How to Purify Investment Income
Step-by-step guide with calculator for Islamic income purification
Scholarly Basis
AAOIFI Shariah Standard No. 21 requires purification of income derived from impermissible sources. Even halal stocks may have up to 5% impure revenue that must be cleansed through charity.
What is Investment Purification?
Even Shariah-compliant stocks may have a small percentage (under 5%) of impure revenue from interest, prohibited activities, or non-permissible sources. Islamic scholars require investors to donate the proportional amount to charity to cleanse their earnings.
✅ Simple Rule
Purification Amount = Income × Impure Revenue %
If Apple has 1.9% impure revenue and you receive $100 in dividends, donate $1.90.
When Do You Need to Purify?
Purification is required when your investment generates income from stocks with impure revenue:
Interest Income
Company earns interest on cash holdings or from lending
Banking Revenue
Subsidiaries involved in conventional financial services
Prohibited Activities
Even small revenue from gambling, alcohol, tobacco
Impure Entertainment
Revenue from adult content or non-compliant media
🧮 Purification Calculator
Step-by-Step Purification Process
Step 1: Find the Impure Revenue Percentage
Check the company's annual report (10-K) or use screening tools:
- Look for "Interest Income" or "Non-operating Income" in financial statements
- Divide by total revenue to get the percentage
- Use tools like HalalSignalz, Zoya, or Musaffa that pre-calculate this
Reference: Impure Percentages for Popular Stocks
| Stock | Impure % | Source |
|---|---|---|
| Apple (AAPL) | 1.9% | Apple Card interest, some App Store content |
| Microsoft (MSFT) | 0.8% | Interest on cash holdings |
| NVIDIA (NVDA) | 1.2% | Interest income |
| Tesla (TSLA) | 1.1% | Regulatory credits (debated) |
| Salesforce (CRM) | 0.5% | Minor interest income |
| ServiceNow (NOW) | 0.7% | Interest on cash |
Step 2: Calculate the Purification Amount
Example 1 — Dividends:
- You received $500 in Apple dividends
- Apple's impure revenue = 1.9%
- Purification = $500 × 1.9% = $9.50 to charity
Example 2 — Capital Gains:
- You bought Microsoft for $10,000, sold for $12,000
- Gain = $2,000
- Microsoft's impure revenue = 0.8%
- Purification = $2,000 × 0.8% = $16 to charity
Step 3: Donate to Charity
The purified amount should be donated to:
- ✅ Poor and needy — most recommended by scholars
- ✅ Islamic charities — relief organizations, food banks
- ✅ Mosques and Islamic education — acceptable to most scholars
- ❌ NOT for your own benefit — cannot use for yourself or close family
⚠️ Important: This is NOT Zakat
Purification is separate from Zakat. You cannot count purified income toward your annual Zakat obligation. Pay both separately.
Purification Frequency
| Event | When to Purify | Recommended Approach |
|---|---|---|
| Dividends Received | Immediately upon receipt | Calculate and donate same month |
| Stock Sale (Capital Gains) | At time of sale | Calculate on realized gain only |
| Yearly Portfolio | Once per year | Conservative: purify all holdings annually |
Frequently Asked Questions
What if the company has 0% impure revenue?
No purification needed! Some companies like Salesforce (0.5%) and ServiceNow (0.7%) have very low impure revenue. Pure tech companies with no interest income may have 0%.
Can I donate to my local mosque?
Scholars differ on this. Majority opinion: Direct charity to the poor is better.Minority opinion: Mosques and Islamic education are acceptable recipients. When in doubt, donate to the poor or a relief organization.
What if I held the stock for multiple years without purifying?
Calculate total dividends received and gains realized, then purify retroactively. Going forward, purify each year or upon each dividend/sale.
Do I purify unrealized gains?
Most scholars say purify only realized gains (when you sell). Conservative approach: some scholars recommend annual purification based on current portfolio value.
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