Is the valuation of trade goods based on the selling price or the buying price?
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The questioner : O Shaykh, you mentioned the zakah on trade goods. Is the zakah based on the selling price or the buying price?
The Shaykh : Yes, this is a pertinent question: Is the valuation of trade goods based on the purchase price or the selling price?
It is based on the selling price, because you might buy something cheaply and its value rises, or buy it expensively and its value falls. For example, if a man buys land for trade for one hundred thousand riyals, and at the end of the lunar year it is worth only twenty thousand, how much does he pay in zakah?
He pays zakah on twenty thousand. And if it were the opposite, he bought it for twenty thousand and it became worth one hundred thousand at the end of the year, then it is obligatory for him to pay zakah on one hundred thousand. Yes.
The Shaykh : Yes, this is a pertinent question: Is the valuation of trade goods based on the purchase price or the selling price?
It is based on the selling price, because you might buy something cheaply and its value rises, or buy it expensively and its value falls. For example, if a man buys land for trade for one hundred thousand riyals, and at the end of the lunar year it is worth only twenty thousand, how much does he pay in zakah?
He pays zakah on twenty thousand. And if it were the opposite, he bought it for twenty thousand and it became worth one hundred thousand at the end of the year, then it is obligatory for him to pay zakah on one hundred thousand. Yes.