Zakat on Stock Market Losses

By Mufti Ebrahim Desai
Posted: 27 Sha'ban 1423, 3 November 2002

Q.) I was in America 2 years ago. I invested $ 30,000 in stocks in America. Now because of poor stock market, this stock is valued at less than $5,000. Is zakat due on this 5000? Do I have to deduct my $25,000 loss from total money that I have to pay zakat on? [Bilal Mohammad]

A.) Zakat on the purchased stock will be calculated according to the present market value. If the present market value is $5000, then Zakat will be calculated only on that amount.

And Allah Ta'ala Knows Best

Albalagh Note: It should be understood that zakat calculations do not take incomes and losses into account. They are based only on the net zakatable assets you posses on the zakat anniversary date. If your zakat anniversary date is 1 Ramadan, say, then your payable zakat will be calculated based on your total possession of zakatable assets on1 Ramadan every year.

Zakat anniversary date itself is determined by determining the very first time your assets reach the nisab ( the minimum amount of ownership that qualifies you for paying zakat). A year after that is your first anniversary and then it continues every year from there on. If on a given anniversary date your possessions fall below the nisab then your zakat payment calendar will be reset. It will be begin again a year after you reach nisab once more.

It should also be noted that only Hijrah calendar is to be used for all purposes of shariah including the calculation of zakat.