Zakat on business stock and receivables: a simple guide for shopkeepers

Most shopkeepers work out zakat on the business once a year, on a fixed date: the selling value of stock, plus cash, bank balances and the money customers will genuinely pay, minus debts that are due soon. If the result is above the nisab, 2.5% of it is given as zakat. That is the common method taught by many scholars. Details differ between schools and situations, so treat this as a plain-words explanation and confirm your own case with a scholar you trust.

Step 1: fix your zakat date

Choose one date in the Islamic year and keep it every year. Many shopkeepers use 1 Ramzan because the shop is busy before Eid and they want to give early. What matters is that the same date is used each year, and that your figures are taken on that date, not averaged.

Step 2: what to count

• Stock for sale: everything on shelves and in the godown that you intend to sell, at its current value on the zakat date. The common view uses selling value; some scholars allow wholesale value.
• Cash: in the drawer, at home for the business, and with staff.
• Bank and wallet balances: business accounts, JazzCash, Easypaisa.
• Good receivables: udhaar customers are likely to pay. Debts you doubt will ever be paid are usually left out until received.

Step 3: what not to count

• The shop itself, shelves, fridges, scales, the motorcycle and other things used to run the business.
• Personal household items.

Step 4: subtract what you owe soon

Many scholars allow you to subtract debts that are due now or soon: supplier credit, rent due, salaries due. Long-term loans are treated differently by different scholars.

Step 5: compare with the nisab and apply 2.5%

The nisab is the minimum amount of wealth on which zakat is due. It is linked to the value of gold or silver, and many in Pakistan use the silver nisab because it is lower. Check the current figure announced each year. If your net total is above it, 2.5% is the zakat.

A worked example

A kiryana store on its zakat date has:

• Stock at selling value: Rs 9,00,000
• Cash in drawer and at home for the shop: Rs 60,000
• Bank and JazzCash: Rs 1,40,000
• Customers owe: Rs 3,00,000, of which Rs 40,000 is from two customers who left the area and will probably not pay
• Owed to suppliers, due this month: Rs 2,00,000

Count: 9,00,000 + 60,000 + 1,40,000 + 2,60,000 (good receivables) = Rs 13,60,000. Subtract supplier credit: 13,60,000 − 2,00,000 = Rs 11,60,000. This is above the nisab, so zakat is 2.5% of Rs 11,60,000 = Rs 29,000. If the Rs 40,000 is later recovered, many scholars say zakat is then given on it.

Where your khata helps

The hardest numbers to get right are usually receivables and payables, because they live in many pages of a register. With Munshi:

• Home shows You will get (what customers owe) and You will give (what you owe suppliers) as totals.
• The Accounts list, filtered to Not paid in 30 days, shows which balances are old and possibly doubtful.
• The Bank Book shows each bank and wallet balance, and the Cash Book shows cash in hand.
• Today’s closing puts cash, bank, to get and to give on one screen on your zakat date.

Munshi does not track stock, so count stock separately on the same day. It also does not calculate zakat: the figures are yours and the ruling is your scholar’s.

Common mistakes

• Using last year’s receivables instead of the figure on the zakat date.
• Counting the shop or fixtures as zakatable wealth.
• Forgetting cash kept at home for the business.
• Counting bad debts as if they were cash.
• Forgetting supplier credit, which many scholars allow you to subtract.

Before Ramzan

A khata that balances makes this a one-hour job. Two weeks before your zakat date, clear wrong entries, remind customers with old balances, and settle with suppliers if you can. See how to keep a khata that balances and managing Ramzan and Eid credit.

Special cases

Partnership shops. Each partner usually pays zakat on their own share of the business’s zakatable wealth. Agree the figures together on the zakat date.

Goods bought on credit and not yet paid for. They are in your stock, and the amount owed is supplier credit. Count the stock and, following the common view, subtract the credit due.

Advances received from customers. Money taken in advance for goods not yet delivered is owed back to the customer until delivered; many scholars treat it as a liability.

A one-hour zakat-day checklist

1. Count stock on the shelves and in the godown, and value it.
2. Count cash in the drawer, at home for the shop, and with staff.
3. Note bank and wallet balances from the Bank Book and the apps.
4. Note You will get and remove debts you consider doubtful.
5. Note You will give for supplier credit due soon.
6. Add, subtract, compare with the nisab, and take 2.5%.
7. Write the figures down for next year’s comparison.

This guide explains a commonly taught method in general terms. It is not a religious ruling. Munshi is made by DIGIT.