Zakat is one of the five pillars of Islam and needs to be given once within every Islamic year (also known as the lunar year). This means that you need to mark one date every year on which you will calculate your Zakat with respect to all the assets you have amassed over the year. It is common for many Muslims to mark the start of Ramadan as the time to calculate and give Zakat.
However, in order to calculate your Zakat, you need to first determine whether you are Sahib-e-Nisab. In other words, Zakat is only obligatory on those Muslims who have more than a set threshold of savings and assets. Once you determine whether you are eligible to pay Zakat, you can calculate it accordingly.
AM I ELIGIBLE TO PAY ZAKAT AS PER THE NISAB?
You are Sahib-e-Nisab and eligible to pay Zakat if the total of your assets values more than 7.5 tola/3 ounces/87.48 grams of gold, or 52.5 tola/21 ounces/612.36 grams of silver for a full lunar year. Since gold and silver are not used as currency in today’s world, it is important to convert the Nisab into your local currency based on the current rate of either gold or silver on the day of calculation.
Please note that we’ll be using Pakistani Rupees (PKR) as the default currency in our examples, to show you how to calculate Zakat in Pakistan, but all the rates and currency values will differ based on when and where you are calculating your Zakat.
Assuming that you are calculating your zakat on a day when the rate of gold in Pakistan is PKR 133,300 per tola. Thus:
PKR 133,300 * 7.5 tola = PKR 999,750 [Nine lakh, ninety-nine thousand, seven hundred and fifty rupees]
On the other hand, if you are using silver to calculate the Nisab, and assuming that the rate of silver in Pakistan for that day is PKR 1,749 per tola, the total would be:
PKR 1,749* 52.5 tola = PKR 91,823 [Ninety-one thousand, eight hundred and twenty-three rupees]
This means that if you calculate your Zakat with the gold Nisab and have more than PKR 999,750 as the worth of your savings and assets for a full lunar year, you are eligible to pay Zakat on them. Meanwhile, you will have to pay Zakat on assets and savings kept for a full lunar year if they are in excess of PKR 91,823 based on the silver Nisab.
The important thing to note here is that your net worth must be over the Nisab for a full lunar year. If your assets drop below PKR 91,823 (for instance) during the lunar year, then your lunar year will restart when you are above the Nisab again, and the restarting date on the Islamic calendar should essentially be the day for calculating Zakat after a year has passed. In contrast, if you are Sahib-e-Nisab all year round, it is up to you to decide one day in the year to calculate your wealth, but as mentioned above, many people choose the month of Ramadan for this charitable act.
You can check out the latest gold rate in Pakistan here.
WHICH NISAB SHOULD YOU CHOOSE—GOLD OR SILVER?
Now the question is—which Nisab should you choose? While the silver Nisab is considered Afzal or more rewarding, both for the giver and the recipient, as more Zakat is given due to the lower threshold, there is a way to determine which Nisab to use.
Generally, if you only have assets and savings in gold, that is the Nisab you should use. However, if you have savings and assets in silver or mixed assets, including cash, gold, silver, and other tradable commodities, it is ideal to use the silver Nisab.
Please note that different religious sects may differ in their opinions with regard to which Nisab you should follow, and if you are in doubt, it is best to ask an Aalim-e-Deen for advice.
CALCULATING ZAKAT FOR 2023
So, you’ve calculated the Nisab and found out that you’re eligible to pay Zakat for 2023. Well, while there are a number of Zakat calculators available online, most of them will not show you how they’ve actually calculated Zakat for a particular year. In contrast, we’ll take you through a step-by-step process to help you understand how to calculate Zakat on gold and all your other assets for one lunar year.
Firstly, remember that Zakat is applicable to savings and assets that are in excess of your belongings for personal use. Therefore, your house, your clothes, your car, your appliances, and other items of daily use are not included in the calculations for Zakat.
ASSETS TO BE INCLUDED
The savings or assets that you must consider include:
- Cash, whether it’s at home or in the bank
- Foreign currency that you own (valued at the conversion rate of the local currency)
- Savings that are set aside for a specific purpose, such as Hajj, marriage, buying a car, etc.
- The value of all the gold and silver that you own in your local currency
- The market price value of any shares that you might own if you wish to sell them
- The dividend received from shares if you are not selling them in the near future
- Money that is owed to you and will be repaid in the near future
- Business owners should also include the balance sheet value of the stocks that they own
- Rental property owners should tabulate any saved rental income as well
- If a property is bought as an investment to be sold, then its market value is to be included
- Anticipated profit on the sale of an investment asset in the near future
LIABILITIES TO EXCLUDE
Following liabilities should not be included in your Zakat calculations:
- The total amount of pending utility as well as credit card bills
- Any pending amount of rent you owe to your landlord
- The outstanding amount on any personal loans or mortgages that you have taken
- The value of a property that you’ve given on rent to your tenant
- Any amount that is due to your employees as their salary