IV. Zakat on business stock:-
No matter what your business is you have to pay Zakat on all Stock in Trade. The stock must be valued at Cost price (Purchase Price Plus Transport, Insurance etc).
If you have any bills receivable from your customers you must add the same.
The following amounts are detectable from the above
a) All amounts due to your suppliers.
b) All loans on stock on the date of calculation.
Dead stock should also be taken into account at the discount rate (i.e. if sold in the open market by way of discount sale etc). You should not calculate dead stock at Purchase Rate or Cost Price. Damaged stock need not be calculated at Cost Price but at scrap value. Pay Zakat on your net stocks as per above calculations.
Zakat is payable on all business stock including old parts, scrap, cars if you are in the car business (excluding taxies, lorries, pick-ups, auto, meant for transport business). Even on pan shop stocks Zakat is payable. Hence Zakat is payable on all business stock after adding bills receivable and deducting bills payable. Allah has promised to protect your stocks on which you pay Zakat regularly. By paying Zakat you are creating the best insurance on your stock.
Zakat on factory building, machinery and goods produced:-
There is no Zakat on factory building or any kind of machinery, but there is Zakat on products produced in the factory (finished stock). If there is any loan or liability on the finished stock you should deduct the same for calculation of the stock value. Similarly amount receivable on credit sales should be added to the nett stock. Bad debts should be deducted from nett calculation. Sometimes bad debts are recovered and you should pay Zakat on such recoveries in the year of recovery only and not retrospectively. There is no Zakat payable on vehicles used for personal transport and factory goods transport.