Zakat is a core obligation in Islam and one of the five pillars that every eligible Muslim must fulfill. While most people are familiar with paying zakat on salary savings, cash, or gold, there is often confusion when it comes to zakat on business profits. Business owners, traders, and even small shopkeepers in Pakistan are required to calculate and pay zakat correctly to purify their earnings.
This step-by-step guide explains how zakat applies to business profits, what counts as zakatable assets, and how to calculate zakat in Pakistan.
Who Must Pay Zakat on Business Profits?
Zakat is mandatory for any Muslim who:
- Owns a business or trade (small or large).
- Has business assets that exceed the Nisab threshold.
- Has held these assets for at least one lunar year.
This includes retailers, wholesalers, manufacturers, service providers, and freelancers if their earnings accumulate into savings.
Nisab for Business Zakat in Pakistan (2025)
Before zakat is due, business wealth must reach the Nisab threshold. As per Islamic law:
- Gold Nisab = 87.48 grams of gold (approx. 7.5 tolas).
- Silver Nisab = 612.36 grams of silver (approx. 52.5 tolas).
In Pakistan, most scholars recommend using the silver Nisab since it makes zakat applicable to more people, thereby helping more needy individuals.
What Business Assets Are Subject to Zakat?
When calculating zakat, not all assets are included. Only zakatable assets are considered. These typically include:
✅ Cash in hand or at bank – including profits and receivables.
✅ Inventory / Stock-in-trade – goods available for sale.
✅ Accounts receivable – money owed by customers (if collectible).
✅ Investments – business investments or shares held for resale.
❌ Assets not subject to zakat include:
- Fixed assets like land, office buildings, furniture, and machinery (unless they are for resale).
- Business expenses, debts, and liabilities (these can be deducted).
Step-by-Step: How to Calculate Zakat on Business Profits
Here’s a simple breakdown:
- Calculate Total Business Assets
Add up cash, inventory value, receivables, and investments. - Subtract Liabilities and Payables
Deduct any outstanding business debts or expenses. - Check Nisab
Compare the net balance with the Nisab value (based on gold/silver). - Apply 2.5% Rate
If eligible, pay 2.5% of the net zakatable wealth as zakat.
Example:
- Cash in hand & bank: Rs. 1,200,000
- Inventory value: Rs. 800,000
- Receivables: Rs. 500,000
- Total assets = Rs. 2,500,000
- Liabilities (debts & expenses): Rs. 600,000
- Net zakatable wealth = Rs. 1,900,000
Zakat = 2.5% of Rs. 1,900,000 = Rs. 47,500
Zakat on Business Partnerships
If a business is run by multiple partners, each partner must calculate zakat separately on their share of profits and assets, not the total company wealth.
Example:
If two partners own equal shares in a business worth Rs. 2,000,000, each will be responsible for zakat on Rs. 1,000,000.
Zakat on Service-Based Businesses
Even if you don’t hold physical inventory (e.g., freelancers, consultants, software developers), zakat applies to savings, cash in hand, and receivables after deducting expenses.
Example:
A freelance web developer in Pakistan earns Rs. 1,500,000 annually and has Rs. 400,000 in savings at year-end. If this amount is above Nisab, zakat of 2.5% = Rs. 10,000 is due.
Using a Business Zakat Calculator
Manually calculating zakat on business profits can get complicated. That’s why using an online Zakat Calculator makes it easier. Simply input:
- Cash, receivables, and stock values.
- Deduct liabilities.
- Get instant zakat due in Pakistani Rupees.
Conclusion
Paying zakat on business profits ensures your earnings are purified and redistributed to those in need. Whether you run a shop in Karachi, a factory in Lahore, or a small freelancing business online, zakat is a spiritual obligation that strengthens both faith and society.
By following this step-by-step guide, you can confidently calculate zakat on business profits in Pakistan. For accurate results, use our Business Zakat Calculator and pay your zakat with sincerity.