Ethica Institute of Islamic Finance™

Is ushr due on destroyed property?

It is He who produces gardens trellised, and untrellised, palm-trees, and crops diverse in produce, olives, pomegranates, like each to each, and each unlike to each. Eat of their fruits when they fructify, and pay the due thereof on the day of its harvest; and be not prodigal; God loves not the prodigal”(6:141). Ushr is the zakat equivalent for agricultural produce, charged at a rate of 5% or 10% depending on the means of irrigation by which the crop is produced. Zakat is measured in relation to an individual business owner’s nisab, not on a business's or property's nisab, so business partners or owners of shared property pay zakat according to their respective nisab only, not for the nisab of the business or property in aggregate; the Shaf'i school calculates nisab on the basis of the entire business or property, even if individual partners do not qualify for nisab; the Maliki school exempts partners who have been with the business or shared in the property for less than one lunar year or who do not qualify for nisab. Yes, one must pay zakat on corporate equity. One treats all shares as cash and pays zakat on them accordingly. So, on the day that zakat is due you would calculate the total value of the shares according to the market value of the shares on that day, and then pay 2.5% of that amount in zakat.

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