Zakat Calculator
Calculation Summary
Total Net Assets: 0.00
Zakat Due: 0.00
Comprehensive Guide: How Do We Calculate Zakat?
Zakat is one of the Five Pillars of Islam, representing a mandatory form of almsgiving for every adult Muslim who meets the necessary wealth criteria. It is not merely a tax, but a spiritual obligation intended to purify one's wealth and provide for the less fortunate members of the community.
1. Understanding the Nisab
Before calculating Zakat, you must determine if your wealth has reached the "Nisab" threshold. The Nisab is the minimum amount of wealth a person must possess for a full lunar year before Zakat becomes obligatory. Traditionally, the Nisab is calculated based on the market price of two commodities:
- Gold: The value of 87.48 grams of gold.
- Silver: The value of 612.36 grams of silver.
Most modern scholars recommend using the Silver Nisab to ensure more people contribute to the welfare of the poor, though the Gold Nisab is also widely used for stability.
2. Assets Subject to Zakat
Zakat is calculated at a rate of 2.5% on your net qualifying assets. These include:
- Cash: All money held in bank accounts, savings, or cash on hand.
- Precious Metals: The market value of gold and silver jewelry (excluding personal use items in some schools of thought) or bullion.
- Investments: The current value of stocks, shares, and retirement funds (pension pots).
- Business Assets: The value of trade goods, inventory, and raw materials intended for sale.
- Receivables: Money you have lent to others that you are confident will be repaid.
3. Deductions (Liabilities)
Before applying the 2.5% rate, you must subtract your immediate debts. This includes monthly bills, upcoming rent, or the portion of a long-term loan (like a mortgage) that is due immediately. Do not subtract the entire principal of a long-term mortgage, only the immediate installment due.
Step-by-Step Example
Scenario:
- Total Cash and Bank: 5,000
- Gold Value: 3,000
- Business Goods: 2,000
- Personal Debts: 1,000
- Net Wealth: (5,000 + 3,000 + 2,000) – 1,000 = 9,000
If the Nisab is 5,000, then Zakat is due because 9,000 > 5,000.
Zakat Calculation: 9,000 x 0.025 = 225
When to Pay Zakat?
Zakat is due once every lunar year (Hawl). Many people choose to pay during the month of Ramadan to maximize spiritual rewards, but it can be paid at any time once the one-year anniversary of reaching the Nisab has passed.