Home Zakat Information 12.6 Business Merchandise Inventory
12.6. Business Merchandise Inventory
AddThis Social Bookmark Button

 

Business merchandise inventory is normally acquired for the purpose of resale. In such a case, the asset qualifies for Zakat purposes. Zakat must be paid on the fair market value calculated as at the end of the relevant Zakat year. In arriving at the fair market value of the merchandise inventory, the trader is not obliged to compute the retail selling price of each item. He may fix a price based on the original cost price plus an estimated overall average mark up for the business concerned. He may even fix a bulk price for his merchandise inventory as a composite whole being the price he would receive if his entire merchandise inventory were sold in the open market at once. The price so determined would, having regard to inflation, invariably exceed the original cost price. It must be noted that, in the case of the manufacturer of goods, the merchandise inventory would comprise both raw material (e.g. fabric) and the finished goods.
This requires a fourth of a tenth (2.5%) Zakat to be paid on them, when they remain a full year without decreasing to zero. The minimum amount of the value of business merchandise that requires Zakat to be paid is the same as gold and silver, and the merchant could use either standard to estimate how much Zakat he should pay.

 

<<Prev
12.5 Stock Options

Next>>
12.7 Private Companies, Corporations,
and Partnerships

 

 

Sitara-e-Isaar Awarded to Hidaya Foundation

The sister organization of Hidaya Trust, Hidaya Foundation was awarded Sitara-i-Eisaar (Star of Sacrifice) by the Government of Pakistan, in recognition of the results-oriented relief efforts of both the organizations during the 2005 earthquake in Pakistan. It was awarded during a special ceremony held at the Embassy of Pakistan in Washington, DC.

In Keeping with our commitment to the communities in which Hidaya Trust operates, it hires its work force as an equal opportunity employer.  It means that employment decisions are based on merit and business needs and not on race, color, status in the society, ancestry, sex, age, religion, creed and marital status.