Investment bank stocks and zakat

May 5, 2021 | Uncategorized


Question 1:
Is investing in commercial and investment banks stocks allowed. Like Citi Bank or JP Morgan.

Question 2:
We have stocks which are bought not for sale but holding long term. Is there zakat on it.

We have land which is not for sale and to hold long term. Do we pay zakat on it.


1. It is permissible to buy shares in a company if it fulfils certain conditions. Below are some of the relevant condition that need to be met:

– The business must not engage in non-shari’ah activities and have unlawful revenues of income.

– If there is non-shari’ah activity, such income should not exceed 5% of the gross revenue.

– The total illiquid assets of the company must be at least 33%.

Based on our understanding investment banks would generally not meet the relevant conditions. For more detail on the shari’ah criteria of purchasing shares see:

Investment in Stocks and Shares

2. If stocks are purchased with the intention of holding, zakat is still payable. One would have to work out what percentage of the companies assets are zakatable and pay zakat according to that. If for example, your shares are worth £1000 and the zakatable assets of the company are 20%, then you will pay zakat of 2.5% on 20% of the £1000. You can find a detailed explanation here:

3. If at the time of purchasing the land the intention was to sell it in the future then the land will be zakatable even if it is not currently up for sale. If it was not purchased with this intention it will not be zakatable. Similarly, if it was purchased with the intention of selling but then later you decided that you will no longer be selling it, then it will not be zakatable, even if at a later date you decide to sell it again.

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel