Zakat is one of the Five Pillars of Islam, representing a mandatory giving of a portion of wealth to those in need. It purifies wealth and promotes social welfare. Zakat is obligatory on Muslims who meet the nisab threshold and have held wealth for a lunar year.

Zakat Principles

Key Requirements for Zakat

Nisab Threshold

Minimum amount of wealth required

Based on value of 87.48g gold or 612.36g silver

Approximately $4,500-$5,000 (varies with gold price)

Hawl Period

Wealth must be held for one lunar year

Approximately 354-355 days

Zakat due annually on lunar calendar

Zakat Rate

2.5% (1/40th) of eligible wealth

Applied to net assets above nisab

Distributed to eight categories of recipients

Assets Subject to Zakat

Zakatable Assets

Cash and bank savings
Gold and silver (in any form)
Stocks and shares
Business inventory and assets
Agricultural produce
Rental income and receivables
Investment properties

Non-Zakatable Assets

Primary residence
Personal use items (cars, furniture)
Debts owed to you
Pension funds
Life insurance policies
Education and retirement savings
Assets below nisab threshold

Zakat Calculation Method

Step-by-Step Zakat Calculation

Step 1: Calculate Total Assets

Sum all zakatable assets (cash, gold, investments, business assets, etc.)

Step 2: Deduct Liabilities

Subtract outstanding debts and immediate obligations

Step 3: Check Nisab Threshold

Compare net assets with current nisab value

Step 4: Apply Zakat Rate

Calculate 2.5% of amount above nisab

Step 5: Distribute Zakat

Give to eligible recipients within the lunar year

Zakat on Different Asset Types

Asset Type	Zakat Treatment	Rate	Notes
Cash & Savings	Fully Zakatable	2.5%	Current market value
Gold & Silver	Fully Zakatable	2.5%	Market value, not weight
Stocks & Shares	Fully Zakatable	2.5%	Market value on zakat date
Business Assets	Zakatable portion	2.5%	After deducting liabilities
Real Estate	Investment property	2.5%	Rental properties only

Zakat Recipients (Asnaf)

Zakat must be distributed to eight categories of eligible recipients as specified in the Quran. The distribution should be made with the intention of seeking Allah's pleasure and helping those in need.

Distribution Guidelines

Give locally when possible
Verify recipients' eligibility
Distribute within the lunar year
Give with sincerity and compassion
Prefer relatives and neighbors

Zakat vs. Tax

Zakat

Voluntary act of worship
Purifies wealth and soul
Distributed to specific categories
Promotes social welfare
Only on Muslims above nisab

Income Tax

Mandatory government levy
Funds public services
Used for various government expenditures
Progressive taxation system
Applies to all taxpayers

Zakat Planning Tips

Maximizing Zakat Benefits

Timing

Calculate Zakat annually on the lunar calendar. Early payment is recommended.

Investment Planning

Consider investments that generate ongoing charitable impact.

Business Zakat

Deduct business liabilities before calculating Zakat on business assets.

Family Planning

Consider Zakat implications when planning major purchases or investments.

Key Takeaways for Zakat

Zakat is obligatory on Muslims with wealth above nisab for one lunar year
Nisab is based on the value of 87.48g gold or 612.36g silver
Zakat rate is 2.5% of eligible wealth
Cash, gold, silver, investments, and business assets are zakatable
Primary residence, personal use items, and debts owed are exempt
Zakat must be distributed to eight categories of eligible recipients
Calculation should be done annually on the lunar calendar
Zakat purifies wealth and promotes social welfare
Professional advice recommended for complex financial situations
Early payment and proper intention are important

Zakat Calculator

Cash and Bank Balances

Gold and Silver

Investments and Assets

Liabilities (Debts)

Zakat Summary

Zakat Details

Asset Breakdown

Understanding Islamic Zakat