Introducing an easier way to calculate zakat on your stock portfolio

We just launched our first mini-tool that helps you quickly and accurately calculate how much zakat you owe on your stock investments.

Traditional calculators either treat your stocks as cash or apply some arbitrary percentage to estimate the underlying asset value of your holdings. This can easily lead to overpaying, or worse, underpaying your zakat.

With our Zakat mini-tool, you can:

:white_check_mark: Add holdings manually or import a CSV
:white_check_mark: Separate short-term vs long-term holdings
:white_check_mark: Calculate true zakat based on the current assets of the company

It’s designed to be really quick and easy to use so you can go from feeling :exploding_head: to :relieved: about your zakat.

Love it? Hate it? Let us know in the comments below.

8 Likes

It looks quite good. Just not very clear for me what is meant by assets.
As far as I understand, we shall calculate Zakat on the earnings (actually I prefer free cash flow) and also on zakatable assets (mainly cash).
I have compared your calculations with mine for AAPL and INTC. For Apple it was very similar but for INTC, your tool gave me very high figure.

Another thing, I thought the Zakat for the earnings would be 10% not 2.5% (like agriculture). It would be nice if you add religious references for the way of calculations.

Jazakom Allah Khayran.

its very helpful JazakAllah Khair. Can you please provide religious references for this method of calculation

I’ve been looking for something like this. I love it!!!. جزاك الله خير

May Allah accept your work and bless you all.

1 Like

Masha Allah it’s a great tool calculating Zakat in a very easy manner. Only thing just waana know out of curiosity, also for a better understanding, what’s the formula to calculate and the Zakat percentage for short term (active) and long-term (passive) holdings /stocks?

JazakAllah Khair to all Zoya team!

Salam Saad,

I assume Sheikh Joe is still advising Zoya team on Shariah compliance and Zakah calculations.

If Zoya is going to introduce Zakah calculations, which is awesome!! You also need to incorporate “Purification” calculation as well.

Secondly, based on our consultation with Sheikh Joe few years ago, he had advised that if your portfolio’s intention is to generate passive Income by investing in companies that pay dividends, in such cases the Zakah calculation is based on the income (the way you are calculating Passive investment Zakah).

However, if your portfolio’s intention is growth of capital by investing in companies that do not pay dividends, in such cases the Zakah calculation is based on the value of the portfolio (the way you are calculating Active Investment Zakah)

Since Zakah is an obligation, it is extremely important to ensure the calculation methodology is comprehensive (includes Purification as the first step, as Sheikh Joe does/shows in his Zakah calculation book) and accurate (validate income vs growth or active vs passive).

Can you please expand on this or verify this with the Sheikh.

جزاك الله خير Sameer

2 Likes

Thanks for putting together this tool. I have a few thoughts on it below regarding the methodology:

  1. Zakatable base is being calculated as Current Assets. However my understanding is that debts should be deducted from the zakatable base, therefore at least current liabilities should be deducted? (and possibly long term liabilities as well?)

  2. The concept of active vs passive holdings is not very accurate in this context IMO. Stocks cannot be viewed as Active Holdings (عروض تجارة) because they are simply not tangible. It cannot be treated like other assets such as real estate where if the intent was to flip real estate (i.e. buying and selling apartments) then you would be liable for the full value of the real estate (which is a tangible asset) - and also in this case btw the arbitrary duration of 12 months is not meaningful - You are liable for active holdings no matter the duration as long as intent to sell exists. A stock on the other hand is not a tangible asset, it is simply a share of ownership in a company and therefore its value can only be attributed to its share in the assets less liabilities of such company. As for what was actually paid for that ownership stake that is a completely different story. I’m personally not sure how exactly this should be accounted for but I don’t think the approach you have now is accurate because of what I mentioned above.