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Zakat Calculation on Cash and Saving

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Table of Contents

Zakat on Gold and Jewelry

Islam considers gold and silver growing wealth in all forms; coin, bullion, or handicraft. One who possesses them at the threshold (Nisab), a value equal to 85 grams of pure gold in our time, must pay zakat on them as they are property which “increases,” and that’s the definition of zakat.

Women don’t pay zakat for the jewelry they use for ornamentation.

However; Muslims pay zakat on jewelry in four cases;

  • When one hoards it as a store of values to accumulate wealth.
  • When one hoards it in quantities commonly considered in excess of ordinary accumulation.
  • When the jewelry in itself or in aggregate, is recognized as extravagant; whether in quantity, in size as relates to monetary worth, or in composition as applies to its market price.

Zakat on Silver

As mentioned before, gold and silver are growing wealth in all forms. Therefore, both when they reach the “Nisab” are subject to zakat in all their forms. However; a plain silver ring for men, or a silver decorative sword hilt, and women’s jewelry, have no zakat to pay.

Zakat on Money in Banks

There are two types of deposited money in the bank;

  • Money deposited in Islamic banks.
  • Money deposited in banks that deal with interest and usury.

For the money deposited in Islamic banks, zakat must be paid on the capital money and the profit. Therefore, when a lunar year passes on the capital money that reaches the minimum amount of zakat, you have to pay zakat on all capital money and the profits.

For the money deposited in banks which deal with interest and usury; the zakat is due on the capital money only. There is no zakat on interest, as it is considered forbidden and impure money. And you can’t give it to the poor and needy, to deduct it from the due zakat money.

Zakat on Business Assets

Business assets are subject to zakat, including;

  • Cash.
  • Finished goods.
  • Work in progress.
  • Raw materials.
  • Strong debts.

Meaning; the money owed to business that is likely to be received.

  • Business assets must be valued at their current market price.
  • For finished goods, this should be their retail sale price.
  • For unfinished goods; this should be whatever price you expect the unfinished good to fetch on your Zakat anniversary date.

Zakat Calculation on Cash and Saving

Zakat on Money that is Invested in Trade

Zakat is due to money that is invested in trade in this way; if a lunar year has passed since a Muslim has possessed this wealth, they should pay zakat on it, whether it’s on hand or is invested in trade. However, if one has earned some profit on it, during the same lunar year, the zakat for that profit money is due when the zakat on the original amount is due.

Zakat on Stocks and Investments

Zakat on stocks and investments is due.

Muslim zakat scholars consider shares and stocks as partial ownership of the capital of a corporation or business entity.

They define shares and stocks as a capital contribution that faces its ups and downs, so are the bonds they frame as contractual financial instruments of set terms and compensations. Therefore, both forms of wealth hold a market value that may rise or fall. Thus, zakat for both is due.

 

Zakat on Startups

The zakat treatment on start-up and private equity investments is that the investor should pay on the net Zakatable assets of the company annually.

The investor should determine the ratio and percentage of net Zakatable assets in the company. Thereafter; the same percentage should be applied to one’s investment.

At the end; (2.5%) of this amount should be paid as zakat.

Zakat Calculation on Cash and Saving

Zakat on Investment Property

If the property (apartments, houses, buildings) is used as a private residence of the owner of the property, or of his relatives, or even others who authorized him to live in it, then there is no zakat due on it, because it is not “rented.”

If the property is for rent, then zakat is required on its proceeds, which is the amount he receives from the lessee, not on the property’s value.

Nisab Value 2022

Nisab is determined through the current value of gold and silver;

  • The Nisab value in gold is 3 ounces / 87.48 grams or its cash equivalent.
  • The Nisab value in silver is 21 ounces / 612.36 grams or its cash equivalent.

FAQ

How Much Is Zakat on Money?

Zakat on money should be paid at (2.5%) on all cash balance and bank balance in your savings, current, or FD accounts. And the amount should be in the bank for the lunar year.

Who Is Eligible For Zakat Money?

1. The poor (Al-fuqara’).
2. The needy (Al- masakin).
3. The administrators.
4. Those whose hearts are to be reconciled; (new Muslims and the friends of the Muslim community).
5. Those in bondage (slaves and captives).
6. The debt-ridden.
7. In the cause of Allah.
8. The wayfarer; (who are stranded on traveling with few resources).

How Do You Calculate 2.5 Zakat?

To calculate 2.5 Zakat on your wealth; multiply 2.5 with the leftover amount of your money. For Example; 2.5% x 12,000 USD = 300 USD is due for Zakat.

How is Zakat Calculated On Gold?

Zakat on pure gold reaches Nisab equals 87.48 grams which are equivalent to a quarter of one-tenth (2.5%) after one lunar year of possession.
Zakat must be paid on 2.5% of the value of the gold that you own. A gram of gold costs £40.88, which equates to £1.02 Zakat per gram.

How Much Zakat is 7.5 Gold Tola?

They are required to donate (2.5%) of their total wealth to those in need. Nisab was set by Prophet Muhammad (SAW) at 20 (Mithqaal) of gold or 200 (dirhams) of silver. This is the equivalent of (87.48) grams (7.5 tolas) of gold and (612.36) grams (52.5 tolas) of silver, respectively.

How Much is Gold Per Gram for Zakat?

A gram of gold costs £40.88, which equals £1.02 Zakat per gram. Zakat is payable at (2.5%) of the wealth one possesses above the Nisab. Nisab, which is equal to three ounces of gold, is the minimum amount of wealth one must have before they are liable to pay zakat on gold.

Is Zakat on Gold Every Year? 

Yes, Zakat on gold has to be paid annually.  

How is Zakat Calculated on Cash in the Bank?

If the money is deposited in Islamic banks; zakat must be paid on the capital money and on the profit as well. 
But if the money is deposited in banks that deal with interest and usury; the zakat is due on the capital money only. There is no zakat on interest, as it is considered forbidden and impure money

how to calculate zakat on savings?

An average of (2.5%) of the saved money. 

Is Zakat on Savings or Income?

Zakat is only paid on saved money.

What Money is Exempted From Zakat?

The exempt money from zakat is the one that didn’t reach the Nisab and the money that didn’t pass a lunar year.

Is Zakat Applicable on Business Investment?

Yes. Business investments are partial ownership of the capital of the corporation or business entity. Muslim zakat scholars define business investment as a capital contribution that faces ups and downs and holds the market value that may rise or fall. Therefore, zakat on business investment is due.

Do You Have to Pay Zakat on Stock Investments?

Yes, there is zakat on stock investments, as it is considered partial ownership of the capital.

Is Zakat Payable on Business Capital?

Yes, zakat is obligatory on the business capital (the original money) as well as its profits, if the capital reaches the “Nisab” and one lunar year has passed.

How to calculate zakat on cash?

you can use our online zakat calculator

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