Do Trade Receivables Qualify as Zakatable Assets?

Yes, trade receivables are subject to Zakat.

In Islamic finance, determining their status for Zakat purposes is essential.

Key Points:

• Trade Receivables as Zakatable Assets:
• When goods are sold on credit, the receivables replace a Zakatable asset—trade stock.
• Since trade stock is subject to Zakat, the outstanding balance from credit sales retains the same ruling.
• Reasoning Behind Zakat on Receivables:
• Trade stock represents wealth intended for commerce.
• Even if payment is pending, the receivable holds the same financial weight as the stock itself.
• Just as Zakat is due on inventory, it is also due on the equivalent value of trade receivables.
• Conditions for Zakat on Receivables:
• Zakat is payable only when the debt is expected to be recovered.
• If there is uncertainty or a risk of non-payment, scholars advise delaying Zakat on that portion until received.
• For debts that are likely to be collected, the full amount should be included in the Zakat calculation.

Thus, trade receivables qualify as Zakatable assets because they replace trade stock, which itself is subject to Zakat. As long as the amount is recoverable, it must be accounted for in one’s Zakat calculation.

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Other Zakat Questions You May Have

• How Does a Business Asset Qualify for Zakat Purposes?
• Is Zakat Applicable to Stock and Inventory?
• Is an Asset Purchased for Personal Use Liable for Zakat?
• How to Calculate Zakat on Grocery Store Inventory?
• Can Benefits from a Zakatable Asset Change Zakat Payments?
• What Types of Goods in Shops are Subject to Zakat?