How to Calculate Zakat on Work-in-Progress and Raw Materials?

When calculating Zakat on work-in-progress and raw materials, it’s important to value each category correctly to ensure accurate calculation. 

Here's how you can approach this:

• Raw Materials:
• Raw materials should be valued at their current market value for Zakat purposes.
• If determining the market value is not feasible, use the cost price as an alternative.
• Example: 

Let's assume the value of raw materials is PKR 50,000. If the market value is difficult to determine, you can use the cost price as a fallback.

• Work-in-Progress:
• Work-in-progress refers to partially completed goods still being manufactured.
• These should be valued at their current market value. This valuation should reflect the price these goods would fetch if sold in their current state.

• Example: 

Suppose you have a product that is 50% completed, and its estimated retail price when finished is PKR 200,000. The work-in-progress value would be PKR 100,000 (50% of the finished value).

• Finished Goods:
• Finished goods are fully completed and ready for sale.
• For Zakat, these goods should be valued at their current retail price. This is the amount you would sell the product for in the market.
• Example:

If you have fully manufactured goods with a retail value of PKR 300,000, then that would be the value to use for Zakat.

Formula for Zakat on Inventory:

To calculate Zakat due on inventory, the following formula can be used:

For this example:

• Raw Materials: PKR 50,000
• Work-in-Progress: PKR 100,000
• Finished Goods: PKR 300,000

Total value of inventory = PKR 50,000 + PKR 100,000 + PKR 300,000 

= PKR 450,000

Zakat Due = PKR 450,000 × 2.5% = PKR 11,250

So, the Zakat due on the inventory would be PKR 11,250.

By giving your Zakat wisely, you ensure that it supports those in need in the most impactful way. If you're looking to support an orphanage in Islamabad, Pakistan Sweet Home stands as a trusted place where your contribution helps vulnerable children find hope and a brighter future.

And Allah knows best!

Other Zakat Questions You May Have

• Is Zakat Payable on Unpaid Invoices for Sold Goods?
• How to Determine the Zakat Value of Damaged Goods?
• Is Zakat Applicable to Operational Fixed Assets?
• Is Zakat Due on Land Bought for Personal Use or Investment?
• Is Zakat Due on Earnings from Driving Lessons?
• Are eBay Resale Items Zakatable After 6 Months?