Zakat on trade goods (Zakat Al-Urudh) is one of the most important types of Zakat, especially significant for merchants as it constitutes a major portion of their wealth. Understanding the rules of Zakat on trade goods is crucial for organizing the relationship between Zakat-eligible wealth and the needy, and determining how to distribute it to those in need.
Zakat on trade goods includes all commercial assets such as merchandise, inventory, equipment, commercial buildings, and other assets used in business. The Zakat amount is calculated at 2.5% of the value of these assets after deducting necessary debts and expenses.
In this article, we will explore the importance of Zakat on trade goods and its impact on society and the economy. We will also cover how to calculate it and its Islamic rulings, focusing on its role in achieving economic and social balance and ensuring mutual support in the community.
Additionally, the article will introduce Masarat Initiative for free education and training, which enables you to extend help to students in northern Syria by donating your Zakat money to them. This initiative provides systematic solutions to bridge the gap caused by declining education levels there, especially for those suffering from a lack of basic resources.
Definition of Zakat on Trade Goods
Firstly, we need to understand the linguistic meaning of the terms to know the true meaning of Zakat on trade goods. The term “Urudh” is the plural of “Ard,” referring to any wealth except gold and silver, named so because its value is not stable and can fluctuate. “Trade” means engaging in buying and selling for profit.
The term “trade goods” refers to wealth prepared for trade, if it falls under the category that requires Zakat like camels or clothes.
Conditions and Evidence for the Obligation of Zakat on Trade Goods
Conditions for the Obligation of Zakat on Trade Goods:
- The trade goods must reach the Nisab (minimum amount of wealth subject to Zakat), whether by themselves or in combination with other Zakat-eligible wealth.
- A lunar year (Hawl) must pass on these trade goods from the time of acquisition.
- The intention at the time of purchase must be for trade.
- The trade goods must be acquired through the action of the Muslim who is liable for Zakat, such as by purchase.
The evidence cited by most Muslim scholars, including Malik, Al-Shafi’i, and Abu Hanifa, for the obligation of Zakat on trade goods are as follows:
- The verse from the Quran: “O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth” (Quran 2:267).
- A Hadith from the Prophet Muhammad (peace be upon him), narrated by Samura bin Jundub (may Allah be pleased with him): “The Messenger of Allah (peace be upon him) commanded us to give charity from what we prepared for sale” (Narrated by Abu Dawood).
How to Calculate Zakat on Trade Goods and Its Nisab
Zakat on trade goods is calculated when it reaches the Nisab, which is the equivalent of 85 grams of gold. When a trader’s goods reach the Nisab amount in value, Zakat must be paid.
Zakat is calculated meticulously, with the trader assessing the value of their goods based on current market selling prices, not purchase prices.
If the trader has outstanding debts expected to be repaid, they should be included in the Zakat calculation. If the trader owes debts, these are deducted from the total. If the remaining amount still reaches the Nisab, Zakat of 2.5% must be paid on the total value.
How to Calculate Zakat on Trade Goods – Al-Azhar Method
The method for calculating Zakat on trade goods is:
- Assess the value of the goods prepared for sale at the wholesale price.
- Include other Zakat-eligible assets the trader possesses, whether they are cash, gold, or collectable debts.
- Deduct the debts the trader owes from their capital.
- Zakat is paid on the net capital if it reaches the Nisab (minimum amount).
- The Nisab is equivalent to 85 grams of 21-karat gold.
- The required Zakat on trade goods is 2.5% of the total Zakat-eligible assets.
- Zakat becomes obligatory after a lunar year has passed since acquiring the wealth or goods fully.
- Value the goods at the wholesale price when paying Zakat, and Zakat on trade goods should be paid in cash, according to the majority opinion.
Zakat on Trade Goods According to the Four Schools and Other Scholars
Ibn Uthaymeen and Al-Albani:
According to Ibn Uthaymeen, any item prepared for earning profit qualifies as trade goods and is subject to Zakat, including livestock, wood, iron, and land if bought and sold for trade.
Sheikh Al-Albani disagreed with the consensus of scholars, stating that there is no Zakat on trade goods, asserting that those who wish to give charity may do so voluntarily.
Al-Durar Al-Sunniya and Egyptian Dar Al-Iftaa:
In Al-Durar Al-Sunniya, Zakat on trade goods is based on the consensus of the Ummah’s scholars that items prepared for trade are subject to Zakat. Items not prepared for trade are not subject to Zakat on trade goods.
Maliki, Shafi’i, and Hanafi Schools:
All four major Islamic schools, Maliki, Hanbali, Shafi’i, and Hanafi, agree on the obligation of Zakat on trade goods. This is also the view of the majority of scholars.
How to Calculate Zakat on Trade Goods and Its Amount
Zakat on trade goods can be calculated by assessing the trader’s trade goods based on the selling price, not the purchase price.
Then, add the expected debts to be paid off and deduct any debts owed by the trader. If the total value reaches the Nisab, which is 85 grams of gold, Zakat of 2.5% of the total amount must be paid.
Types of Trade Goods Subject to Zakat
Zakat on Livestock in Trade Goods:
When livestock is prepared for trade, its Zakat is considered Zakat on trade goods, provided two conditions are met:
- The livestock’s market value reaches the Nisab, i.e., its total selling price in the market equals 85 grams of gold.
- The wealth completes a lunar year from the time of acquisition. If these conditions are met, 2.5% Zakat must be paid on the total value.
Zakat on Real Estate in Trade Goods:
Zakat on Trade Goods in Real Estate Sales
If a person buys a property intending to trade it, Zakat must be paid on it every year after it completes a lunar year. Zakat is calculated based on the property’s full value at a rate of 2.5%.
Zakat on Trade Goods Including Stocks and Bonds:
If stocks are acquired for trade, they must be treated as trade goods for Zakat purposes. If the Zakat year passes and the stocks remain in possession, their market value must be assessed, and 2.5% of the total value must be paid as Zakat. Any profits earned from these stocks must also be subject to Zakat.
Masarat Initiative for Online Education and Knowledge Dissemination in Syria
Refugees and displaced people suffer from a lack of basic resources and face significant challenges in obtaining quality education. They live in environments where education may seem like a distant dream, but with your support, these dreams can become a reality.
By donating your Zakat, you ignite the light of knowledge in the hearts of refugee children, orphans, and those with special needs. Become a catalyst for changing their lives and involving them in a brighter future. From this standpoint, Masarat Initiative invites you to donate to support our various educational programs, including:
- School Education: Ensuring refugee students, orphans, and those with special needs complete their basic education and transition to higher education.
- Student Activities: Enhancing and developing beneficiaries’ soft skills through diverse programs that encourage creativity and interaction.
- Academic Advising: Discovering students’ interests and guiding them towards career and academic paths that match their abilities and ambitions.
- Vocational Training: Preparing beneficiaries to enter the job market, especially in remote work fields that offer broad opportunities.
- Psychological and Technical Support: Providing necessary support to ensure continuity of education under favorable conditions, along with regular follow-up by the Student Affairs Department to achieve educational goals.
Your support for Masarat Initiative represents an opportunity to build a knowledgeable generation capable of facing challenges.
