Darul Iftaa Mahmudiyyah

How should I calculate Zakāh on my dividends?

· 7 Rabiʻ II 1436 AH1 min readFatwa 31907English

Question

My Question is regarding zakat on dividend and shares, I've been investing in Zakat for last 4 years with the intention of keep on purchasing shares to receive divdend in my retirement, I came across different Ulma's online with different views regarding zakat on dividend. My Question is:

Based on my intention, to hold my stocks forever, do I need to pay zakat on my stock portfolio value.

OR

Do I pay zakat only on my dividends(which some online Ulma say's 10% of dividend income).

OR

Follow the formula based on Meezan Bank Pakistan for share holders(intention to keep stock forever) which is Total Asset - Fixed Asset - Liabilities/ Number of Shares x 2.5/100 (based on this formula the zakat comes much lower then what am I paying)

Will really appreciate your answer in detail related to my situation.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

You may follow the formula as outlined by Meezan Bank Pakistan.[1] However, if the calculation becomes difficult, then you may consider paying Zakāh on the entire value of one’s stock portfolio.[2]

And Allah Ta’āla Knows Best

Bilal Mohammad

Student Darul Iftaa
New Jersey, USA

Checked and Approved by,
Mufti Ebrahim Desai.

www.daruliftaa.net

References (Arabic / Urdu sources)

[1] Islam Aur Jadeed Ma`āshī Masāil, v. 3 p. 27, Idarah-e-Islāmiyyāt;

Guide to Zakah: Understanding and Calculation, p. 19, Maktabah Ma`āriful Qur’ān

[2] Ibid.;

Islam Aur Jadeed Ma`īshat aur Tijārat, p. 93, Maktabah Ma`āriful Qur’ān

Answered by
Bilal Mohammad
Checked & approved by
Mufti Ebrahim Desai
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