Which asset is Zakatable?
An asset must fulfil the following criteria to qualify as a Zakatable asset:
1) Complete ownership of the asset
2) The asset is productive (intrinsically or extrinsically)
3) The wealth is equivalent to Nisab or more
4) A whole lunar year passes after possessing Nisab
Complete ownership of wealth
Complete ownership refers to having ownership and the ability to benefit from a Zakatable asset. It is not necessary to have direct possession; one may have indirect possession such as having cash deposited in the bank or money kept with a relative. This is agreed upon by the mainstream schools of jurisprudence.
Asset is productive
Zakat is binding on wealth which is productive according to all four schools of jurisprudence.
Productivity in terms of Zakat refers to the potential of an asset to grow and increase. Productivity of an asset can be intrinsic as is the case with gold, silver and cash. Productivity can be activated by an intention to trade when purchasing stock or investing into Zakatable assets. And finally, productivity can be established through the breeding of flock.
Besides these three causes, the Shariah has not recognised any other cause of productivity. Personal assets and belongings which may appreciate will not be Zakatable despite growing in value as they are not productive wealth in Zakat terms.
The wealth is equivalent to Nisab or more
For the payment of Zakat to be obligatory, it must equal or exceed the Nisab threshold on the Zakat anniversary.
A whole lunar year passes after possessing Nisab
After owning Nisab for the first time, Zakat is obligatory after the passing of one lunar year. Thereafter, Zakat will be due every year on the same date if the qualifying conditions are found. It is not necessary for a year to pass on every single Zakatable asset, rather, the same Zakat anniversary will be used for other Zakatable assets such as gold, silver, cash and business stock acquired during the year.