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Zakat On Investment
I invested some money in an investment company. For which they give me returns. Since the company I invested are Muslim brothers, they took an average amount for returns and fixed the return price.
1) Is this fixed return comes under Riba?
2) Should I pay Zakat on the amount I invested or just on the returns?
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6 Replies
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Zakat On Investment
updated 2 years, 5 months ago
3 Members
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6
Replies
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Return on investment is not riba. Riba is only in loan transactions. You are liable to pay 2.5% Zakat on the total current value of your assets, including investments. You are also liable to pay 10% Zakat on the returns. This assumes that you have met the nisab.
You may enter appropriate numbers in our Zakat Calculator after reading the description for each box. When you reach the end, it will generate a statement showing you exactly what you owe after any applicable deductions, and what percentage was applied to each category. It’s also a great way to learn the sharia of zakat.
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Jazakallahu Khairan Haroon. I also understand from Ghamidi Sahab is that am liable for zakat as soon as I get this returns. Since am recieveing it weekly, Should I pay Zakat on it weekly? Or can I pay once in a year, when I do my taxes?
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To add that, By Nisaab, you mean that I have met the Nisaab only in that returns.. or I have the met Nisaab which includes all my assets? Jazakallahu Khairan
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For your first question please see:
Discussion 70023 • Reply 70025
Niisab for assets is the minimum amount below which your state exempts tax or zakat on assets. If your state does not provide a nisab then you can use the standard nisab of 642 grams of silver or equivalent value.
Nisab for production / earnings is the minimum amount below which your state exempts tax or zakat on earnings.
It would be much easier for you to calculate your Zakat using the Zakat Calculator by entering appropriate numbers in the designated boxes.
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Jazakallahu Khairan Haroon. I also understand from Ghamidi Sahab is that am liable for zakat as soon as I get this returns. Since am recieveing it weekly, Should I pay Zakat on it weekly? Or can I pay once in a year, when I do my taxes?
Thank you heaps for answering and suggesting the calculator.
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Payment of Zakat on production can be done yearly (Please refer to Faisal Sahab’s response shared above: Discussion 79119 • Reply 79124).
Whether the investment and resulting returns fall in the category of production or not, depends on the nature of business and on the availability of funds. To understand Zakat applicability on Investments, please refer to the responses of Ghamidi Sahab shared in the following thread:
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