How Do I Calculate Zakat on Inventory and Receivables in My Business?
Hanafi Fiqh
Answered by Mawlana Ilyas Patel
Question
How do I calculate Zakat on inventory and receivables in my home business? Should I use the selling price or the cost price for unsold inventory? Are unpaid shipped customer orders zakatable on my zakat date? If goods arrive two days before my zakat anniversary, must I include them?
Answer
I pray you are in good faith and health. Thank you for your question.
Generally, when calculating the net worth of trade goods in your possession, you should use their current market value.
Note that there are generally three valuation sets: (1) the cost or wholesale price, which is likely the price you paid to buy the goods; (2) the current market value; and (3) the retail price, which you can set as a business owner.
Unpaid Shipped Customer Orders
Unpaid shipped customer orders are not zakatable on your Zakat date, as you have not yet received the money.
Goods Arrive Before Zakat Date
If goods arrive before the Zakat date, they will be included in the Zakat.
[Ibn ‘Abidin, Radd al-Muhtar]
I would like you to read the valuable answers and links below. In sha Allah, you will receive guidance and direction.
Related
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I pray this helps with your question.
Wassalam,
[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani
Mawlana Ilyas Patel has received a traditional education in various countries. He started his schooling in the UK and completed his hifz of the Quran in India. After that, he joined an Islamic seminary in the UK, where he studied secular and Aalimiyya sciences. Later, he traveled to Karachi, Pakistan, and other Middle Eastern countries to further his education. Mawlana has served as an Imam in the Republic of Ireland for several years and taught the Quran and other Islamic sciences to both children and adults. He also worked as a teacher and librarian at a local Islamic seminary in the UK for 12 years. Presently, he lives in the UK with his wife and is interested in books and gardening.
