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Zakat on shares calculator

Work out the zakat on shares and funds, on the full market value for holdings bought to sell or on the zakatable share of company assets for long-term ones.

How you hold them

Basis of assessment

Shares bought to sell are trade goods and are assessed in full. Shares held long term are widely treated differently, which is what the second option is for.

The holding

What the holding is worth on the day your zakat year closes

Cash, so it is assessed in full whichever basis applies to the shares

Nisab threshold

Measured against

Today's market price where you are

Add the current silver price and the threshold appears here. Without it there is nothing to test your wealth against, so no figure is shown rather than one assumed.

Zakat on shares

Enter the value of your holding and the zakat due appears here.

Why shares get their own calculator

A general zakat calculator has one box for investments, and for someone who trades shares that is perfectly adequate. For someone holding a long-term portfolio it is not, because the two cases are assessed differently and the answers can differ by a factor of three or four. That gap is too large to hide inside a single field.

Bought to sell

Shares acquired with the intention of selling them on are trade goods, no different in principle from stock in a shop. Zakat is due on their full market value on the day your zakat year closes, not on what you paid, and not on the gain. This treatment is not disputed.

Held for the long term

Where shares are held for dividends or growth rather than for resale, the widely stated treatment looks through the share price to what the company actually owns. Zakat falls on your portion of its zakatable assets, cash, receivables, inventory, and not on its buildings, plant and equipment, which are the tools of the business rather than wealth in circulation.

The practical difficulty is that the proportion is different for every company. A bank is almost entirely zakatable assets. A manufacturer with heavy plant may be mostly not. Get the figure from the company’s accounts, or from a published figure for it.

Why no default percentage is offered

You will find rules of thumb quoted in various places. This tool does not use one, for the same reason it does not ship a gold price: a single figure would be wrong for most holdings, and wrong quietly. If you cannot find a proportion for your holding, use the full market value, that errs towards paying more rather than less.

Dividends are cash

Once a dividend is in your account it is simply money, and money is zakatable in full whatever basis applies to the shares that produced it. The tool keeps it in its own field so that it is never quietly assessed at the reduced proportion.

The view this tool does not compute

Some hold that a long-term shareholder pays only on dividends received and gains realised, on the reasoning that they have no access to the company’s assets and are really receiving an income. It is a minority position, and it is described here rather than offered as a button, because giving it equal billing would imply a parity of use that does not match practice. If you think it applies to you, ask someone qualified rather than taking a calculator’s word for it.

Questions

Do I pay zakat on the whole share price?
It depends on why you hold the shares. If you bought them to sell, they are trade goods and zakat is due on their full market value. That much is not disputed. If you hold them long term for dividends or growth, the widely stated treatment is that zakat falls on your portion of the company's zakatable assets, meaning its cash, receivables and stock, rather than on its buildings and machinery.
Where do I find the zakatable proportion?
From the company's accounts, or from a figure published for that company by a zakat body or fund. It is the share of the balance sheet made up of cash, receivables and inventory. It varies enormously. A bank is almost entirely zakatable assets, while a manufacturer with heavy plant is mostly not, which is exactly why this tool asks for it instead of supplying a number.
Why does the tool not just use a standard percentage?
Because there is no percentage that is right across companies, sectors and years. Shipping one would produce confidently wrong answers for most holdings, in the same way a hardcoded gold price would produce a wrong nisab. If you cannot find a proportion for your holding, the cautious course is to assess the full market value.
What about dividends I have already received?
They are cash, so they are zakatable in full whichever basis applies to the shares themselves. The tool keeps them in a separate field for that reason, folding them into the holding would quietly assess them at the reduced proportion, which would understate what is owed.
Is there a view that I only pay on dividends and gains?
Yes, it is held by some, on the reasoning that a long-term shareholder has no access to the underlying assets and is really receiving an income. It is a minority position and the tool does not offer it as a calculation, because presenting it as an equal option would suggest a parity of use that does not reflect common practice. If you believe it applies to you, that is a question for someone qualified.
What about funds, ETFs and pensions?
A fund or ETF can be treated the same way as direct shares if you can find the zakatable proportion of its holdings; many Islamic funds publish one. Pensions are a different question again, because access and ownership are restricted, and they have a calculator of their own.

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