Ramadan-ul-Mubarak
07-30-2012, 06:20 PM
Stocks which are permissble to buy and own may be purchased for either holding them and expecting their dividends or for participating in the management of the company.
Holding stocks for their dividend is usually done on a long term vision, during which capital gains may also be realized but the owner usually keeps holding them for long period
Narrated Ibn 'Umar: Allah's Apostle said: Islam is based on (the following) five (principles): To testify that none has the right to be worshipped but Allah and Muhammad is Allah's Apostle; to offer the (compulsory congregational) prayers dutifully and perfectly; to pay Zakat (i.e. alms); to perform Hajj. (i.e. Pilgrimage to Mecca), and to observe fast during the month of Ramadan. (Al-Bukhari, Vol.1, Book 2, No.7).
Allah has notified some things on whoihc the Zakat is require to pay if you will not then it will effect you in Judgemnt day and in the world to. So Followings are the list of Things on which zakat is Require
Gold and Silver
Cash
Stocks
Mutual Funds
Stock Options
Business Merchandise Inventory
Private Companies, Corporations and Partnerships
Retirement Plans (401K, IRA, etc.)
Real Estate Investments in Property Owning Companies
Accounts Receivable
Profits from Investments
Trusts
Long-Term Insurance (Life Insurance)
Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
Severance Package
Income Tax
Liabilities which may be deducted
Buried Precious Metals or Minerals (Rikaz)
Livestock, Animals, Cows, Sheep, Camels
Agricultural Produce
Zakat On Stock :
Stocks which are permissble to buy and own may be purchased for either holding them and expecting their dividends or for participating in the management of the company.
Holding stocks for their dividend is usually done on a long term vision, during which capital gains may also be realized but the owner usually keeps holding them for long period.
There are three views on the Zakat in this case:
A)The view of the majority, which came in a resolution of the OIC Fiqh Academy, maintains that one has to calculate the Zakat-able part of the value of the stock, from the company's balance sheet and pay Zakat on it in the due date at the rate of 2.5%. The Zakat-able part is: cash + receivables + inventories of goods in process and ready for sale-short term debts.
B)The minority view, in the case where the owner is only investing in these stocks even for long term but without any interest in the management and little concern about dividends, states that this investment is similar to trading in stocks, in the Shariah meaning of the word. Accordingly, the owner has to pay Zakat at the rate of 2.5% on the market value on the due date.
C)he third view is a subset of the first one; it actually adds to the first one that if it is difficult to calculate Zakat from the balance sheet, one may pay 10% on the net income of the stock, in analogy with agriculture. But there is not enough logical support in Shariah for this opinion.
Holding stocks for their dividend is usually done on a long term vision, during which capital gains may also be realized but the owner usually keeps holding them for long period
Narrated Ibn 'Umar: Allah's Apostle said: Islam is based on (the following) five (principles): To testify that none has the right to be worshipped but Allah and Muhammad is Allah's Apostle; to offer the (compulsory congregational) prayers dutifully and perfectly; to pay Zakat (i.e. alms); to perform Hajj. (i.e. Pilgrimage to Mecca), and to observe fast during the month of Ramadan. (Al-Bukhari, Vol.1, Book 2, No.7).
Allah has notified some things on whoihc the Zakat is require to pay if you will not then it will effect you in Judgemnt day and in the world to. So Followings are the list of Things on which zakat is Require
Gold and Silver
Cash
Stocks
Mutual Funds
Stock Options
Business Merchandise Inventory
Private Companies, Corporations and Partnerships
Retirement Plans (401K, IRA, etc.)
Real Estate Investments in Property Owning Companies
Accounts Receivable
Profits from Investments
Trusts
Long-Term Insurance (Life Insurance)
Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
Severance Package
Income Tax
Liabilities which may be deducted
Buried Precious Metals or Minerals (Rikaz)
Livestock, Animals, Cows, Sheep, Camels
Agricultural Produce
Zakat On Stock :
Stocks which are permissble to buy and own may be purchased for either holding them and expecting their dividends or for participating in the management of the company.
Holding stocks for their dividend is usually done on a long term vision, during which capital gains may also be realized but the owner usually keeps holding them for long period.
There are three views on the Zakat in this case:
A)The view of the majority, which came in a resolution of the OIC Fiqh Academy, maintains that one has to calculate the Zakat-able part of the value of the stock, from the company's balance sheet and pay Zakat on it in the due date at the rate of 2.5%. The Zakat-able part is: cash + receivables + inventories of goods in process and ready for sale-short term debts.
B)The minority view, in the case where the owner is only investing in these stocks even for long term but without any interest in the management and little concern about dividends, states that this investment is similar to trading in stocks, in the Shariah meaning of the word. Accordingly, the owner has to pay Zakat at the rate of 2.5% on the market value on the due date.
C)he third view is a subset of the first one; it actually adds to the first one that if it is difficult to calculate Zakat from the balance sheet, one may pay 10% on the net income of the stock, in analogy with agriculture. But there is not enough logical support in Shariah for this opinion.