Short answer
Only if they are for sale. Stock you bought to resell, and raw materials that go into products you sell, are zakatable at their market value on your zakat date, even if they sit in a warehouse. Household stores, such as food, clothes and furniture kept for your own use, carry no zakat.
Goods are trade goods ('urud al-tijarah) when they are bought with the intention of resale at the time of purchase. Their value is added to your other wealth each year. Goods owned for use, and goods inherited or received as gifts, do not become trade goods by intention alone.
Other madhhabs
- Maliki
- A trader who holds goods waiting for a better price (muhtakir) pays zakat on them for one year only, when they are sold; a trader who buys and sells continually pays yearly on their value.
Explanation
What matters is why you own the goods. Things bought to sell are trade goods and carry zakat on their value. Things kept for use carry none, however many you store.
Zakatable:
- Shop and warehouse stock, including goods in transit that you already own.
- Stock held by an online marketplace or fulfilment centre on your behalf.
- Raw materials and ingredients that become part of the products you sell.
- Goods bought and held to sell later when prices rise.
- Land or property bought to resell (see zakat on rental property).
Not zakatable:
- Food, clothes, furniture and household supplies kept for your own use, even in bulk.
- Tools, machines, shelving and vehicles used to run a business.
- Personal items you later decide to sell, until you actually sell them.
- Inherited goods, even if you plan to sell them, until they are sold.
Value stock at the price you could realistically sell it for in your market on your zakat date. Damaged or slow-moving stock is counted at what it would really fetch. Add the total to your cash and other zakatable wealth, subtract debts due now, and pay 2.5 percent if it reaches the nisab.
The Shafi'i and Hanbali schools agree with the Hanafis here. If you sell without holding stock, as in dropshipping, there is no stock to count, only the cash you hold. The zakat on business calculator walks through the figures.
The evidence
Quran, Surah Al-Baqara 2:267
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَنفِقُوا۟ مِن طَيِّبَٰتِ مَا كَسَبْتُمْ وَمِمَّآ أَخْرَجْنَا لَكُم مِّنَ ٱلْأَرْضِ ۖ وَلَا تَيَمَّمُوا۟ ٱلْخَبِيثَ مِنْهُ تُنفِقُونَ وَلَسْتُم بِـَٔاخِذِيهِ إِلَّآ أَن تُغْمِضُوا۟ فِيهِ ۚ وَٱعْلَمُوٓا۟ أَنَّ ٱللَّهَ غَنِىٌّ حَمِيدٌ ﴿٢٦٧﴾
O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy.
Wealth earned through trade carries a due.
Sahih al-Bukhari 1463
Sahih... ليس على المسلم في فرسه وغلامه صدقة ...
"A Muslim owes no zakat on his horse or his servant."
Things kept for use carry no zakat, unlike goods kept for sale.
Where the ruling is recorded
- al-Hidaya, Kitab al-Zakat, section on trade goods. Trade goods are zakatable at their value once it reaches the nisab; the intention of trade must accompany the purchase.
- Radd al-Muhtar, Kitab al-Zakat, chapter on the zakat of wealth. Inherited goods do not become trade goods by intention alone; raw materials that stay in the product are zakatable.
- Mukhtasar Khalil with al-Sharh al-Kabir, Bab al-Zakat, on trade goods. The Maliki distinction between the continual trader and the one who waits for prices.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.