What Types of Investments Are Subject to Zakat?

Investments in gold, silver, cash, commodities, shares, unit trusts, and equity investments purchased for profit or resale are Zakatable.

The following types of investments require Zakat:

• Precious Metals & Cash: Investments in gold, silver, and cash are subject to Zakat due to their intrinsic value and liquidity.
• Commodities: Any trade goods or commodities held for business purposes are also Zakatable.
• Shares & Equity Investments:
• If purchased with the intent of reselling for profit, the entire market value is considered for Zakat.
• If held primarily for dividends, Zakat applies only to the Zakatable assets within the company, such as cash reserves and inventory.
• Unit Trusts & Mutual Funds: Investments in unit trusts and similar funds that generate returns must be included in Zakat calculations.

Key Considerations:

• Investments should be assessed annually to determine Zakat obligations.
• Wealth intended for long-term holding versus trading affects the calculation method.
• Ensuring accurate Zakat payments helps purify wealth and supports those in need.

Hence, understanding which investments require Zakat ensures that wealth is distributed ethically. It fulfills religious responsibilities while fostering social and economic balance.

One meaningful way to direct your Zakat is by supporting initiatives that uplift vulnerable children through education, shelter, and care. A prime example is Pakistan Sweet Home, a renowned orphanage center providing holistic support to orphaned children across the country.

And Allah knows best!

Other Zakat Questions You May Have

• How to Fulfill Missed Zakat Obligations?

• How to Correct Zakat Given Without Proper Calculation?
• Are Non-current Liabilities Deductible in Zakat Calculation?
• Should Inflation Be Accounted for in Missed Zakat Payments?
• How Are Personal and Long-Term Debts Treated in Zakat?
• Do Fluctuations in Wealth Impact Zakat's Obligations?