Zakat13 Feb 20265 min read

What Wealth is Subject to Zakat?

Zakat applies to wealth that has growth potential or represents stored value. Understanding what counts is crucial for accurate calculation.

Assets That Are Zakatable

The following categories of wealth are subject to Zakat:

1. Cash and Liquid Savings

All money in bank accounts, physical cash at home, money in wallets, and digital payment platforms.

2. Gold and Silver

Jewelry made from gold or silver (there is scholarly difference on ornaments regularly worn), gold/silver bullion, coins, or bars held as investment. Calculate based on current market value.

3. Business Inventory and Trade Goods

Raw materials and finished products intended for sale, as well as work-in-progress inventory. Calculate at current market value, not cost price.

4. Investment Holdings

Various investment types require Zakat consideration:

Stocks and shares — Two approaches exist: pay Zakat on full market value (cautious approach), or pay Zakat only on the Zakatable portion of company assets (complex calculation).

Cryptocurrencies — Treated like currency or commodity (scholarly views vary).

Mutual funds and ETFs — Based on underlying assets.

Real estate held for investment — Calculate based on current market value if purchased for resale.

5. Outstanding Debts Owed to You

Money others owe you that you reasonably expect to collect.

6. Rental Income Assets

The rental income received during the year, not the property value itself (unless held specifically for resale).

Assets Exempt from Zakat

The following are not subject to Zakat:

Primary residence — Your home is not subject to Zakat.

Personal items — Clothing, furniture, and cars used for personal transport.

Business equipment — Machinery, tools, and fixtures used in production.

Professional tools — Equipment you need for your livelihood.

Real estate for personal use — Holiday homes used by family.

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