Zakat Calculator

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement. As a follow-up to Sarah's question on company granted stock options, I'd like to ask about the Zakat that is due on gains received via these options.

In certain cases as with some of the recent IPO's in the tech sector , the compensation achieved fromstock options can be huge -dwarfing the other benefits an employee receives i.

Sharia

According to at least one booklet I've read about Zakat calculation, the rateof Zakat is not a uniform 2. Given this, would the gains from stock option salesbe considered a windfall and therefore be Zakatable at something other than 2.

Zakat

BTW,I realize that this is not strictly an Islamic investment question. However, it is onewhose answer would benefit many people here in the Silicon Valley.

Institute of Islamic Banking and Insurance - Islamic Economics

At the end of Section Three in Lesson Six, I spoke of the differences of opinion among contemporary scholars in regard to the calculation of Zakah on types of wealththat were unknown in the times of the classical jurists. While the debates of contemporaryscholars on these issues may be disconcerting to modern investors, it must be rememberedthat these issues are new and have yet to receive the attention from jurists that theydeserve.

As the demand for solutions increases, so will the attention these issues receivefrom scholars. Now, with particular reference to the Zakah on gains realized through employee stockoptions, your observations are astute. It is true that the rate is not uniform for everyclass of asset.

And, yes, it might be possible to identify the returns from such optionsas windfalls. As such, theywould not fall under the category of a windfall.

Another group of contemporary scholars,however, insists that the rate on this type of wealth should equate to the rate onagricultural produce, where the land is exempted. I said, in the lesson,that I would not indicate my own preference in these matters, partially at least for thereason that the debates have only just begun.

But my advice to you is that you consultwith someone you trust who also has knowledge of the subject of Zakah, or with severalpeople, and then decide for yourself what is best. Ultimately, Allah will judge you onthe sincerity of your intentions. All comments and articles by others are copyright by their owner, and reflect their views and opinions, which may not necessarily be consistent with the views and opinions of Muslim-Investor.

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