Chapter 11 of 12 · 14 min
Purification & zakat on shares
Cleansing the impermissible sliver, and calculating zakat on your portfolio.
Screening lets you own the right companies. Two duties remain on what you earn from them: purification (cleansing incidental haram income) and zakat (the annual alms on wealth). Both are arithmetic, not mystery.
Purification: the why
Even a compliant company keeps cash in banks and earns some interest — tolerated by the 5% rule, but tolerance is not permission to *consume* it. Your share of that impermissible income must leave your wealth: given to charity without expecting reward (it is a cleansing, not a sadaqah you are credited for). What remains is clean.
Purification: the how
- Find the company's non-compliant income percentage (impermissible income ÷ total revenue). Gennoor Invest computes and displays this for every stock.
- Multiply your dividend received by that percentage.
- Give that amount to charity. Done.
Example: you hold 200 shares; the company paid ₹15 per share; its non-compliant income is 2%. Dividend = ₹3,000; purification = ₹60 to charity; ₹2,940 is cleanly yours. The purification calculator on this site does exactly this. (For capital gains, schools differ — some scholars require purifying a proportion of gains too, others only dividends; follow your scholar. The calculator handles the dividend method that AAOIFI requires.)
🎛 Try it: The purification splitter
Your dividend, split live. The small slice keeps the big slice halal.
Dividend received
₹3,000
To charity (purification)
₹60.00
Cleanly yours
₹2940.00
Zakat on shares: the two intentions
- You are a long-term investor (buying to hold and earn): the dominant contemporary view is zakat applies to the zakatable assets of the company proportionate to your shares — commonly approximated as ~25–40% of holding value, or more simply some scholars advise 2.5% on the full market value to be safe. Practical, widely-used approach: pay 2.5% of your portfolio's market value on your zakat date if you want simplicity and caution.
- You are a trader (buying to resell): shares are trade goods — zakat is 2.5% of full market value, no debate.
💡 The one-day-a-year system
Pick your zakat date (many choose a Ramadan date). On that day each year: portfolio market value × 2.5% (or your scholar's method) = zakat; the year's dividends × each stock's purification % = purification. Two numbers, once a year, and your wealth is in order. Set the reminder now.
⚠️ Do not skip purification because it feels small
₹60 on ₹3,000 feels trivial to ignore. But purification is precisely what makes the 5%-tolerance framework honest — scholars permitted owning mixed companies *on the condition* the impermissible sliver is removed. Keeping it quietly unravels the permission you are relying on.
🛠 Build the skill — 10 minutes
- Open the Purification calculator on this site.
- Enter a real or imagined holding: shares, dividend per share, and the stock's purification % from its page.
- Note the amount, and decide *now* which charity receives your purification money each year.
- Put your zakat date in your phone calendar, repeating yearly.
📌 Remember
- Purification = dividend × company's non-compliant income %. Give it away; it is a cleansing.
- Zakat: traders pay 2.5% of market value; long-term holders follow their scholar (2.5% of full value is the cautious simple route).
- One fixed date a year makes both duties a 15-minute task.
- Purification is the condition that makes mixed-company ownership permissible — never optional.
✅ Check yourself
5 quick questions — answer honestly, learn instantly.
USE CASE1. You hold 300 shares; dividend ₹12/share; the company's non-compliant income is 1.8%. Purification owed…
2. Purification money should be given…
USE CASE3. Long-term investor, portfolio ₹10 lakh, wants the simple cautious zakat route. On zakat day she pays…
4. Skipping purification "because it is only ₹60" effectively means…
5. The cleanest operating system for both duties is…