Calculation Methodology

Rafiq's calculation engine supports 5 madhabs. This page documents the exact constants, formulas, and decision logic we use. Rafiq has not yet been reviewed by a Shariah board.

1. Zakat Calculation

Core Constants

Ja'fari nisab weights sourced from: al-Sistani, Tawdih al-Masa'il, Mas'alah 1863.

Asset Categories

Rafiq calculates zakat on these asset categories:

1. Cash & bank accounts — full value zakatable
2. Gold — valued at live spot price per gram
3. Silver — valued at live spot price per gram
4. Investments (stocks, ETFs, mutual funds) — 1/3 zakatable ratio applied
5. Business inventory — full value zakatable
6. Cryptocurrency — full market value zakatable
7. Personal jewelry — madhab-dependent (see below)
8. Retirement accounts (401k, IRA, Roth) — madhab-dependent, 1/3 ratio when applicable

Madhab-Specific Rules

Ja'fari Per-Category Nisab

In the Ja'fari school, gold and silver are checked independently against their own nisab thresholds. Unlike Sunni schools where all assets are combined, each Ja'fari category must independently meet its threshold before zakat is due on that category. Deductions are distributed proportionally across categories based on their relative values.

Formula

For Sunni schools:

Zakat Due = (Total Zakatable Assets − Applicable Deductions) × 2.5%

(only if net amount ≥ nisab threshold)

For Ja'fari:

Gold Zakat = Gold Value × 2.5% (if gold value ≥ 69.12g × gold price)

Silver Zakat = Silver Value × 2.5% (if silver value ≥ 483.84g × silver price)

2. Khums Calculation

Income Sources (Taxable)

• New savings accumulated this khums year
• Cash on hand
• Investment gains
• Business profits
• Rental income
• Gifts received (remaining unused at year-end)

Exempt: Expected inheritance from close relatives.

Property Subject to Khums

• Gold and silver purchased
• Jewelry beyond personal use
• Unused goods and surplus items

Deductions

• Annual living expenses
• Debt payments (for living necessities)
• Business reinvestment

Advanced Categories

These are taxed independently at 20%, regardless of surplus/deductions:

• Kanz — Buried treasure or hidden wealth
• Ma'dan — Minerals extracted from the earth
• Ghaws — Valuables retrieved from the sea
• Property Appreciation — Gains on investment property (excludes primary residence)
• Mixed Halal/Haram — Wealth with inseparable halal/haram portions (owner unknown)

Formula

Net Surplus = (Total Income + Total Property) − Total Deductions

Standard Khums = Net Surplus × 20%

Advanced Khums = Sum of (each advanced category × 20%)

Total Khums = Standard + Advanced

Sahm al-Imam = Total Khums × 50%

Sahm al-Sadat = Total Khums × 50%

3. Halal Stock Screening

Rafiq screens stocks with four checks. Its debt and cash limits are 33% of market cap, the level used by the Dow Jones Islamic Market (DJIM) index. AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shariah Standard No. 21 sets a stricter 30%, so a stock with a ratio between 30% and 33% can pass Rafiq's screen but fail AAOIFI's.

Screening Criteria

Status Classifications

• HALAL — Passes all 4 criteria
• NOT HALAL — In a prohibited industry, or far above the debt or interest income limit
• QUESTIONABLE — Debt of 33–50% of market cap, interest income of 5–10% of revenue, or cash and receivables above 33% of market cap. Scholars may differ.

Data Sources

• Live screening: Financial Modeling Prep (FMP) API for company financial statements

4. Tatheer (Dividend Purification)

Formula

Purification Amount = Dividend Income × Non-Compliant Revenue Ratio

The non-compliant ratio is derived from the company's income statement: interest income and interest expense as a percentage of total revenue. This ratio represents the portion of company earnings from impermissible sources.

Haram Stock Detection

Stocks in inherently prohibited industries (conventional banking, alcohol, tobacco, gambling, conventional insurance) are flagged as haram. For these stocks, 100% of dividends should be donated to charity, plus any unrealized capital gains.

Data Flow

1. User enters stock ticker and number of shares
2. FMP API provides: company profile, dividend history, income statement
3. Non-compliant ratio calculated from income statement interest fields
4. Purification amount = dividends × non-compliant ratio

5. Testing

Rafiq's calculation engine is checked by automated tests covering:

• Per-madhab nisab enforcement (Sunni vs Ja'fari thresholds)
• Ja'fari per-category nisab independence
• Madhab-specific deduction rules (Shafi'i gross vs Hanafi net)
• Jewelry inclusion/exclusion per madhab
• Retirement account treatment per madhab
• Stock zakatable ratio (1/3) application
• Khums surplus and advanced category calculations
• Equity compensation vesting (RSUs, stock options, ESPP)

These tests check that the code follows the rules on this page. They don't show that the rules themselves are correct: we haven't measured accuracy against an independent test set, and the rules have not yet been reviewed by a Shariah board. Where scholars differ on a rule, Rafiq says so and recommends consulting a qualified scholar.

6. Data Freshness

• Gold & silver prices: Live spot prices fetched at calculation time
• Stock screening ratios: Refreshed quarterly, using each company's latest financial statements.
• Dividend data: From the Financial Modeling Prep (FMP) API

Rafiq is an educational calculation tool, not a religious authority or tax advisor. For complex situations, consult a qualified Islamic scholar. This methodology document describes the logic implemented in our calculation engine and is subject to refinement as scholarly guidance evolves.