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.

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?