Zakaah on shares and dividends.


Does Zakaat have to be paid on Shares? Also does one have to pay on the capital and the dividend also? Jazakallah



In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

On the outset one should ensure that the company in which shares are owned are of a Halaal and Shariah compliant nature.

Zakaah is payable on both the capital and the dividend of the share if the company one has shares in is a trading company, such as a fabric, car manufacturer, store, etc.  Zakaah will be due on the market value of the share on the day one is paying Zakaah. This is if one has the intention for resale or capital gain, the entire value of the share is subjected to Zakaah.

If, however, the shares are purchased with the intention of holding them as an investment and receiving the dividend income, Zakaah is not Waajib on the entire share. Rather Zakaah is only Waajib upon the Zakaatable assets of the company, i.e. current assets (cash, stock etc.). Non zakaatable items (such as machinery, land, furniture etc.) will be subtracted.

If the company is not a trading investment and only receives revenue, for example from rentals of properties or vehicles then Zakaat is payable only on the dividends.[1]

And Allah Ta’āla Knows Best

Mufti Arshad Ali

Darul Iftaa, Jaamia Madinatul Uloom (Trinidad) /

[1] Fatawa Rahimiyyah