Fatwa #3190727 January 2015Australia
How should I calculate Zakāh on my dividends?
Question
My Question is regarding zakat on dividend and shares, I've been investing in Zakat for last 4 years with the intention of keep on purchasing shares to receive divdend in my retirement, I came across different Ulma's online with different views regarding zakat on dividend. My Question is:
Based on my intention, to hold my stocks forever, do I need to pay zakat on my stock portfolio value.
OR
Do I pay zakat only on my dividends(which some online Ulma say's 10% of dividend income).
OR
Follow the formula based on Meezan Bank Pakistan for share holders(intention to keep stock forever) which is Total Asset - Fixed Asset - Liabilities/ Number of Shares x 2.5/100 (based on this formula the zakat comes much lower then what am I paying)
Will really appreciate your answer in detail related to my situation.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
You may follow the formula as outlined by Meezan Bank Pakistan.[1] However, if the calculation becomes difficult, then you may consider paying Zakāh on the entire value of one’s stock portfolio.[2]
And Allah Ta’āla Knows Best
Bilal Mohammad
Student Darul Iftaa
New Jersey, USA
Checked and Approved by,
Mufti Ebrahim Desai.