Calculating Zakah on a rice mill

6-1-2011 | IslamWeb

Question:

I am operating a small rice mill, I want to ask on how would I compute my Zakah on the income I derived from its operation. Shall I include the total cost of operation for one lunar year such as a) fuel, oil and other maintenance cost; and, b) total wage for the operator for one year, as basis in computing zakat for my income in the operation of this rice mill. Or shall I deduct all these expenses to get my net income and them compute Zakah on it. Sukran Mr. Mustapa Philippines

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

The expenses of operating the mill, like the cost of fuel, the wages of the workers and what you spend on its maintenance are all not included when calculating the Zakah.

The method of calculating the Zakah on the profit of this mill is to calculate the profit when the Zakah becomes due and then you deduct from it whatever expenses that were already due and you have not paid yet, then if what remains from it reaches a Nisaab (i.e. the minimum amount liable for Zakah) and a whole lunar year has already elapsed over it, then you pay out of it 2.5 %.

Allaah Knows best.