Date : 02-08-2010

Question :

Should a trader pay Zakah on basis of his profits and unfixed capital? Are business expenses, such as rent and salaries, liable for Zakah or should he pay Zakah on basis of all his wealth?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May Allah`s peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

After a full lunar year elapses over trading money, the trader should evaluate the goods he has in the currency with which he had bought them, and according to their wholesale price on the day they are eligible for Zakah. He should also add to that whatever money is in his possession. If the total reaches Nisaab (Minimum amount liable for Zakah), then he should pay (2.5%) as Zakah without deducting any business expenses that he had paid. Rather, he should pay the Zakah on basis of the net profit, all the money and goods in his possession, but he should exclude the fixed instruments. And Allah the Almighty Knows Best.