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Zakat On Shares — Follow Up Question 2
Your reply:
‘Share is your participation in a pool of investments. Your share is your invested money. It is consumed, and then it is regenerated through profit…..Therefore, investment is not considered a means of production but means of productions are bought with it.’
When means of production are bought with money that is the literal definition of investment. Consider person A and person B are doing partnership by bringing 5 million each. They bought factory with 5m and plant with 5m. Now will person A and person B pay zakat on 5m ‘consumed’? The answer is no.
In summary:
Person A’s share of investment: 5m zakat: exempt
Person B’s share of investment: 5m zakat: exempt
Same thing happens when a person buys a share on stock market. He is basically investing in means of production of the company’s plants, factory etc. Please comment?
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1 Reply
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Zakat On Shares — Follow Up Question 2
updated 1 week, 2 days ago
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When you buy a a machine, you own it and it produces which you sell and make profits. You cannot convert your machine into money. This is not the case with investment. You don’t own a machine or thing. You don’t know if your money is used in buying a means of production or paid in utility bills, etc. You can take your money back anytime, according to the laws or SoPs. Therefore investment is not counted as means of production. Economics treat them differently.
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