Zakat on Purchase Value or Resale Value?
I request you to clarify some doubts regarding payment of Zakat in the following case:
1- I had purchased 30 gms of gold in the year 1975 at the rate of Rs. 500 per 10 gms.
2- 20 gms of gold was purchased by me in the year 1995 at the rate of Rs. 5,000 per 10 gm.
3- In the year 2007, I purchased 10 gms of gold at the rate of Rs. 18,000 per 10 gm.
4- In the year 1985 100 nos. of a company’s shares at par i.e., Rs. 10 per share. The present market price of share is Rs. 600 per share.
The total purchase cost of above gold and shares comes to be Rs. 44,000. I have not sold any of the gold and shares till today.
Considering the present value of gold Rs. 30,000 per 10 gms and Rs. 600 per share, the total present cost of above gold and shares comes to Rs. 240,000.
Majority of the local religious heads are of the opinion that the zakat must be paid on the present values. However, one of them opined that the zakat can be paid on purchase value since all the gold and shares are still in my possession.
I request you to kindly clarify me the exact way to pay the zakat in above case as per the shariat.
Shah Jahan Yusuf Shaikh
Islamic Voice replies:
Answer is simple. Since you are in possession of the gold and you are not likely to sell them any soon, you should take out zakat on the purchase value, not the current market value. Most clerics opine that the current market value has to be taken into consideration. This is mainly because they are more enthusiastic about channelizing more charity towards the madrassas they run. We contacted Mr. Sayeedur Rahman Nadvi of Furqania Academy, a very learned man who is both a product of a renowned madrassa and has acquired post graduate degree in modern discipline from a University. He says the zakat will be taken out on the purchase value of the gold and the shares and not the current value in the market. However, if you sold all the gold and shares in your hands today, you will have to see if the total money you get in hand exceeds that of 88 gms of gold in the market today. The zakat on this will have to be taken out at the rate of Rs. 2.50 for each Rs. 100.
Moreover, the gold in your possession is just about 50 gms. The zakat becomes obligatory if you have 88 gms of gold in possession. You can even directly approach Sayeedur Rahman Nadvi for queries on cell: 98452-92730.