What is Zakat?
Zakat, one of the Five Pillars of Islam, is a mandatory charitable contribution for Muslims who meet certain wealth criteria. It is a spiritual and social obligation intended to purify one's wealth and support those in need within the community. The amount to be paid is 2.5% of one's total Zakatable wealth that has been held for a full lunar year.
How to Use the Zakat Calculator
Our Zakat calculator helps you determine your obligation in a few simple steps:
- Enter Your Assets: In the "Zakatable Assets" section, input the value of your cash, gold and silver, investments (like stocks), and any debts owed to you that you expect to be repaid.
- Enter Your Liabilities: In the "Deductible Liabilities" section, input your immediate, short-term debts and expenses that are due around your Zakat date. This can include bills, rent, and loan payments due within the month.
- Check the Nisab Threshold: The calculator has a pre-filled Nisab value. You should verify the current Nisab value with a trusted local Islamic authority, as it changes with the market prices of gold and silver.
The calculator will then determine your Net Zakatable Assets. If this amount is above the Nisab threshold, it will calculate the Zakat you owe (2.5% of the net amount).
The Zakat Calculation Formula
The formula for calculating Zakat is:
Zakat Due = (Total Zakatable Assets - Deductible Liabilities) × 0.025
This calculation is only performed if the Net Zakatable Assets (Assets - Liabilities) are greater than the Nisab threshold.
Key Terms Explained
- Zakatable Assets: Wealth that is subject to Zakat. This typically includes assets that are productive or have the potential for growth, such as cash, precious metals, business inventory, and investments.
- Deductible Liabilities: Immediate debts and living expenses that can be subtracted from your total assets before calculating Zakat. Long-term debts like a mortgage are generally not deducted in full, though opinions can vary.
- Nisab: The minimum amount of wealth a Muslim must own for one lunar year to be obligated to pay Zakat. The Nisab is traditionally valued as the equivalent of 85 grams of gold or 595 grams of silver.
Frequently Asked Questions (FAQ)
- Why are there two values for Nisab (gold and silver)?
- Historically, gold and silver had similar values. Today, their values have diverged significantly. Many scholars recommend using the silver Nisab, as it is lower, which means more people are able to pay Zakat, thus benefiting a greater number of needy individuals. It is best to consult with a local scholar or Islamic center for guidance on which value to use.
- Do I pay Zakat on my personal home and car?
- No, Zakat is generally not due on personal-use items like your primary residence, the car you drive, or the clothes you wear. Zakat applies to surplus wealth and productive assets.
- How is Zakat calculated on stocks and investments?
- Calculating Zakat on investments can be complex. A common method is to pay Zakat on 2.5% of the total market value of your portfolio on your Zakat due date. However, for investments made with the intention of long-term growth (not active trading), some scholars permit paying Zakat only on the profit portion. It is highly recommended to seek guidance from a qualified scholar for your specific situation.
- When do I pay Zakat?
- You pay Zakat once a year. Your "Zakat year" starts on the date your wealth first equaled or exceeded the Nisab. You then calculate and pay your Zakat one full lunar year after that date. Many Muslims choose to pay their Zakat during the month of Ramadan for its multiplied blessings, but it can be paid at any time your Zakat year is complete.