On what value of the merchandise should Zakaat be paid?

Answer

Zakaat should be paid on the current wholesale price of the stock-in-trade. In one of his Malfoothaat, Hadhrat Maulana Ashraf Ali Thanvi (Rahmatullah alayh) confirms this view. Thus he said:

For paying Zakaat on merchandise (stock-in-trade), the current value will be taken. If the prices for the stock vary, the average will be taken into account. A good method is to pay Zakaat with the stock. One fortieth of the stock should be given. (Current price refers to the price one has to pay to acquire the stock, i.e. the current wholesale price.)

Paying one fortieth of the stock, i.e. the physical stock and not its value, is possible only if the stock is of the same kind, e.g. sugar, rice, flour, etc., etc. (End of Malfooz)

(If the stock consists of a variety of products, the total value will have to be calculated. Then Zakaat could be paid in either cash or kind. If in kind, then one fortieth (2½ %) in value of the stock should be given. —Translator)