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Zakat On Investment
Aslam o alikum
I gave money to someone for investment. Now how i will pay zakat from that money.
Did i pay zakat only from profit which i invested or i pay zakat as a whole profit+invested money.
And in which percentage.
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4 Replies
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Zakat On Investment
updated 2 years, 7 months ago
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If the Principal amount of your investment is effectively at your disposal (like in Savings Schemes) or if the principal is invested in a retail/trading business, then both the Principal amount and the Profit you receive are subject to Zakat on Asset/wealth at 2.5% at year-end. However, if Principal amount is tied up (usually in the form of means of production), then Principal can be considered as means of production and profit can be considered as a production, to which production zakat percentages will be applied (5%, 10% or 20%) as soon as production happens, provided the amount is above Nisab Threshold.
Please also note that even if you pay Zakat on production/earnings at 10%, you’re still under obligation to pay Zakat on Assets/Savings at 2.5% at year-end if your wealth is above Nisab (Details on Law of Zakat: Discussion 58129 • Reply 58137).
Please refer to the following responses of Ghamidi Sahab:
Discussion 50318 • Reply 50554
Discussion 50318 • Reply 50553
Please also refer to the following response by Ghamidi Sahab from 1:16:39 to 1:18:12
https://www.youtube.com/live/apcKbzBbQow?si=tIGyqeFPN-AgDk9C&t=4599
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Aslam o alikum
Umar brother what will be the nisab?
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Nisab for production / earnings is the minimum amount below which your state exempts tax or zakat on earnings.
Nisab for assets is the minimum amount below which your state exempts tax or zakat on assets. If your state does not provide a nisab for assets then you can use the standard nisab of 642 grams of silver or equivalent value.
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Please also refer to the video below from 27:15 to 28:43
Sponsor Ask Ghamidi
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