Zakat Expert

What are business assets according to Zakat principles?

A: Not all assets owned in a business are Zakatable. So, what defines a Zakatable asset in a business? An asset purchased to resell or developed in a manufacturing contract to sell becomes a Zakatable business asset. Such an asset is a ‘productive asset’ (Mal Nami) in Shariah. According to all four schools of jurisprudence, only ‘productive’ assets are Zakatable. Productivity in terms of Zakat refers to the potential of an asset to grow and increase in one of the following ways:
1) Intrinsic productivity
2) Productivity by trading
3) Productivity by the breeding of flock

Gold, silver and their substitute fiat currencies are intrinsically and naturally productive, therefore, no intention (niyyah) of trading is required for them and they are always Zakatable assets in themselves. Other assets (excluding animals pastured for their milk and offspring) such as stock and inventory, require an intention to sell for it to become productive wealth (Mal Nami). This intention of sale must be made at the time of a commutative acquisition. Then, as long as the intention for sale remains, the business asset remains productive wealth (Mal Nami) and continues to be Zakatable.

And Allah knows best!

Mufti Faraz Adam

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