Refresher & Advanced · Worship Refresher

Zakah on Various Assets and Incomes

Explore zakah obligations on inherited jewelry, investments, company shares, and specific incomes.

3 questions · Hard · about 4 minutes

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3 questions, about 4 minutes.

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1. How is the extra percentage taken by a managing partner treated for zakah?

  • As profit connected to capital, subject to zakah after a year even if not divided. (correct answer)
  • As a fixed salary that is never zakatable.
  • As money that is zakatable immediately when earned.
  • As non-zakatable compensation because it came from management work.

Why

A partner who invested capital and receives an extra percentage of profit for managing the company is treated as a partner, not as an employee receiving a fixed salary. His share of company zakah is calculated on the company’s zakatable assets, such as cash, trade goods, and recoverable debts. Profits connected to the capital are zakatable with the capital. The extra percentage for management is also zakatable after one full year, even if the profit has not yet been divided, because it is profit from capital.

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2. Who is responsible for zakah on company shares?

  • The shareholders, unless the company validly pays zakah on their behalf. (correct answer)
  • Only the company, in every case.
  • Only the government, even if it does not collect zakah.
  • No one, because shares are not wealth.

Why

Zakah on shares is obligatory upon the owners of the shares. The company may pay on their behalf if its constitution states that, the board decides it, local law obliges it, or shareholders authorize it. When the company pays zakah, the shareholders’ wealth may be treated collectively like the wealth of one person, based on the principle of khultah. If the company does not pay, then shareholders must pay zakah on their own shares according to whether they hold them for annual profits or for trading.

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3. How is zakah paid on shares in service companies such as hotels or transportation companies when they are kept for returns?

  • Zakah is due on the returns and profits if they reach nisab and a full Hijri year passes. (correct answer)
  • Zakah is due every year on all equipment, vehicles, and buildings used by the company.
  • Zakah is due only when the shares are sold.
  • Zakah is never due on any profit from service-company shares.

Why

Shares bought for trading are zakatable at their market value every year regardless of company type. But shares kept for returns are treated according to the company’s nature. For service companies, such as hotels and transportation companies, zakah is due on the returns and profits only, if they reach the nisab by themselves or when added to other wealth and a full Hijri year passes. Equipment, tools, furniture, vehicles, and buildings used for service operations are not zakatable in themselves.

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A note on these answers

These questions are for learning and self-testing. Explanations are drawn from the sources linked on each question and are not a fatwa. For a ruling on your own circumstances, please consult a qualified scholar.

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