Q. I am a businessman and pay zakaat at the beginning of Ramadhan. I total all cash, jewellery and debtors and subtract the creditors to get my zakatable income. With regards to the business stock, I have heard two opinions. Many have mentioned that you have to calculate it at the cost price. Many have also mentioned that it has to be calculated at market price. I will appreciate it if you can clarify this matter for me. I will appreciate a detail response including the hanafi school’s verdict and whether there are differences of opinions.
A. With respect to the business stock, it must be calculated at the market price. This is the accepted verdict of the Hanafi Mazhab as recorded in many of the authentic and reliable books of Fiqh.
Besides being the established verdict of the Hanafi Mazhab, it is also the view of the majority of scholars. In this regard, Dr. Yusuf Al Qardawi has written the following under the topic of ‘Pricing of stock for Zakaat Purposes’.
He writes ‘The majority view is to use current prices on the due date of Zakaat. This is also reported from the Tabi’ee Scholar, Jabir in Zaid. Evaluation is done according to the price on the day Zakaat becomes due. (Fiqh az Zakat (English) pg. 218)
In Raddul Muhtar, it is mentioned that ‘Consideration will be given (to the price) at the time when Zakaah is being given and upon this is Ijma’. (Radul- Muhtar. Chapter of Zakaah). Similar references and quotations are made in Fatawa Al Hindiyah and Al Bahr Ar Ra’iq.
In Fatawa Haqqqanniya, it is written, ‘Consideration will be give to the present Market value for items of trade (stock of trade) (Fatawa Haqqaaniya Vol. 3 pg. 542).
In Fatawa Darul Uloom Deoband, the following is written, ‘Consideration will be given to that price of goods for trade which is present in the market at the time of giving Zakaah’. (Fatawa Darul Deoband (Jadeed) vol. 6 pg.144).
Mufti Taqi Usmani has also clearly indicated the same answer by stating, ‘Zakaah is always payable on the current market price of each Zakaatable asset’. This answer was given by the respected Mufti when he was asked, ‘What should be the basis of valuation of our stock for the purpose of Zakaah?’. (Contemporary Fatawa by Mufti Taqi Usmani pg 93).
From these quotations, it becomes clear that with respect to business stock, the present market price must be taken when a valuation is done for paying Zakaah.
And Allah knows best.
Mufti Waseem Khan