Zakat on dividends

Question:
How is zakat to be paid on income and stock dividends?

Response:
My response to your question is based on our understanding that the law of Zakat given to us by the prophet, alaihissalaam, divides Zakat into three categories: Zakat on livestock, wealth, and prodoction. Our decision on whether a certain case of Zakat falls into one category or another would depend upon our ijtihad.

In our opinion, all income from shares falls into the category of production. Therefore, Zakat on such income would be deducted according to the formula of 10% of revenues generated by such shares. If the shares of companies you have mentioned bring dividends to you, take away 10% of such dividends as Zakat. In case if some shares don't bear any dividends during a certain year, no Zakat is decutable on them.

And Allah knows best.

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