Business Zakat Calculator
Calculate zakat on business assets including inventory, receivables, and cash. Enter values for instant results with step-by-step formulas.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Business Zakat Calculator
Calculator
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Formula: Zakat = (Cash + Receivables + Inventory + Investments - Liabilities) x 2.5%
Worked example — Zakat Due: $2,375 per year ($198/month)
Formula
Zakat = (Cash + Receivables + Inventory + Investments - Liabilities) x 2.5%
Sum all zakatable business assets, subtract current liabilities and debts, then multiply by the 2.5% zakat rate. Zakat is only due if the net amount meets or exceeds the nisab threshold for a full lunar year.
Worked Examples
Example 1: Small Retail Business Zakat
Problem:A shop owner has $50,000 cash, $20,000 in receivables, $30,000 inventory, $10,000 investments, and $15,000 in liabilities. Nisab is $5,500.
Solution:Total assets = $50,000 + $20,000 + $30,000 + $10,000 = $110,000 Zakatable wealth = $110,000 - $15,000 = $95,000 Since $95,000 > nisab ($5,500), zakat is due Zakat = $95,000 x 2.5% = $2,375
Result:Zakat Due: $2,375 per year ($198/month)
Example 2: Startup Below Nisab
Problem:A new business has $2,000 cash, $500 receivables, $1,000 inventory, no investments, and $800 in liabilities. Nisab is $5,500.
Solution:Total assets = $2,000 + $500 + $1,000 + $0 = $3,500 Zakatable wealth = $3,500 - $800 = $2,700 Since $2,700 < nisab ($5,500), no zakat is due
Result:No zakat due — wealth is below the nisab threshold
Frequently Asked Questions
What is business zakat and how is it calculated?
Business zakat is an obligatory Islamic wealth tax of 2.5% levied on net business assets that meet or exceed the nisab threshold. It applies to cash balances, trade inventory at current market value, accounts receivable expected to be collected, and short-term investments. To calculate, you total all zakatable business assets, subtract current liabilities and debts due within the year, and then apply the 2.5% rate to the remaining zakatable wealth. The calculation must be performed at the end of a full lunar year (hawl) from when the wealth first reached nisab. Business zakat purifies commercial earnings and supports the community.
What business assets are subject to zakat?
Zakatable business assets include cash on hand and in bank accounts, trade inventory valued at current market price, accounts receivable that are expected to be collected, short-term investments and marketable securities, and raw materials intended for sale. Fixed assets used in business operations such as machinery, buildings, vehicles, and office equipment are generally exempt from zakat because they are not held for trade. Similarly, prepaid expenses and long-term assets not intended for resale are excluded. The key distinction is whether an asset is held for trading purposes or for operational use within the business.
What is the nisab threshold for business zakat?
The nisab is the minimum wealth threshold that triggers the obligation to pay zakat. It is based on the value of either 85 grams of gold or 612.36 grams of silver, whichever is lower. Most contemporary scholars recommend using the gold standard for business zakat, which at current market prices typically ranges between $5,000 and $6,000 USD. The nisab must be maintained for a full lunar year (approximately 354 days). If your net zakatable business assets remain at or above the nisab for the entire hawl period, zakat becomes obligatory at the 2.5% rate on the full amount, not just the portion exceeding the threshold.
How should inventory be valued for zakat purposes?
Trade inventory for zakat purposes should be valued at its current market selling price, not at the original cost or purchase price. This is the opinion held by the majority of Islamic scholars including the Hanafi, Shafi, and Hanbali schools of thought. If market value cannot be determined easily, then the wholesale replacement cost may be used as an alternative. Work-in-progress inventory should be valued at the cost of materials plus labor invested so far. Damaged or obsolete inventory should be valued at its realistic expected selling price. Raw materials intended for manufacturing goods for sale are also included in the zakat calculation at their current replacement cost.
Can zakat be paid in installments throughout the year?
Yes, many scholars permit paying zakat in advance through monthly or quarterly installments rather than in one lump sum at the end of the hawl year. This approach can ease the financial burden on business owners and provide a more consistent stream of support to zakat recipients. To do this, estimate your expected annual zakat obligation and divide by twelve for monthly payments. At the end of the hawl, recalculate your actual zakat due and reconcile any difference. If you overpaid, the excess counts as voluntary charity (sadaqah) or can be credited to the next year. If you underpaid, the remaining balance must be settled promptly to fulfill the obligation completely.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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