Zakat is obligatory on grazing livestock among the animals of cattle, namely camels, cattle, sheep and goats.

Question: We have a project for raising dairy cows that are fed with fodder brought to them and do not graze on their own in the open. Is zakat due on them, or is zakat only on the annual profits? And if zakat is required, how much must be paid?

Answer: Cows kept for milk production, on which expenses are incurred and which are hand-fed for most of the year, are not themselves subject to zakat. Zakat is due only on grazing livestock. Grazing livestock are those that pasture for all or most of the year on freely available pasture. Animals that are fed for most of the year carry no zakat on their capital stock. However, if their yield produces money that reaches the nisab or more, zakat is paid at the rate of one quarter of one tenth (2.5 %) of that yield. Likewise, if the owner sells the animals and a full year then passes over the sale proceeds, he must pay one quarter of one tenth of the proceeds.

Question: If the animals are kept for trade, are they regarded as trade goods in that case?

Answer: If he raises them and sells from them, they are trade goods (ʿurud al-tijarah).

Question: Should he appraise their value and pay zakat on it at the end of each lunar year?

Answer: For whatever he has sold, he pays zakat on its price after a lunar year has elapsed. As for the animals that remain, then at the end of the year he appraises them—or at the completion of the year reckoned from the capital with which he purchased them. Once a full year has passed, he pays zakat by giving one quarter of one tenth of their current market value, not the original purchase price—that is, he appraises them at the time the zakat falls due and pays one quarter of one tenth of the assessed value.