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Atta-ur-Rehman

Is Zakat Due on the Shares I Buy and Sell Daily for Short-Term Profits?

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Yes, Zakat is due on the shares you buy and sell daily for short-term profits.

According to Islamic principles, if the shares are purchased with the intention of resale and seeking profit, they are treated as tradable goods (merchandise). In this case, the entire value of the shares is subject to Zakat, not just the profits earned from their sale.

This means that at the time Zakat becomes due, you are required to calculate Zakat on the current market value of the shares you hold. This applies regardless of whether the shares have been sold or not.

For individuals involved in frequent trading or short-term investments, the calculation should be based on the total value of the shares held on the Zakat due date. The rate of Zakat is 2.5%, and it applies to the full market value of these shares.

This ruling aligns with the principles of Zakat on business assets, where the intention behind acquiring an asset (in this case, shares) determines its Zakatability.

It is essential to regularly monitor and assess the value of the shares on your Zakat calculation date to ensure accurate compliance. If you are unsure about the specific details or the market value of your shares on the Zakat due date, seek guidance. It may be helpful to consult a financial advisor or an Islamic scholar to assist with the calculation process.

Thus, any shares bought and sold for short-term trading to make a profit are entirely subject to Zakat based on their current market value at the time Zakat is due. This ensures that your wealth is purified, and you fulfill this important pillar of Islam as prescribed.

And Allah knows best!

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WRITTEN BY

Atta-ur-Rehman

Atta-ur-Rehman, a specialist in Fiqh from Fazal-Jamiat-ul-Uloom-ul-Shariah, Jama'at ul-Umar Karachi, is an expert in Islamic jurisprudence. His expertise spans various aspects of Shariah, including Zakat, financial rulings, family laws, and ethical guidance in everyday life. With a deep understanding of Islamic principles, he provides a reliable insights into matters of faith, worship, and personal obligations.