Chapter: Zakat on Qarad Funds

If the agent has traded with the capital for a full lunar year, zakat becomes obligatory on the entire amount, whether or not the agent’s own share reaches the nisab (minimum taxable threshold).

Example: the capital is 20 mithqals (gold dinars) and the parties have agreed to share profits equally. Zakat is then due on the whole 20 mithqals: three-quarters of the zakat burden falls on the owner of the capital, and one-quarter on the agent.

Should they divide the capital before the year is complete, the owner of the capital continues counting from his original zakat year, while the agent begins a new year on his share.

If the entire capital equals a nisab but the owner’s personal share is below that threshold, Ibn al-Qasim holds that no zakat is due. Sahnun and others, however, rule that zakat is payable as long as the combined capital reaches the nisab.