How is zakah paid for commercial goods? Is it calculated based on the increase during the year? Can zakah be paid by goods?

Details of the Question

We have a hardware store. How should we calculate the zakah of the goods in the store?

The Answer

Dear Brother / Sister,

All kinds of goods that are bought and sold and that are kept in order to gain profit are commercial goods; therefore, it is necessary to pay zakah for them.  Real estate like houses, plots of land, shops, inns and public baths, things like dry goods, carpets, rugs and white goods, grains like wheat, barley, rice and lentil, metals like iron, copper and aluminum, and animals like sheep, cattle and horses are all commercial goods. 

First of all, it is necessary for the commercial goods to be owned for one year and to reach the amount of nisab for zakah. The nisab amount of gold and silver are used as a basis for commercial goods. Accordingly, the value of the goods at the end of the year is taken into consideration while calculating zakah for the goods that reach the nisab amount of 20 mithqals (85 grams) of gold or 200 dirhams (595 grams) of silver at the beginning of the year. The increase and decrease in the value during the year do not affect zakah. However, if the amount falls below nisab at the end of the year, zakah is not paid for it.

If a merchant goes bankrupt during the year or he has no goods or money left, the condition of passing one year is annulled and the obligation of zakah is removed.

According to Shafii and Malikis, the condition of reaching the amount of nisab for commercial goods is taken into consideration only at the end of the year. If the value of the goods falls under the amount of nisab at the beginning or in the middle of the year, the obligation of zakah is not affected. For instance, if the capital of somebody who starts business with a capital of 10 mithqals (42.5 grams) of gold at the beginning of the year reaches the amount of nisab one year later, zakah is paid from all of the goods without waiting for a year to pass for the amount that increased.

According to Hanbalis, it is necessary for the value of the commercial goods not to fall below the amount of nisab from the beginning to the end of the year to be subject to zakah. If the value of the goods falls below the amount of nisab during the year, the condition of passing one year is regarded to have failed and zakah is not paid. It is necessary for those goods to pass one year again after they reach the amount of nisab for zakah to be paid. (Yusuf al-Qardawi, Fiqhuz-Zakah, I/329-331)

If the goods that are sold or bought are changed with the same or different kinds of goods during the year, "the condition of passing one year" is not removed. It is necessary to pay zakah for them based on the calculation made at the end of the year. For example, if somebody who has nisab amount of construction iron at the beginning of the year sells them and buys bricks, and then sells them and buys cement, he needs to pay zakah by calculating them unless they fall below the amount of nisab at the end of the year.  

When the value of commercial goods are calculated, their value is determined based on the market conditions of the place where they. When their value is calculated, the purchasing price and the cost are taken into consideration, not the marketing or selling price. For, the selling price of a certain product generally changes based on the market conditions, the balance of supply and demand, and the state of the customer. This becomes definite only when the sale is realized. However, the product has not been sold yet and its exact selling price is not definite. On the other hand, the cost and the purchasing price are definite. Therefore, it is more appropriate and easier to take into consideration the cost or purchasing price of the commercial goods when their zakah is calculated.

The rate of zakah is one-fortieth for commercial goods as it is for gold and silver. The commercial goods are calculated based on gold or silver.  If the value of the goods does not reach the amount of nisab according to one of them and reaches according to the other, zakah is paid according to the one that reaches nisab. For instance, if the value of a product does not reach the amount of nisab based on gold but reaches based on silver, it is calculated based on silver and its zakah is paid.

The zakah of commercial goods can be paid by money or by the goods themselves. For instance, a person who buys and sells fabrics can pay zakah by money or fabrics. It is useful to take into account the needs of the poor while doing it. It is better to prefer the one that will be benefit the poor. When zakah for commercial goods is calculated, the debts are subtracted and zakah is paid based on the remaining amount.

(Mehmed PAKSU, İbadet Hayatımız-1)

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