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Subject - Zakat

Zakat On Shares

Date: 17 SEP 2022
Answered By: Management


Is Zakat payable on Shares


As per the available information, generally two opinions are prevailing as for Zakat on listed shares is concerned. One opinion is that, if the investor is intending to hold shares for short-term gains, then Zakat is applicable on the market value of the shares held in the portfolio on the (Zakat) record date, every year, as long as they remain in the investor’s portfolio. The second opinion is that Zakat is not payable at all on listed shares themselves, if the intention is to hold them for a long term.
TASIS considers shares listed on the stock exchange as liquid investments. Irrespective of the intention of the investor to hold the investments for long term, it believes that in the matter of Zakat on marketable (listed) shares which are subject to daily fluctuations in value, there is no real basis for discrimination among shares on the basis of period of holding as the same may change at any time as a result of price movements. Further, Zakat is a religious obligation which is intended to provide for the needy and can be and has been enforced by (Islamic) states in times past. No tax regime can be based on the intangible intention of a tax-payer, particularly if such discrimination tends to give a large unfair advantage to the tax-payer. Hence, this is a pointer to the unsustainability of treating Zakat on listed shares differently based on the intention of the Zakat- payer.
TASIS advises investors to pay Zakat on listed shares as per their current market price on the day of calculation, irrespective of whether they were intended to be held from a long-term perspective or a short term one.

Allah Knows Best...