How much Zakat do I have to pay on Shares?
A share represents part-ownership of a company, by owning shares in a company, you own a portion of that company.
If you bought shares with the sole intention to sell, Zakat is payable at the current market value.
If you bought shares for any other reason (eg. dividend income) or with mixed intentions, then Zakat is payable on the underlying assets of the business. In this case, we recommend 25% of the market value as a suitable proxy, which our Zakat calculator will automatically apply.
This proxy was established by reviewing the balance sheets of the FTSE 100 companies. 66 out of 100 had net Zakatable assets below 25%. The other 34 were non-compliant companies. Hence, the majority of the companies have net Zakatable assets below 25%.
Allah knows best