Purification of Income
Purification of Income
Condition # 1
Condition # 2
A) Treatment
for Shareholding
1) Disposed off
immediately
1) Not Applicable
B) Treatment
for Dividend
2) If shares are to be
2) Formula for cleansing dividend:disposed, to establish date of
disposal to facilitate
(Value of Non-Islamic activities/ Total worth of the company) X
computation of amounts to be
Dividend X (Holding period (in days) since on-set of Nondeducted from dividends and
Islamic activities/365)
donated to charity using
same formula indicated
above
3) If interest from deposits
e 3) Formula used
constitute part of the dividend
Interest earned X Number of shares held
paid, then the interest earned
Issued share capital
must be deducted from the
dividends and given to charity
C) Treatment of
Capital Gains
D) Effect of
Borrowings on
Dividend
E) Effect of
Borrowings on
Capital Gain
NOTE
Purification should commence from the point of purchase only
Monitoring of the activities of the Company should be an on-going exercise until the shares are disposed off
Borrowings to be taken into consideration should be loans exceeding one (1) year duration
X Capital Gains