How do I purify my dividends?

Multiply the dividend by the company's impermissible income share and give that amount to charity. For example, a $100 dividend with a 3% share means $3.

Do I need to purify profit from selling shares?

Scholars differ: most say purifying dividends is enough, while some recommend purifying the matching portion of the profit as well.

Halal finance

What is Purification?

Tozalash (purification)

In short

Giving to charity the part of a dividend that corresponds to impermissible income: dividend × (impermissible income ÷ total revenue).

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Also known as: tathir, tozalash

Purification (tathir) means giving to charity the portion of income from a screened stock that corresponds to impermissible income. Screening allows a company to have a small amount of impermissible income (from interest, for example), but that portion is not considered the investor's to keep.

Amount to purify = Dividend × (Impermissible income ÷ Total revenue)

How it's done

Add up the dividends received during the year.
Take each company's impermissible income share from its latest report.
Multiply and give the result to charity. This amount isn't counted as voluntary charity for reward and doesn't replace zakat — it simply removes money that isn't yours.

What about capital gains

Most scholars require purification only of dividends. Some scholars also recommend purifying the matching portion of the profit when shares are sold. There is a difference of opinion here; cautious investors may choose the second approach.

Limitations

Where the impermissible share can't be calculated precisely, an estimate is used. In halal ETFs purification is sometimes done by the fund itself — check the fund's documents. Our calculation method is on the methodology page.

For information only, not a fatwa.

Purifying a $400 dividend

Yours: $394Charity: $6 (1.5%)

Purification ratio 1.5% — that share of the dividend goes to charity.

The same 100 shares — three methods

1. Dividends only$6 · $400 × 1.5%

2. Impermissible income per share$7.50 · 100 × $0.075

3. Dividends + capital gain$51 · $6 + $3,000 × 1.5%

100 shares held for one year, impermissible share 1.5%. The methods give different amounts. Settle with your own scholar which to use; the cautious path is the largest.

Example

An illustrative case: you own 50 shares and the quarterly dividend is $1.20.

Quarterly dividend: 50 × $1.20 = $60.
The company's impermissible income share: 4%.
Amount to purify: $60 × 4% = $2.40 to charity.
For the year (4 quarters, if the share doesn't change): $2.40 × 4 = $9.60.

Net dividend you keep: $240 − $9.60 = $230.40 (before tax).

Mistakes and tips

Calculate purification on the gross (pre-tax) dividend — most methodologies do it this way.
Note down the purification amount as soon as the dividend arrives; it's hard to reconstruct at year end.
Purification does not replace zakat — they are separate obligations.

Halal finance terms are explained for general information — not a fatwa. Not investment advice either.

Calculate it

Stock zakat calculator

Estimate the zakat on your stocks: trading or long-term investor method, lunar or solar year, and a nisab check.

Frequently asked questions

How do I purify my dividends?: Multiply the dividend by the company's impermissible income share and give that amount to charity. For example, a $100 dividend with a 3% share means $3.
Do I need to purify profit from selling shares?: Scholars differ: most say purifying dividends is enough, while some recommend purifying the matching portion of the profit as well.

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Related terms

Impermissible income Dividend Zakat