How is zakat on business calculated? Add business cash, stock at its current selling value and money customers owe you that you expect to receive, subtract supplier bills and other debts due now (where your madhab allows), and pay 2.5% if the total reaches the nisab.
The Business and Money owed to you boxes are open below. Want to see how it works first? Press Fill in the cloth shop example and the calculator loads the figures from the worked example on this page; then replace them with your own. When you are done, download the PDF report to keep a record of what you entered.
What counts and what does not
- Counted: stock and raw materials for sale (at sale value), cash and bank balances of the business, good receivables.
- Not counted: shop, machinery, vehicles and furniture used to run the business. Plots and flats bought to sell are stock, while a building you rent out is not; see zakat on property for plots, houses and rent.
- Doubtful debts: not counted now; pay zakat on them when they are received.
- Supplier bills: subtracted in the Hanafi, Maliki and Hanbali calculations, not in the Shafi’i or Ahl-e-Hadith ones.
Worked example: a cloth shop
Bilal owns a cloth shop in Lahore. On his zakat date:
| Item | Amount | Counted? |
|---|---|---|
| Stock at today’s selling price | Rs 12,00,000 | Yes |
| Cash in the till and business bank account | Rs 3,00,000 | Yes |
| Customers who will pay (udhaar) | Rs 2,00,000 | Yes |
| A customer who has stopped paying | Rs 50,000 | No, until received |
| Shop fittings, sewing machines, delivery van | Rs 8,00,000 | No (fixed assets) |
| Supplier bills due now | Rs 4,00,000 | Subtracted where the madhab allows |
- Hanafi, Maliki and Hanbali: Rs 12,00,000 + Rs 3,00,000 + Rs 2,00,000 − Rs 4,00,000 = Rs 13,00,000. Zakat is 2.5% = Rs 32,500.
- Ahl-e-Hadith: the supplier bills are not subtracted, so 2.5% of Rs 17,00,000 = Rs 42,500.
- Shafi’i: the supplier bills are not subtracted either, but the Shafi’i calculation uses the gold nisab, about Rs 31,67,074 today. Rs 17,00,000 is below it, so nothing is due. Only a Shafi’i who follows a scholar using the silver nisab would pay 2.5% of Rs 17,00,000 = Rs 42,500.
If the Rs 50,000 is recovered later, Bilal pays zakat on it then. Any personal savings and gold go in the same calculation, as zakat is worked out on everything a person owns.
Worked example 2: a wholesaler with a bank loan
Sana runs a wholesale grocery business in Karachi and follows the Hanafi madhab. On her zakat date her accounts show:
| Item | Amount | How it is treated |
|---|---|---|
| Stock in the godown (what it would sell for wholesale today) | Rs 40,00,000 | Counted |
| Business bank account and cash | Rs 6,00,000 | Counted |
| Shops that buy on credit and pay within the month | Rs 9,00,000 | Counted |
| Supplier bills due within the month | Rs 7,00,000 | Subtracted (Hanafi) |
| Five-year bank loan for a delivery truck: Rs 12,00,000 left, of which Rs 3,00,000 falls due in the next 12 months | Rs 12,00,000 | Only the Rs 3,00,000 due this year is subtracted |
| The truck, racks and weighing scales | Rs 25,00,000 | Not counted (fixed assets) |
Zakatable assets: Rs 40,00,000 + Rs 6,00,000 + Rs 9,00,000 = Rs 55,00,000. Debts subtracted: Rs 7,00,000 + Rs 3,00,000 = Rs 10,00,000. Net: Rs 45,00,000, and zakat at 2.5% is Rs 1,12,500.
Why not subtract the whole Rs 12,00,000 loan? Many contemporary Hanafi scholars, including Mufti Muhammad Taqi Usmani in his writing on zakat on business debts, say that long-term loans taken to buy fixed assets should not wipe out a trader’s zakat; only the part payable in the coming year is subtracted. Enter it in the calculator under Debts / Bills → Instalments due in the next 12 months, and the supplier bills under Unpaid supplier bills. In the Shafi’i and Ahl-e-Hadith calculations neither is subtracted, so Sana would pay 2.5% of Rs 55,00,000 = Rs 1,37,500.
Step by step on your zakat date
- Count the stock, or take it from your stock register, and price it at what it would sell for today.
- Add the business cash in hand and every business bank or wallet balance.
- List customers who owe you. Count those who will pay; leave out the ones who have stopped paying.
- List what the business owes that is due now: supplier bills, salaries, rent, tax, and the next 12 months of any long-term loan.
- Enter all of it, with your personal cash and gold, in the calculator, choose your madhab and pay 2.5% of the net figure if it reaches the nisab.
Valuing stock
- Finished goods: the price you would sell them at on the zakat date. A wholesaler uses the wholesale price, a retailer the retail price; many scholars accept the price you could sell the whole stock for in one go.
- Raw materials that will become goods for sale are counted. Materials used up in running the business (fuel, cleaning supplies) are not.
- Old or damaged stock is counted at what it would really fetch, which may be far below cost.
- Online sellers: stock held in a warehouse or with a fulfilment service is still yours and is counted. Money held by a marketplace that will be paid out to you is a receivable.
Partnerships and companies
In a partnership each partner pays zakat on their own share of the stock, cash and receivables, minus their share of the business debts where their madhab allows it. A partner who cannot get exact figures can estimate from the latest accounts. For shares in a listed company, enter the market value of shares you hold to sell; shares held long term for dividends are a separate question, so ask your scholar. A sole trader simply adds the business figures to their personal ones.
Keep your records year to year
Use Save data file to keep your figures on your own device and open them next year. Nothing is stored on our server. Pick a fixed zakat date, such as 1 Ramadan, and take stock on the same date every year; the zakat date calculator can remind you. Animals bought to sell are trade goods too; animals kept for breeding and grazing are covered by the livestock calculator.
Frequently asked questions
Is zakat due on shop equipment?
No. Fixed assets used to run the business are not zakatable; only stock for sale, cash and receivables are.
Should stock be valued at cost or sale price?
Most scholars say at its current market (selling) value on the zakat date.
Karobar ki zakat kaise nikalein?
Zakat ki tareekh par dukaan ka maal bechne wali qeemat par, karobari naqdi aur jo udhaar wapas milne ki umeed hai, sab jorein. Hanafi, Maliki aur Hanbali maslak mein supplier ke bill minus karein. Phir kul ka 2.5% ada karein. Dukaan, machinery aur gaari par zakat nahi.
Is a business loan deducted from zakat?
Supplier bills and other debts due now are subtracted in the Hanafi, Maliki and Hanbali calculations. For a long-term loan, many contemporary scholars subtract only the instalments due in the next 12 months. The Shafi'i and Ahl-e-Hadith calculations do not subtract debts.
Is zakat due on money customers owe me?
Yes, on money you expect to receive. Debts that are unlikely to be paid are left out until they are actually received.