How it all works
Understand exactly how Hisaab calculates your net profit, Zakat eligibility, and dividend purification. Transparency is key to Halal investing.
1. Buy Charges & Average Price
When using Indian brokers like Angel One, Zerodha, or Groww, the Average Price shown in your portfolio the next day (T+1) already includes your brokerage, STT, Exchange transaction charges, and GST.
- Method 1 (Recommended): Enter the Average Price from your broker app as the Buy Price, and enter
0for Buy Charges. This prevents double-counting charges. - Method 2 (From Contract Note): Enter the raw execution price as the Buy Price, and the total overall charges from your contract note into the Buy Charges field. Hisaab will pro-rate the charges across your shares automatically.
2. Net Profit (Realized Gain)
When you sell shares, Hisaab calculates your true take-home net profit.
If you sell only half of your shares, Hisaab only deducts half of the Buy Charges you entered to accurately reflect the cost basis of the sold shares.
3. Capital Gains Purification
Purification is the process of donating the non-halal portion of your income to charity (without expecting reward) to cleanse your wealth. This is strictly calculated on your Gross Profit.
Dividend Purification
If a stock has a 5% non-halal income ratio, you must donate 5% of every dividend received to charity. Hisaab calculates this automatically per payment based on the ratio you set.
4. Zakat on Shares
Zakat is an annual Islamic obligation of 2.5% on eligible wealth. In Hisaab, we automate this tracking.
- Nisab: The minimum wealth threshold before Zakat becomes obligatory (based on the gold/silver standard). For investments, only profit is zakatable.
- Hawl (Hold Period): A stock must be held for a full lunar year before its profit is zakatable. Hisaab tracks exactly how many days a position has been held. Zakat becomes eligible after approximately 354 days (a lunar year varies depending on the moon cycle).
- Active vs Long-Term: Active traders (buying/selling for short-term gain) pay 2.5% on the total market value of the stock. Long-term investors pay 2.5% typically due only on the profit and dividend yield (zakatable assets), not the capital invested.
- Haram Stocks: If a stock is categorized as Haram, it must be divested immediately and is entirely subject to purification. Haram stocks are excluded from Zakat because you are obligated to divest them entirely without keeping the profit.
5. What Makes a Stock Sharia Compliant?
There is no single universally mandated Sharia standard — multiple global scholarly bodies provide screening frameworks. All agree on what is prohibited, but differ slightly on financial ratio thresholds. A stock must pass two steps to be considered halal.
The company's core business must be halal. These industries are excluded by all standards:
- ✕Conventional banking & insurance (interest / riba-based)
- ✕Alcohol production or distribution
- ✕Pork-related products
- ✕Gambling & betting
- ✕Tobacco
- ✕Adult entertainment / pornography
- ✕Weapons manufacturing (excluded by most standards)
Even a halal business can have a haram financial structure due to excessive interest-bearing debt. Three ratios are checked:
| Standard | Threshold | Denominator | Interest in 5%? |
|---|---|---|---|
| AAOIFI | < 30% | Market Cap | Yes (stricter) |
| DJIM | < 33% | Market Cap | No |
| S&P Shariah | < 33% | Market Cap | No |
| FTSE / MSCI | < 33% | Total Assets | Yes |
The 33% threshold used by mainstream index providers is derived from a well-known Hadith regarding what constitutes a "significant" or "large" portion.
Islamic financial scholars extracted from this that anything up to one-third (33.3%) is considered a minority portion, while one-third and above crosses the threshold into becoming a significant portion. Thus, impermissible financial elements (like interest-bearing debt) must be kept strictly below one-third. AAOIFI adopts a slightly stricter 30% out of extra caution.
6. Dividend Tracking
Dividends are periodic cash payments from companies to shareholders. Hisaab tracks every payment and automatically links it to your purification obligations.
- Auto-Fetch: Pull historical dividend data from Yahoo Finance across all your holdings at once with a single tap.
- Manual Logging: If auto-fetch doesn't detect a payment, you can log it manually with the exact date and amount per share.
- Purification Link: Any dividend from a stock with a non-halal % will automatically show the exact portion you need to donate to charity.
7. Portfolio & Sharia Tracking
Add a stock and Hisaab takes care of the rest — tracking every position's performance, compliance, and religious obligations automatically.
- P&L Tracking: Unrealized and realized gains calculated per position, updated with live market prices.
- Sharia Compliance: Mark each stock as Halal, Doubtful, or Haram and set the non-halal income percentage.
- Zakat Automation: 2.5% on eligible profit after 1 lunar year (which varies depending on the moon cycle and is approximately 354 days), calculated hands-free across all compliant holdings.