How is Zakaat to be calculated on stock-in-trade?

Answer

Zakaat has to be paid on the current value of the stock. That is, the price which the holder of the stock (retailer, wholesaler or manufacturer) will pay. The selling price is an imaginary entity. The added profit is in the 'air'. It is something which has not been realized. Zakaat is not paid on imaginary 'stock' regardless of the certitude of its acquisition.

Consider the following case: Zaid has R1,000 cash on which he has to pay Zakaat. He purchases stock for the R1,000. If he had paid Zakaat on the R1,000 a minute before purchasing the stock, he would have paid on R1,000. It will be incorrect to say that one minute after having purchased stock for R1,000 he has to pay Zakaat on R1,250, the extra R250 being anticipated profit. He has not taken physical possession of the expected profit which he may or may not realize. But he has in his possession R1,000 worth of stock. He has to pay Zakaat on only R1,000. The future profit is imaginary or fictitious as long as the tangible money has not reached his possession.

Zakaat is paid on tangible Zakaat assets which are in one's possession. Zakaat is not paid on imaginary entities.