Zakaat on Unit Trusts

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Q: Is Zakat payable on Unit Trusts that have not been cashed to date?

A. Our Fatwa on unit trusts is that such investment is not permissible.

Therefore, Zakaat is necessary on the initial amount invested but one does not need to pay the Zakaat until they are cashed in and money is received.

When the cash comes in then Zakaat must be calculated from the time the unit trusts were purchased. If they were bought a year ago then Zakaat for one year must be paid. If two years ago, then Zakaat for the past two years must be paid on that amount, and so forth.

It is also permissible for one to pay Zakaat up front, that is, to pay the full Zakaat on the unit trusts in advance. In that case there is no need to pay any Zakaat when the units are cashed in.

And Allah Ta'aala knows best

Mufti Siraj Desai