Does an Item Bought for Resell Become Subject to Zakat?

Yes, items purchased to resell them are subject to Zakat.

This includes stock in trade, raw materials, and finished goods meant for sale. Zakat is a wealth tax that is productive and fully owned, meaning any asset that is intended to generate income is typically subject to this religious obligation.

Here’s an explanation of how Zakat applies to such items:

• Intent to Resell: The key factor is the intention behind the purchase. If you buy an item specifically to resell for a profit, it becomes part of your Zakatable assets. These assets are then subject to the 2.5% Zakat requirement.

• Not for Investment or Holding Capital: If an item is bought for investment purposes or to hold as capital (without the intent to resell), it is generally not subject to Zakat. For example, land purchased for long-term investment is not liable for Zakat.

• Zakat Calculation: The value of an item for Zakat purposes is calculated at the end of the Zakat year based on its market value at that time. Zakat is then calculated by subtracting any deductible debts from your total wealth and paying 2.5% of the remaining balance.

Examples:

• Reselling Goods: If you purchase a house, car, or furniture with the intent to resell, Zakat is due on these items, as they are meant for trade.

• Investment Assets: Conversely, land purchased to hold it as an investment does not attract Zakat.

Hence, items purchased for resale are subject to Zakat, and their value is included in your Zakatable assets. It’s essential to calculate this at the end of your Zakat year for accurate payments.

And Allah knows best!