to such and such (as it is too late).”[1]

Following this Hadith, I strongly argue for giving while living. Why? Giving while living provides you with an opportunity to see the effects of your gift. While living, you can direct or redirect the use of your contributions. If a project you contribute to does not succeed, you have the opportunity to contribute to another one.

Imagine what would happen if no one gave while living—if everyone only willed, upon death, a portion of their wealth Continue reading

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