Zakat on business, stock, rent and land

Add your business cash, stock in trade and money owed to you, take off what the business owes this year, and see the zakat on your share. Rental property, land and goods for resale are covered too.

Zakat due on your businessEnter your figures

Use the values on your zakat date. Leave anything that does not apply.

1 Cash Cash in hand and in the till$ Business bank accounts$Current and savings accounts, and money held by payment providers.

2 Stock in trade Finished goods for sale$At the price you would sell them for on your zakat date. A wholesaler uses the wholesale price. Raw materials and part-made goods$Only what goes into the goods you sell, at what it would cost to buy now. Goods paid for but not yet received$

3 Money owed to the business Customers who will pay$Invoices and loans you expect to be paid. Doubtful or bad debts$Not counted now. Pay zakat on them when they are paid, as explained below.

4 Property and land Property or land bought to resell$Market value today. Only if you bought it with a firm intention to sell. Rent you have collected and still hold$Only if it is not already in the bank balance above. The rental building itself is not counted.

5 What the business owes Suppliers and bills due now$ Wages, rent and taxes due$ Loan payments due in the next 12 months$For a long business loan, only the next year's payments.

6 Your share and other wealth Your share of the business%100% if it is yours alone. A partner or shareholder enters their share. Your other zakatable wealth, after debts due now$Cash, savings, gold, silver and anything else zakatable that is not entered above. It is added to check the nisab; the zakat shown is only on what you entered above.

Not zakatable, so not asked for

The building or shop you work from
Machines, tools and equipment
Vans, cars and delivery bikes
Furniture, computers and fittings
A rental property itself (only the rent counts)
Land and property you keep for your own use

Currency

Madhhab

Nisab based on

Zakatable assets: 0
Less what it owes: 0
Net zakatable: 0
Your share: 0

Zakat due, 2.5%0

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Silver, per gram: …
Nisab today: …

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How it works

Three steps, about five minutes

1Value

Count what is for sale

Cash, stock at its selling price, money owed to you, and property bought to resell.

2Subtract

Take off what is due

Bills, wages and taxes due now, and the next 12 months of loan payments.

3Pay

Give 2.5% of your share

Partners pay on their own share. Buildings, equipment and vehicles are not counted.

Guide

How to calculate zakat on a business, Hanafi first

Zakat on a business is 2.5% of its zakatable assets on your zakat date, after taking off what it owes now. Zakatable assets are cash, stock in trade at its selling value, money owed to the business that you expect to get, and property or land bought to resell. The things you run the business with, such as premises, equipment, vehicles and furniture, are not zakatable. For a rental property, zakat is due on the rent you have collected and still hold, not on the value of the building.

يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَنفِقُوا۟ مِن طَيِّبَٰتِ مَا كَسَبْتُمْ وَمِمَّآ أَخْرَجْنَا لَكُم مِّنَ ٱلْأَرْضِ ۖ وَلَا تَيَمَّمُوا۟ ٱلْخَبِيثَ مِنْهُ تُنفِقُونَ وَلَسْتُم بِـَٔاخِذِيهِ إِلَّآ أَن تُغْمِضُوا۟ فِيهِ ۚ وَٱعْلَمُوٓا۟ أَنَّ ٱللَّهَ غَنِىٌّ حَمِيدٌ

Yaaa 'ayyuhal lazeena aamanooo anfiqoo min taiyibaati maa kasabtum wa mimmaaa akhrajuaa lakum minal ardi wa laa tayammamul khabeesa minhu tunfiqoona wa lastum bi aakhizeehi illaaa an tughmidoo feeh; wa'lamooo annal laaha Ghaniyyun Hameed

"O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy."

Quran 2:267, translation by Sahih International.

The Prophet ﷺ is reported to have told the Companions to give zakat on what they prepared for sale:

كَانَ يَأْمُرُنَا أَنْ نُخْرِجَ الصَّدَقَةَ مِنَ الَّذِي نُعِدُّ لِلْبَيْعِ

"He used to order us to pay the sadaqah on what we prepared for sale."

Sunan Abi Dawud 1562, from Samurah ibn Jundub. Graded weak (da'if) by al-Albani and others.

Because that chain is weak, the ruling rests mainly on the practice of the Companions, such as Umar ibn al-Khattab telling a leather trader, Hammas, to value his goods and pay zakat on them,¹ and on the agreement of the four schools that trade goods are zakatable.

What to count

Asset	Zakatable?	Value used
Cash and business bank accounts	Yes	The balance on your zakat date
Finished goods for sale	Yes	What they would sell for now (wholesale price for a wholesaler)
Raw materials that become the goods you sell	Yes	What they would cost now
Things used up in making them (fuel, cleaning stock)	No	Not counted
Money customers owe you	Yes, if you expect to be paid	The amount owed
Property or land bought to resell	Yes	Market value today
Rental property	No, only the rent	Rent you still hold, as cash
Premises, equipment, vehicles, furniture	No	Not counted

Stock in trade

Hanafi position

Goods bought with the intention of selling them are zakatable at their market value on your zakat date, not what you paid. Raw materials that become part of what you sell count too; things consumed in the work, like fuel or cleaning materials, do not. A business with several partners pays on the whole and each partner bears their share, or each partner pays on their own share with their other wealth.²

Other madhhabs

Shafi'i: Trade goods are also valued at the end of the year, in the currency used to buy them. The nisab is checked only at the end of the year.
Maliki: A regular trader who buys and sells all the time values the stock every year. Someone who buys a thing and waits for a good price to sell it (a speculator) pays zakat once, for one year, when it is sold.
Hanbali: Trade goods are valued every year at market value, as in the Hanafi school.

Money owed to the business

Hanafi position

Debts that customers acknowledge and will pay are zakatable every year. Zakat on them must be paid once they are received, for all the years that passed, but most people pay every year with the rest of their zakat to keep it simple. Debts you do not expect to recover are not counted; if one is paid later, you pay on what you receive.²

Other madhhabs

Shafi'i: A debt on someone who can pay and admits it is paid every year, without waiting.
Maliki: A loan is paid for one year only, when it is received. A regular trader counts money owed for goods sold every year.
Hanbali: Paid for all the past years once it is received, as in the Hanafi school.

Debts the business owes

Hanafi position

Take off what the business owes now: supplier bills, wages, rent and taxes due. For a long loan, take off only the payments due in the next 12 months, not the whole balance, as Mufti Taqi Usmani explains for long-term debts.³

Other madhhabs

Shafi'i: Debts do not reduce zakat in the school's relied-upon view, so the calculator takes nothing off.
Maliki: Debts reduce zakat on cash and similar wealth.
Hanbali: Debts that are due reduce the wealth zakat is paid on.

Rental property

A house, flat or shop you rent out is not zakatable, whatever its value, because it is not held for sale. The rent becomes part of your cash: whatever you still hold on your zakat date is zakatable at 2.5% with the rest of your wealth. Some contemporary writers, following Yusuf al-Qaradawi, compare rented buildings to farmland and take 10% (or 5%) of the net rent, as the Zakat Foundation of America does; the four schools do not, and AmalKit follows them.⁴

Property and land bought to resell

Hanafi position

Property or land is zakatable only if you bought it with a firm intention to resell. Then it is a trade good, zakatable every year at its market value, until it is sold. Land or a house you bought to live on, build on or keep, or inherited, is not zakatable, even if you later decide to sell it, until it is sold and becomes cash. If you were unsure when you bought it, it is not counted.¹

Other madhhabs

Maliki: Someone who is not a regular property trader pays once, for one year, when the land is sold.
Shafi'i, Hanbali: Land or property bought for trade is valued every year, as in the Hanafi school.

Crops grown on land have their own zakat, ushr, at harvest, which this tool does not cover.

A worked example

Yusuf and his brother own a shop half each. On their zakat date it has $3,000 in the till and $12,000 in the bank. The stock on the shelves would sell for $25,000, and there are $5,000 of materials for goods they make. Customers owe $4,000 they will pay, and $1,000 more that will probably never come. They owe suppliers $6,000, and $3,000 of loan payments are due in the next year. The zakatable assets are $3,000 + $12,000 + $25,000 + $5,000 + $4,000 = $49,000. After the $9,000 of debts, $40,000 is left. Yusuf's half is $20,000, so his zakat is $500, and the same for his brother. In the Shafi'i school nothing is taken off, so it would be $612.50 each.

When to pay

Pick one zakat date and value the business on it every year. Goods and money that came in during the year join your wealth, and do not need a year of their own. Add your business zakat to your personal zakat in the zakat calculator, with your shares and retirement accounts, and give it to people who can receive zakat.

Reported by Abd al-Razzaq and Ibn Abi Shaybah in their Musannafs, and by al-Bayhaqi, from Abu Amr ibn Hammas. SeekersGuidance, "Rulings Related to Zakat on Shares" (Hanafi), on land bought with a firm intention to resell.
Al-Marghinani, al-Hidayah, Kitab al-Zakat; Ibn Abidin, Radd al-Muhtar; Mufti Muhammad Taqi Usmani, Contemporary Fatawa, "How to Calculate Zakah on a Business?". The other madhhabs' positions are summarised from their standard manuals.
Mufti Muhammad Taqi Usmani, Contemporary Fatawa, on zakat and long-term debts.
Zakat Foundation of America, "Is Zakat Owed on Rental Property?", zakat.org, following Yusuf al-Qaradawi, Fiqh al-Zakah.

The rulings on this page are pending review by the scholars on our team.

Questions

Good to know

How do I calculate zakat on my business?

Add the business cash, the selling value of its stock, and money owed to it that you expect to receive. Take off what it owes now and the next 12 months of loan payments. If your share, with your other wealth, is above the nisab, pay 2.5% of it.

Is zakat due on business equipment and vehicles?

No. Things the business uses to work, such as premises, machines, vans, computers and furniture, are not zakatable. Only what it holds for sale, its cash and its receivables are.

Is zakat due on rental property?

Not on the property itself. The rent you have collected and still hold on your zakat date is zakatable at 2.5% with the rest of your wealth.

Is zakat due on land?

Only if you bought it with a firm intention to resell it. Then it is zakatable every year at its market value. Land for your own use, or inherited land, is not zakatable.

Do I value stock at cost or selling price?

At its market value on your zakat date, which is what it would sell for. A wholesaler uses the wholesale price. What you paid does not matter.

Is zakat due on stored goods?

Yes, if they are held for sale. Goods stored for your own or your family's use are not zakatable.