Zakat is the third pillar of Islam, a compulsory charity for eligible Muslims. It purifies wealth and helps the needy. Understanding how to calculate Zakat correctly is very important so that one fulfills this religious obligation properly.
Who Must Pay Zakat?
You must pay Zakat if:
- You are Muslim
- You are adult & sane
- You possess wealth above the Nisab
- A full lunar year (approx. 354 days) has passed over that wealth
Nisab Threshold
Nisab today equals:
- 85 grams of gold, OR
- 595 grams of silver
People often calculate Zakat using silver value because it helps more poor people.
Rate of Zakat
Zakat rate = 2.5% annually on qualifying wealth.
Wealth That Requires Zakat
- Cash (bank or hand)
- Gold & silver
- Business inventory
- Investments & shares
- Rental income savings
- Crypto assets (scholars discuss — but majority count as wealth)
- Agricultural produce (separate rules)
- Livestock (specific rules)
Wealth Exempt From Zakat
- Personal home
- Car for personal use
- Furniture & clothing
- Tools for work
Zakat Calculation Example
If you have:
| Wealth Type | Value |
|---|---|
| Cash | $4,000 |
| Gold | $2,500 |
| Business goods | $2,000 |
| Total | $8,500 |
Zakat = 2.5% of 8500 =
$212.50
Zakat on Gold
Weigh gold, find current market price, multiply, then pay 2.5%.
Where to Give Zakat
Eligible people (Quran Surah At-Tawbah 9:60):
- Poor & needy
- New Muslims
- Debt-burdened people
- Travelers in difficulty
- People collecting/distributing Zakat
- People striving in the path of Allah
Zakat Intention
Intention must be made in the heart.
When to Pay
Once your yearly Zakat date comes, pay immediately.