Rules about Business Losses

“I once asked abu ’Abd Allah (a.s.), about a man who purchases a certain kind of goods but its value falls. He had paid Zakat before purchasing such asset. Is there Zakat on him or Zakat becomes due when he sells it? He (the Imam) said, ’If he had held it to increase his capital, he is required to pay Zakat.’”

“I once asked abu ‘Abd Allah (a.s.), about a man who purchases a certain kind of goods and its value falls. He had paid Zakat of the asset with which he paid for the goods. When is he required to pay Zakat? He (the Imam) said, ‘If he is holding it to preserve his capital, Zakat is not due but if he holds it after getting back his capital, he then is required to pay Zakat, with a view to the fact that he holds it after getting back his capital.’ I asked him (the Imam) about a man with whom assets are kept in deposit and he uses them in business. He (the Imam) said, ’If one year passes he is required to pay Zakat.’”

“I once asked abu ‘Abd Allah (a.s.), about a man who has an asset in stock which remains with him for one year or more time. He (the Imam) said, ‘It is not subject to Zakat until he sells it, unless he has paid for it from his capital and has kept it on hold expecting an increase. If that is the case then it is subject to Zakat. If he has not paid for it from his capital, it is not subject to Zakat until he sells it. If he has kept it in stock in substance when he sells it then he is required to pay Zakat of one year only.’”

“Abu ‘Abd Allah (a.s.), has said, ‘Do not accept an asset for profit-sharing business unless you pay its Zakat or the shareholder pays.’ He (the Imam) said, ‘If you have an asset in stock in your home for which you are offered payment for your capital but you ignored to receive it, you are required to pay its Zakat.’”

“Once Sa‘id al-’A‘raj asked him (the Imam) (a.s.), when I was listening, ‘We stock oil and ghee for business and it remains with us for one year or two years. Is there Zakat on it? He (the Imam) said, ‘If you make profit or find your capital, you must pay Zakat, but if you are just waiting because you do not find other asset, then Zakat is not due on it until it is sold for gold or silver. When it becomes gold or silver, then pay Zakat of the year in which you did business.’”