Trade Zakat: Definition, Benefits, and How to Calculate It

Islam provides comprehensive guidance for all aspects of life, including business affairs. One of these is trade zakat, which is an obligation for every Muslim engaged in buying and selling activities. This is not just a financial duty but also a way for Islam to maintain social and economic balance.

Let’s explore more about trade zakat, its benefits, and how to calculate it!

What is Trade Zakat?

As explained on the BAZNAS website, trade zakat is a type of zakat taken from business assets—wealth acquired through trade or buying and selling activities with the intention of making a profit.

Like other types of zakat, trade zakat is obligatory for those who meet the established conditions and requirements.

Regarding how it should be paid, scholars have differing opinions. According to Rumaysho, the majority of scholars believe that trade zakat should be paid in monetary value (cash).

Meanwhile, Imam Abu Hanifa and Imam Shafi’i hold the view that zakat on trading goods may be paid either in the form of goods themselves or their equivalent monetary value.

Ibn Taymiyyah, on the other hand, suggests choosing the option that is most beneficial for the zakat recipients—whether in the form of goods or cash.

Benefits and Wisdom of Trade Zakat

Trade Zakat: More Than Just a Financial Obligation

Trade zakat is not merely a financial duty; it also brings numerous benefits and wisdom, both for business owners and society as a whole. Below are some of the benefits of trade zakat as explained in the Qur'an and Hadith:

• Redistributes wealth from those who are more capable to those in need, helping to reduce social inequality.

• Purifies and cleanses wealth, protecting its owner from greed and selfishness.

• A way to draw closer to Allah, expressing gratitude for His blessings.

• Encourages social awareness, fostering empathy and generosity toward the community.

• Brings blessings (barakah) to businesses, strengthening their foundation and ensuring they operate with integrity and righteousness.

Also Read: Zakat Fitrah – Definition and Payment Guidelines

Legal Ruling and Conditions for Trade Zakat

Not all trading businesses are subject to zakat. Below are the conditions that make a business obligated to pay trade zakat:

1. Muslim and of Sound Mind

It is obligatory for every Muslim who is of sound mind and engaged in business or trade to pay zakat on their earnings—provided they meet the nisab (minimum threshold) and haul (one-year ownership period), which will be explained further.

2. Personally Owned Trading Goods

The trading goods must be personally owned, not belonging to someone else or held in trust. Ownership can be acquired through profit-seeking transactions (mu'awadhat) such as buying, selling, and leasing, or through non-commercial means (tabaru'at) such as gifts and inheritance.

3. Intended for Trade

The goods must be originally intended for trade, as every action is judged by its intention. In this context, commerce (tijarah) is also considered an act, so there must be a clear intention to buy and sell the goods, just as intention is essential in other religious practices.

4. Meeting the Nisab Requirement

Nisab is the minimum threshold of wealth required for zakat to be obligatory, which is equivalent to 85 grams of gold. If the value of trade assets reaches or exceeds this nisab, zakat must be paid at a rate of 2.5% of the total trade assets.

For example, if the current price of gold is Rp 1,678,000.00 per gram, the nisab for trade zakat would be Rp 142,630,000.00. Therefore, if the total value of trade assets meets or exceeds this amount, zakat must be fulfilled.

5. Owned for One Full Haul (Year)

Haul refers to the completion of one full lunar year (Hijri calendar). Trade zakat is only obligatory if the business assets have been held for a full year.

Typically, zakat is paid at the end of the business’s financial year or during a specific period. Some scholars recommend paying trade zakat in Ramadan, but it can be paid at any time as long as the haul requirement is met.

Also Read: Cash Flow Issues During Eid? Solve Them with the Same-Day Settlement Feature and 0% MDR in the Labamu App!

How to Calculate Trade Zakat

Trade assets subject to zakat can be calculated using the following formula:

Trade Zakat = 2.5% × (Current Assets - Short-Term Liabilities)

Where:

• Current assets can be calculated by adding: 1)Value of Trade Goods (based on market value at the time of haul, not the purchase price), 2) Available Trade Cash, and

  3) Short-Term Receivables.

• Short-term liabilities are debts that are due within the current year, not the total outstanding business debts.

• If the value of Current Assets minus Short-Term Liabilities is greater than or equal to the Nisab (equivalent to 85 grams of gold), then trade zakat is calculated at 2.5% of that amount.

  
  

To better understand how to calculate it, let's look at the following two scenarios.

The first scenario involves Ms. Untung's business, which is not required to pay trade zakat.The second scenario involves Mr. Untung's business, which is obligated to pay trade zakat.

Scenario 1: Not Subject to Trade Zakat

Ms. Untung opened a bakery in Ramadan 1445 H and is considering whether she needs to pay trade zakat in Ramadan 1446 H. The current financial condition of her bakery is as follows:

• Value of goods for sale = Rp 50,000,000.00

• Available business cash = Rp 15,000,000.00

• Accounts receivable = Rp 12,500,000.00

• Due liabilities = Rp 7,500,000.00

If the current gold price is Rp 1,678,000.00 per gram, then the nisab is calculated as:85 grams × Rp 1,678,000.00 = Rp 142,630,000.00

Thus, the calculation of Ms. Untung's trade assets is as follows:

Since the value of Bu Untung's goods for sale is below the nisab threshold, her bakery is not subject to the obligation of trade zakat.

Scenario 2: Subject to Trade Zakat

In the same year, Pak Untung also opened a coffee shop. It is known that his total current assets over the past year amount to Rp 300,000,000.00, with short-term liabilities due in Ramadan 1446 H totaling Rp 25,000,000.00.

Thus, the value of Pak Untung's coffee shop merchandise is calculated as follows:

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Since the value of Pak Untung's merchandise exceeds the nisab, his coffee shop is obligated to pay trade zakat. The amount of trade zakat to be paid is calculated as follows:

So, that’s how you calculate trade zakat! Since you’re already using Labamu, you can check your current financial reports to determine whether your business is obligated to pay trade zakat.

Now you see how beneficial this app is, right? Not only does it help you earn more, but it also brings blessings to your business by ensuring you fulfill your zakat obligations according to Islamic teachings.

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