Zakah on Bank Deposits, Company Cash Assets, and Rental Income

10-3-2026 | IslamWeb

Question:

We are running a vehicle transportation and rental business.Our company has fixed deposits in the bank and a running cash balance.We do not have any stock or inventory.Please advise how to calculate zakat in this case.

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Answer:

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

Know first that a bank deposit placed in an interest-based bank in return for interest is not permissible to deposit, because it is considered an interest-bearing loan. Such a deposit must be withdrawn, and all interest earned from it must be disposed of by spending it in charitable causes.

However, if the deposit is an investment deposit in an Islamic bank that operates according to Islamic law, then there is no harm in depositing it, as it is in reality a form of mudarabah (profit-sharing investment).

Zakah must be paid on such a deposit, as well as on its profit if it is of the permissible type. However, if it is of the prohibited type, it must be withdrawn and zakah must still be paid on the principal amount, while the interest earned from it must be disposed of.

Accordingly, the zakatable assets in your company include:

The deposit and its profit, if it is permissible, according to the previously mentioned details.

The cash balance, as well as what is added to it from vehicle rental income and transportation fees.

Each partner must pay zakah on his share if it reaches the nisab by itself or when combined with other money or trade goods he owns, provided that one lunar year has elapsed.

The amount of zakah that must be paid is one-quarter of one-tenth, that is, 2.5% for each lunar year.

As for vehicles and similar assets, zakah is not due on the assets themselves because they are not intended for sale. Rather, zakah is due on the income derived from them once a year has elapsed.

Ibn Qudamah said in Al-Mughni: “Whoever rents out his house and receives its rent is not required to pay zakah on it until a year has elapsed.” End quote.

Al-Shawkani said in Al-Darari Al-Mudiyyah: “As for the non-obligation of zakah on revenue-generating assets – such as houses that their owners rent out, as well as riding animals and the like – this is due to the absence of evidence requiring it.

Also, the hadith: ‘There is no charity (zakah) upon a Muslim regarding his slave or his horse ’ applies to this situation – namely, when they are used for benefit through leasing or service – though there is no need to rely on this evidence, as the absence of proof itself suffices.” [End quote].

Allah Knows best