Zakat Calculation on Cash and Saving

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 that “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.

You can calculate how much you should pay pay zakat on a gold check with our gold zakat calculator.

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

For the money deposited in Islamic banks, zakat must be paid on capital money and 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 that deal with interest and usury, the zakat is due on 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 a 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 on Money that is Invested in Trade

Zakat is due to the 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 the capital contribution that faces their ups and downs, and 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 cash savings

Zakat is a percentage of your savings that you must give to charity each year. The zakat on cash savings is 2.5%. This means that if you have $1,000 in cash savings, you must give $25 to charity. Zakat is not the same as taxes. Zakat is a religious obligation, while taxes are imposed by the government.

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 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.

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