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Zakat On Stocks And Cash Deposits (CDs)
I have Stocks and CDs in my retirement account on which I get dividends and interest. How do I calculate zakat on these? Please advice.
Jazak Allah
Nazish
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2 Replies
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Zakat On Stocks And Cash Deposits (CDs)
updated 1 month, 1 week ago
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Pension/Retirement Fund is subjected to 10% production zakat, however, it only becomes due when you receive the pension.
As for Zakat on Cash Deposits (CDs) and Stocks in general:
If the Principal amount of your investment is effectively at your disposal (like in Savings Schemes & Cash Deposits) or if the principal is invested in a retail/trading business, then total wealth (including value of stock-in-trade in case of trading business) 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 or in the form of stocks and shares), 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 121490 • Reply 121494)
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