I bought some shares in National Halal Food in England about two years ago. Should I pay the zakat for these shares annually? Is the zakat applied on the total amount of our money, or merely the profits? Last year I paid the zakat obligation of the total amount of my money, since I thought that it resembled saving golds, and I this year I plan to do the same. but one of my friend told me that the obliged zakat is applied only on the profit of that investment? Please give me an explanation.
All praises be to Allah, peace and prayer of Allah be upon Prophet Muhammad, his family, and his devoted companions.
Share or stock is an ownership letter of a part of a company. Thus, it is understood that the value of that share will always in accordance with the development of that company. If everything runs smooth, and the company managed to score some profits, the value of it’s share will increase, and vice versa, thus the value of such share might decrease to a lower point than the value written on the share sheet.
Hence, it is understood that a share certificate may have three kinds of price:
– Price based on the value written on the share certificate or the value at the time the shares were released.
– Price based on assets/real assets of the company.
– Price applied on the stock market (the secondary market). This price, as already known, is affected by many factors, such as the dynamic of supply and demand, speculation, etc.