Zakat is one of the five pillars of Islam: 2.5% of qualifying wealth given each year to those entitled to receive it. Working out the amount is simpler than many people expect.
1. Check the two conditions
Zakat is due when your wealth is at or above the nisab and you have held it for one full lunar year. The nisab is the value of 612.36 grams of silver or 87.48 grams of gold. Because silver is cheaper, the silver nisab is lower, and many people use it so that more is given to those in need.
2. Add up what counts
- Cash at home and money in bank accounts.
- Gold and silver, at today's value.
- Business stock, at the price you would sell it for.
- Money others owe you that you expect to get back.
- Shares and property bought to sell.
3. Leave out what doesn't count
The home you live in, your car, furniture, clothes and other personal items are not zakatable.
4. Subtract debts due now
Take away bills and instalments that are due now. Most scholars do not let you subtract the whole remaining balance of a long-term loan, only the part currently due.
5. Multiply by 2.5%
If what is left is at or above the nisab, multiply it by 2.5%, which is the same as dividing by 40.
Worked example
Cash and bank Rs 500,000 + gold worth Rs 300,000 − bills due Rs 50,000 = Rs 750,000. If that is above the nisab, zakat is Rs 750,000 × 2.5% = Rs 18,750.
A note on jewellery
Scholars differ on jewellery that is worn. The Hanafi school counts all gold and silver jewellery, while other schools exempt jewellery worn regularly. Follow the guidance of a scholar you trust for your own case.
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