The available zakat accounting standards as well as laws governing business zakat reflect a sort of consensus that adjusted net working capital of a business may be regarded as the base for computation of zakat liability of a business. The second accepted alternative is the adjusted growth capital which essentially arrives at the same outcome, given the accounting equality between total assets and total liabilities and equity in the balance sheet of a business organization. The apparent consensus follows from fiqhi prescription of imposing zakat on urud al-tijarah or the inventory of goods available for trade.
We briefly summarize below the fiqhi basis for zakat liability on urud-al-tijara. The full line of arguments and counterarguments are available in chapter 4 of the text Fiqh Al-Zakat by Dr Yusuf Al-Qaradhawi.
Urud al-tijarah, according to Islamic jurists implies business inventory, which means any commodities obtained for the purpose of resale for profit, except liquid monetary assets. Some jurists define ‘urud al tijarah as anything that one buys in order to sell for profit. We quote here from the work of Dr Qaradhawi the evidence from the Qur’an, the Sunnah and Ijma for zakat obligation on business inventory.
“O ye who believe, give of the good things which ye have honorably earned, and of the fruits of the earth which we have produced for you.” (Surah Al-Baqarah No.2, Verse: 267)
Scholars interpret the words ‘that you have earned’ as things earned by means of trade, and the words ‘that we have produced from the earth for you’ as things earned by means of agriculture. This is supported by other verses about zakah that are general and therefore include business assets, such as the verses:
“and on their wealth and possessions there is the right for he who asked and he who is deprived,” (Surah al Dhariyat, 51:19)
“and on those in whose wealth is a recognized right for he who asks and he who is deprived,” (Surah al Ma’arij, 70:24-25)
“Out of their goods take sadaqah so by it thou might purify and sanctify them.” (Surah al Tawbah, 9:103)
Abu Daud reports from Samurah bin Jundub that ” the Prophet (p) used to order us to pay al sadaqah out of what we have for sale.” (Mukhtasar Al Sunan, Vol. 2, p.175)
Al Daraqutini reports Abu Dharr “I heard the Messenger of God (p) saying ‘Camels are zakated, lambs are zakated, and clothes and housewares are zakated.” (Al Muhalla, Vol. 5, pp. 234-235)
There is no disagreement that clothes and other housewares for personal or household use are exempt, which means that housewares and clothes mentioned in this saying refer to business inventory for resale. This is in addition to the general sayings that obligate zakah on all kinds of wealth without discrimination, such as “give zakah on your wealth.” (Al Tirmidhi, Vol. 3, p. 91)