Zakat on Online Business
The question of Zakat on online business is increasingly important as Muslim entrepreneurs operate e-commerce stores, dropshipping businesses, digital product platforms, and internet-based trading operations. Do online businesses owe Zakat like traditional shops? How do you calculate Zakat on inventory stored in Amazon FBA warehouses? What about dropshipping where you never physically handle products? Are digital products like e-books and courses zakatable as inventory? How do you value online business inventory at wholesale when you operate globally? What about money in PayPal, Stripe, and payment processors? Do platform fees and transaction costs affect Zakat? How do affiliate marketers calculate Zakat with no physical inventory? This comprehensive guide answers every question about Zakat on online business with complete clarity for Muslim digital entrepreneurs.
The definitive answer to Zakat on online business: Online businesses operating e-commerce, dropshipping, digital products, or any internet-based trading must calculate Zakat at 2.5% annually on the wholesale value of inventory held for sale plus all business cash balances regardless of platform (PayPal, Stripe, bank accounts) plus customer receivables when total zakatable business assets exceed nisab for one lunar year, with the fundamental principle being that online and offline businesses are treated identically in Islamic law since both involve trade goods making the medium of commerce (internet versus physical location) irrelevant to Zakat obligations. This guide explains how to calculate Zakat on e-commerce inventory, handle dropshipping and fulfillment models, treat digital products and services, account for payment platform balances, manage international online business Zakat, and authentic Quranic and Hadith evidence establishing that trade goods require Zakat regardless of whether sold online or in physical stores.
Critical principle: Online and offline businesses have identical Zakat treatment
Understanding Zakat on online business begins with recognizing that Islamic law makes no distinction between traditional brick-and-mortar retail and internet-based commerce. Both involve the same fundamental activity: holding inventory (trade goods) for sale to customers and generating revenue. The Prophet Muhammad (peace be upon him) established Zakat on trade goods over fourteen centuries ago. This universal principle applies to all forms of trading regardless of how commerce is conducted. For Zakat on online business, whether you sell through Amazon, Shopify, your own website, or any digital platform, the Islamic obligation is identical to operating a physical shop.
The medium of commerce (internet versus physical location) is irrelevant to Zakat calculation. What matters is the substance: do you hold inventory for sale? Do you have business cash and receivables? If yes, these are zakatable at 2.5% annually when total business wealth exceeds nisab for one year. An online clothing store calculates Zakat identically to a high street boutique. A dropshipper selling electronics calculates similarly to a wholesaler. A digital course creator with service revenue follows business Zakat principles for their accumulated income. For Zakat on online business, apply the timeless trade goods Zakat methodology to modern digital commerce contexts.
E-commerce platforms
Calculating Zakat on e-commerce inventory and operations
Understanding Zakat for online stores and retail platforms.
E-commerce inventory is definitive trade goods
For Zakat on online business operating traditional e-commerce, inventory held for customer sale is definitively zakatable. Whether you sell through Shopify, Amazon, eBay, Etsy, WooCommerce, or custom platforms, all products stocked for resale constitute trade goods requiring annual Zakat. If you operate an online clothing boutique with five hundred items in inventory, those five hundred items are zakatable at wholesale value identically to a physical clothing store's stock.
The location where inventory is stored is completely irrelevant. Inventory in your home, a rented warehouse, Amazon FBA centers, ShipBob facilities, or any third-party fulfillment service is zakatable if you own it. For Zakat on online business using fulfillment services, ownership creates obligation regardless of physical location. Count all units you own intended for customer sale when calculating annual Zakat.
E-commerce Zakat Calculation Steps
Value all inventory at wholesale/cost
Count every product unit in stock on your Zakat date. Value at wholesale price or cost (whichever is lower). If you purchased items for £10 each and current wholesale is £12, use £10 per unit.
Add all business cash balances
Include Shopify balance, PayPal, Stripe, bank accounts, payment processors, and any business cash holdings. All accessible business funds are zakatable regardless of platform.
Add accounts receivable
Include customer payments pending in platforms, PayPal transfers processing, Stripe payouts scheduled, and any amounts owed by customers or platforms.
Subtract immediate debts
Deduct supplier invoices due, payment processing fees owed, platform fees payable, and other immediate business debts according to majority position.
Calculate 2.5% Zakat on total
Multiply total zakatable business wealth by 0.025 to get annual Zakat. For Zakat on online business, this is your e-commerce Zakat obligation payable annually.
Using platform reports for inventory valuation
Most e-commerce platforms provide detailed inventory reports. Shopify, Amazon Seller Central, WooCommerce, and other systems track inventory units and values. For Zakat on online business, leverage these reports on your annual Zakat date. Export inventory reports showing current stock levels and your cost basis (what you paid for inventory). Multiply units by cost to get total inventory value at wholesale.
If your platform tracks inventory at retail value, manually calculate at wholesale/cost. Do not use retail prices for Zakat inventory valuation. For Zakat on online business inventory, the conservative scholarly approach values at lower of cost versus current wholesale, not inflated retail prices including your markup.
Handling returns, damaged goods, and unsellable inventory
Damaged products, returned items awaiting inspection, and unsellable inventory should be valued at realistic recovery value (what you could actually get for them). If items are worthless, exclude them. If damaged goods can sell at fifty percent of cost, value at that reduced amount. For Zakat on online business with impaired inventory, honest realistic valuation prevents overstating zakatable wealth.
Dropshipping models
Zakat on dropshipping and fulfillment by third parties
Understanding inventory ownership in dropship operations.
The ownership question in dropshipping
Dropshipping creates unique Zakat questions because inventory ownership can be ambiguous. For Zakat on online business dropshipping models, the critical factor is whether you take legal ownership of products at any point. Two main models exist with different Zakat implications:
Model 1: Ownership Transfer Dropshipping (Zakatable)
How it works: Customer orders from your store. You purchase item from supplier in your name. Supplier ships directly to customer. You briefly own the product (from purchase to customer receipt).
Zakat treatment: The brief ownership period creates zakatable inventory. At any moment, calculate on items you have purchased from suppliers but customers have not yet received. For Zakat on online business with this model, include in-transit inventory you own.
Practical calculation: On your Zakat date, count orders where you purchased from supplier but shipment is in-transit to customers. Value these at what you paid the supplier (wholesale cost).
Model 2: Pure Agency Dropshipping (Not Zakatable as Inventory)
How it works: You are pure intermediary. Customer orders. You forward order to supplier. Supplier ships and you earn commission. You never take ownership or possession.
Zakat treatment: No inventory Zakat since you never own products. However, your business cash (accumulated commissions in accounts) remains zakatable. For Zakat on online business pure agency, calculate on liquid business funds, not inventory.
Practical calculation: Focus on PayPal balances, Stripe funds, bank accounts with commission income. Calculate 2.5% on accumulated business cash when above nisab for one year.
Determining your dropshipping model
For Zakat on online business dropshipping, examine your actual business operations. Do purchase orders go out in your name with you as buyer? Does the supplier invoice you separately from what you charge customers? Do you have legal recourse if products are defective (indicating you were the seller to customers)? If yes to these questions, you likely operate Model 1 with ownership transfer requiring inventory Zakat.
If you are purely forwarding customer orders, earning a commission percentage, and have no liability for product quality, you likely operate Model 2 as an agent. In this case, no inventory Zakat but cash Zakat on accumulated commissions. For Zakat on online business uncertainty about model, consult with Islamic scholars for your specific operational structure.
Print-on-demand and made-to-order businesses
Print-on-demand (Printful, Printify) and made-to-order businesses typically operate as Model 2 agency. You never hold inventory; products are created after customer orders. No inventory Zakat is due. However, business cash from sales accumulates in your accounts requiring Zakat. For Zakat on online business print-on-demand, calculate on accumulated revenue in payment platforms, not on products never physically held.
For online entrepreneurs
Calculate Zakat on your online business
Include e-commerce inventory, business cash, and all digital assets comprehensively.
Calculate Your Zakat →Digital services
Zakat on digital products, courses, and service businesses
Understanding Zakat for information products and online services.
Digital products are not traditional inventory
For Zakat on online business selling digital products (e-books, online courses, software, templates, digital downloads), the products themselves are not zakatable as inventory in the traditional sense. Classical inventory Zakat applies to physical goods requiring repeated production or acquisition costs. A digital file created once and sold infinitely does not fit traditional inventory definitions.
Most contemporary scholars conclude that the digital file itself (the e-book PDF, course videos, software code) is not zakatable inventory. The one-time creation cost is a business expense, not ongoing inventory acquisition. However, the revenue generated from selling these digital products becomes zakatable cash once received and accumulated in your business accounts.
Focus on accumulated revenue, not digital files
If you operate a digital course business earning £5,000 monthly from course sales, that £5,000 becomes zakatable business income accumulating in your PayPal, Stripe, or bank accounts. After one year, if you have accumulated £50,000 from course sales (above nisab), you owe Zakat on that accumulated cash. For Zakat on online business digital products, calculate on the money you have earned and saved, not on the digital files being sold.
Different Digital Business Models and Zakat
E-book and Digital Download Sales
No inventory Zakat on the digital files. Calculate Zakat on accumulated sales revenue in your accounts. If you earned £10,000 selling e-books and it sits in your business account above nisab for one year, pay 2.5% (£250) Zakat.
Online Course Creation
Courses are digital services, not inventory. Calculate Zakat on course revenue accumulated in payment platforms. Students pay, money accumulates in Teachable, Kajabi, or your accounts; that cash is zakatable annually.
Software as a Service (SaaS)
SaaS subscription revenue accumulates monthly. Calculate Zakat on accumulated cash from subscriptions. Server costs and operational expenses are business costs, not inventory. Zakat applies to net cash accumulated above nisab.
Freelance and Consulting Services
Service businesses have no inventory. Calculate Zakat on accumulated income from client payments. If you provide online consulting earning £60,000 annually with £40,000 saved, that £40,000 is zakatable cash.
Websites, domains, and digital tools are capital assets
Your business website, domain names, software tools, email lists, and digital infrastructure used to operate the business are capital assets, not zakatable inventory. These are operational tools similar to a physical store's shelving and point-of-sale system. For Zakat on online business digital assets, exclude operational infrastructure and calculate only on liquid business cash and traditional physical inventory if any exists.
Financial platforms
Zakat on PayPal, Stripe, and payment processor balances
Accounting for business cash across digital platforms.
All business cash is zakatable regardless of platform
For Zakat on online business, a critical principle is that business cash is zakatable regardless of where it is held. PayPal balances, Stripe accounts, Wise (TransferWise) holdings, Payoneer funds, cryptocurrency exchange accounts with business funds, and any digital wallet or payment processor balance containing business money must be included in annual Zakat calculation.
Many online entrepreneurs mistakenly think only traditional bank account cash is zakatable. This is incorrect. If your Shopify store has £2,000 in platform balance, PayPal has £5,000, Stripe has £3,000, and your business bank account has £10,000, your total business cash is £20,000 requiring Zakat calculation. For Zakat on online business payment platforms, sum all accessible business funds across all accounts and platforms.
| Platform/Account Type | Zakatable? | Notes |
|---|---|---|
| PayPal business balance | Yes | All accessible funds zakatable |
| Stripe account balance | Yes | Include pending and available balance |
| Shopify/platform balance | Yes | Money held in e-commerce platform |
| Wise (TransferWise) business | Yes | Multi-currency balances all zakatable |
| Business bank accounts | Yes | Traditional and online banks |
| Pending payouts (in transit) | Yes | Money owed to you is receivable wealth |
| Business cryptocurrency holdings | Yes | Value at current market price on Zakat date |
Handling pending payouts and processing delays
Many payment platforms hold funds for processing periods (Stripe's rolling reserves, PayPal's 21-day holds for new sellers, Amazon's reserve policies). For Zakat on online business with pending funds, these amounts are zakatable as accounts receivable. The money is yours; the platform is merely holding it temporarily. Include pending payouts and held balances in your zakatable business wealth calculation.
Platform fees and transaction costs
Deduct fees already charged and deducted from your balances (already accounted for as they reduce your actual cash). Do not deduct future anticipated fees or platform subscriptions not yet charged. For Zakat on online business platform fees, calculate on your actual net balances after fees already deducted, but do not pre-emptively reduce zakatable wealth for future operating expenses.
Complete assessment
Calculate comprehensive online business Zakat
Include inventory, payment platform balances, and all digital business assets.
Use Zakat Calculator →Real situations
Detailed examples of Zakat on online business
Complete scenarios showing online business Zakat calculation.
Amazon FBA e-commerce seller
Background: Ahmed sells consumer electronics through Amazon FBA. He wants to calculate Zakat on online business for his e-commerce operation.
Inventory situation: On his Zakat date (Ramadan 1st), Ahmed has 800 units of various products in Amazon FBA warehouses. His average cost per unit is £25. Total inventory value at cost: 800 units × £25 = £20,000.
Business cash balances: Amazon Seller account balance: £8,500. PayPal account: £2,000. Business bank account: £5,000. Total business cash: £15,500.
Accounts receivable: Amazon owes him for sales from the past two weeks (not yet paid out): £3,200.
Business debts: Ahmed owes suppliers £6,000 for recent inventory purchases due within 30 days. Deductible as immediate debt.
Total zakatable business wealth: Inventory £20,000 + cash £15,500 + receivables £3,200 minus debts £6,000 = £32,700.
Zakat calculation: £32,700 × 2.5% = £817.50 annual Zakat on online business.
Key insight: For Zakat on online business Amazon FBA, include all inventory in FBA warehouses valued at cost, all platform balances, and amounts Amazon owes. Location of inventory (Amazon's warehouses) is irrelevant; ownership creates obligation.
Dropshipping business with ownership transfer
Background: Fatima operates a dropshipping store selling home decor. She purchases from suppliers after receiving customer orders, then suppliers ship directly to customers. She wants to calculate Zakat on online business dropshipping.
Inventory assessment: On her Zakat date, Fatima has 15 customer orders where she has already paid suppliers but products are still in transit to customers. Total value she paid to suppliers for these 15 orders: £750.
Business cash: Shopify balance: £1,200. PayPal: £4,500. Business bank account: £8,000. Total: £13,700.
No significant receivables: She receives payments when customers order (before she purchases from supplier).
No immediate debts: She pays suppliers immediately when customers order.
Total zakatable wealth: In-transit inventory she owns £750 + business cash £13,700 = £14,450.
Zakat calculation: £14,450 × 2.5% = £361.25 annual Zakat.
Key insight: For Zakat on online business dropshipping with ownership transfer, include the value of in-transit items you have purchased but customers have not yet received. Most of your zakatable wealth is accumulated business cash from previous sales.
Digital course creator
Background: Yusuf created an online course on digital marketing. He sells it through his website and Teachable platform. He wants to calculate Zakat on online business digital products.
Digital product inventory: The course itself (videos, PDFs, templates) is not traditional inventory. No inventory Zakat on digital files created once.
Revenue accumulation: Yusuf earned £80,000 selling courses over the past year. After business expenses (hosting, email marketing, ads), he has accumulated savings from this business.
Business cash on Zakat date: Teachable account balance: £3,000. Stripe (from website sales): £7,500. Business savings account: £45,000. Total: £55,500.
No inventory: Digital course files are not zakatable inventory. No physical products.
No business debts: All operating expenses already paid from revenue.
Total zakatable business wealth: Business cash £55,500 (the accumulated revenue from course sales).
Zakat calculation: £55,500 × 2.5% = £1,387.50 annual Zakat on online business.
Key insight: For Zakat on online business digital products, calculate on accumulated revenue in your accounts, not on the digital files themselves. The course creator's obligation is on the money earned and saved, not the course content.
Affiliate marketing business
Background: Maryam earns commissions promoting products through affiliate networks. She operates a blog and YouTube channel driving affiliate sales. She wants to calculate Zakat on online business affiliate model.
No inventory: Affiliate marketers have no inventory. She does not purchase or hold products.
Accumulated commissions: PayPal balance from affiliate payouts: £8,000. Business bank account: £12,000. Total: £20,000.
Accounts receivable: Various affiliate networks owe her £2,500 in commissions that will be paid next month. This is zakatable as money owed to her.
Business expenses: Minimal expenses. Website hosting and tools already paid.
Total zakatable business wealth: Accumulated cash £20,000 + receivables £2,500 = £22,500.
Zakat calculation: £22,500 × 2.5% = £562.50 annual Zakat.
Key insight: For Zakat on online business affiliate marketing, calculate exclusively on accumulated commissions in your accounts plus amounts owed by affiliate networks. No inventory exists, making calculation straightforward based on liquid business assets.
Complete your obligation
Calculate accurate Zakat on all business wealth
Include online business assets and personal wealth for comprehensive calculation.
Calculate Zakat Now →Islamic evidence
Quran and Sahih Hadith on trade goods Zakat
Authentic sources establishing business Zakat obligations.
Quran
Give from what you earned
Quran 2:267
Allah instructs giving from good things earned through trade and business. Online business earnings require purification through Zakat. For Zakat on online business, the Quranic command to give from earned wealth applies to digital commerce identically to traditional trade.
Quran
In their wealth is a determined right
Quran 51:19
Allah establishes determined rights in accumulated wealth. Online business revenue and inventory contain these rights. For Zakat on online business, the Quranic principle applies to e-commerce wealth requiring annual purification.
Quran
Those who give will succeed
Quran 23:4
Allah mentions Zakat among characteristics of successful believers. Online entrepreneurs succeed through proper business Zakat. For Zakat on online business, fulfilling obligations demonstrates faith while purifying digital commerce wealth.
Quran
Establish prayer and give Zakat
Quran 2:43
Allah commands Zakat universally without specifying commerce medium. Online and offline businesses equally owe Zakat. For Zakat on online business, the universal obligation applies regardless of internet-based operations.
Hadith
Zakat on trade goods
Sunan Abu Dawud 1562
The Prophet (peace be upon him) commanded Zakat on merchandise held for trade. Online business inventory constitutes modern trade goods. For Zakat on online business, Prophetic teaching on merchandise applies to e-commerce inventory at 2.5% annually.
Hadith
Calculate on business wealth
Muwatta Malik 17:15
Early Islamic teaching established valuing merchandise for Zakat. Online business inventory requires similar valuation. For Zakat on online business, classical precedent supports wholesale valuation of e-commerce stock annually.
Hadith
Assess wealth annually
Sahih al-Bukhari 1454
The Prophet (peace be upon him) established annual assessment of accumulated wealth. Online businesses assess inventory and cash annually. For Zakat on online business, annual calculation on Zakat date determines obligation on digital commerce wealth.
Hadith
Purification through Zakat
Sahih Muslim 987b
Zakat purifies all business wealth including trade earnings. Online business revenue requires purification. For Zakat on online business, paying 2.5% annually purifies e-commerce wealth while supporting those in need.
Universal consensus on trade goods regardless of medium
All Islamic schools unanimously agree that merchandise held for sale is zakatable at 2.5% annually regardless of how commerce is conducted. The Quran commands giving from business earnings. The Prophet (peace be upon him) explicitly established Zakat on trade goods. Classical scholars applied these principles to all forms of commerce in every era. For Zakat on online business, contemporary scholars maintain complete consensus that e-commerce, dropshipping, digital sales, and internet-based trading are subject to identical Zakat obligations as traditional retail because both involve the same fundamental activity: holding trade goods for customer sale and generating business revenue. The medium of commerce (internet platforms versus physical locations) is irrelevant to Islamic obligation. What matters is substance: inventory held for sale is zakatable, business cash is zakatable, and customer receivables are zakatable when total exceeds nisab for one year. Modern fatwas from major councils worldwide consistently apply classical trade goods Zakat methodology to online businesses without creating new categories or exemptions, recognizing that digital commerce is simply contemporary expression of timeless trading requiring the same purification through annual 2.5% Zakat on zakatable business assets.
FAQ
Frequently asked questions about Zakat on online business
Direct answers to common digital business Zakat questions.
Do online businesses have to pay Zakat?▾
Yes, online businesses with inventory held for sale must pay Zakat identically to physical stores. E-commerce, dropshipping, and digital businesses all require Zakat on zakatable assets. For Zakat on online business, the same principles apply: 2.5% annually on inventory, cash, and receivables when total exceeds nisab.
How do I calculate Zakat on my e-commerce inventory?▾
Value your inventory at wholesale/cost price on your Zakat date, add business cash (PayPal, Stripe, bank accounts), add customer receivables, subtract immediate debts, then calculate 2.5% on the total. For Zakat on online business inventory, use the lower of cost or current wholesale value for accurate calculation.
Is dropshipping inventory zakatable if I do not physically possess it?▾
Scholarly opinion differs on dropshipping. If you take ownership before customer sale (you buy from supplier then sell to customer), it is zakatable during the brief ownership period. If you never take ownership (pure agency model), no inventory Zakat but business cash remains zakatable. For Zakat on online business dropshipping, ownership determines inventory treatment.
Do I pay Zakat on digital products like e-books or courses?▾
Digital products are not traditional inventory requiring repeated production costs. Most scholars say one-time creation costs are not zakatable as inventory. However, revenue from sales becomes zakatable cash. For Zakat on online business selling digital products, focus on cash income and accumulated revenue, not the digital files themselves.
What about money held in PayPal, Stripe, or payment processors?▾
All business cash regardless of location is zakatable. PayPal balances, Stripe accounts, payment processor holdings, and business bank accounts all count as zakatable cash. For Zakat on online business payment platforms, include all accessible business funds in your calculation.
Can I deduct platform fees and transaction costs?▾
Deduct fees already incurred as business expenses when calculating profit. Future anticipated fees are not deducted from zakatable assets. For Zakat on online business with platform fees, account for actual costs incurred but calculate Zakat on current business wealth including cash and inventory.
How do I handle inventory in Amazon FBA or third-party warehouses?▾
Inventory you own stored anywhere (Amazon FBA, ShipBob, or other fulfillment centers) is zakatable. Location is irrelevant; ownership creates obligation. For Zakat on online business using fulfillment services, calculate on all inventory you own regardless of storage location.
What about affiliate marketing and commission-based online businesses?▾
Affiliate businesses typically have no inventory. Calculate Zakat on accumulated commissions in your accounts (PayPal, bank). Unpaid commissions owed by affiliate networks may be zakatable as receivables. For Zakat on online business affiliate models, focus on liquid assets and amounts owed to you.
Do I pay Zakat on website value or domain names?▾
Websites and domains used for operating your business are capital assets, not zakatable. Only inventory for sale and liquid business assets are zakatable. For Zakat on online business digital assets, exclude operational tools (websites, domains, software) and calculate only on trade inventory and cash.
Can I use e-commerce platform reports for Zakat calculation?▾
Yes, use Shopify, Amazon, or platform reports to determine inventory value, sales, cash balances, and receivables. Export financial reports on your Zakat date for accurate calculation. For Zakat on online business using platforms, leverage built-in reporting tools to simplify zakatable asset assessment.
Fulfill your Zakat obligation
Calculate Zakat on online business and all wealth
Whether you operate e-commerce stores, dropshipping businesses, digital product platforms, affiliate marketing, SaaS applications, or any internet-based trading, calculate your complete annual Zakat obligation accurately on business and personal wealth. Include inventory at wholesale value, cash in PayPal and all payment platforms, customer receivables, and accumulated revenue. Fulfill this pillar of Islam with confidence knowing online business Zakat principles are clearly established through classical trade goods methodology applied to modern digital commerce.
Related guides for business owners
Disclaimer: This guide provides comprehensive educational information about Zakat on online business based on universal scholarly consensus that trade goods are zakatable at 2.5% annually regardless of commerce medium. All Islamic schools agree that inventory held for sale, business cash, and receivables are zakatable whether business operates online or offline. Individual circumstances vary based on business models (e-commerce, dropshipping, digital products, services), inventory ownership structures, platform-specific arrangements, international operations, and specific contexts. While fundamental principles that online businesses owe Zakat on inventory and liquid assets are firmly established, nuanced questions about specific digital business models, dropshipping ownership, digital product treatment, or complex international arrangements may benefit from consultation with qualified Islamic scholars familiar with both classical commercial jurisprudence and contemporary digital business operations. This guide represents mainstream Islamic teaching on Zakat on online business providing practical implementation guidance for the vast majority of Muslim digital entrepreneurs.
About this Content
Written by the Zakat Finance editorial team. All content is based on authentic Islamic scholarship and is reviewed regularly to ensure accuracy. The content aims to provide guidance on Zakat calculation and does not replace advice from a qualified Islamic scholar.
Last updated: February 2026
Method note: We present common scholarly approaches to Zakat calculation, encouraging consultation with trusted scholars for personal cases.