Zakat – How To Calculate 2023

Hazrat abu hurrairah (ra) relates that rasulullah (saw) said whom so ever allah gives wealth, but who do not pay its zakat, his wealth will be likened for him on the resurrection day to a huge bald snake having two fangs.  It will bite him round his neck and take hold of him with his two fangs meaning its two jaws and say – i am your wealth and i am your hidden treasure.  Then he recited “and let not those who covetously with hold of that which allah has bestowed on them out of his bounty” ‘alaayah’.

[Bukhari]

 Zakat is fardh upon a person if s/he is A Muslim, An Adult, Sane, and owns wealth equal to the value of Nisab. Nisab is the amount of wealth, which makes one liable for payment of Zakat and must remain in his/her possession for one Lunar year***.

N.B. The value for Nisab varies according to fluctuation in market price of Gold/Silver

Value of Nisab:

Gold
7 ½ Tolas gold = 87.48g
Price of gold on 25/02/23 is (a) £ 48.78 per gm (Source: – www.bullionbypost.co.uk)
Gold Nisab = 87.48 x (a)=  £ 4267.27 

Silver
52½ Tolas silver 612.35g
Price of silver on  25/02/23 is (b) £ 0.56 per gm (Source: – www.bullionbypost.co.uk)
Silver Nisab = 612.35 x (b)= £ 342.92

The lowest of these two values, (c) £342.92 is the value of Nisab.

If one has in his/her possession mixed wealth (e.g. gold, silver, cash etc) equal to (c) £342.92 that has remained in his/her possession for one whole lunar year then Zakat of 2 ½ % (1/40) of the total aggregate balance (after deducting debts) is due.

 

ZAKAT CALCULATION TABLE

Cash In Hand

Any Currency acceptable in the Market

£          –   

Cash at Bank

In any type of account

£          –     

Gold/Silver

Jewellery/Ornaments/Cutlery / Coins etc.

£          –     

               

Money owed to you

£          –     

Shares & Stocks

See note in next column

£         –      

Pensions & Retirement Plans

 

£         –      

Trusts

 

£           –

Business Goods

See note in next column

£         –      

Total

Add all the above

£         –      

Less Debts

Money you owe others

£         –      

Amount Eligible for Zakat

Amount on Which Zakat is Payable

£         –      

Zakat at 2.5% of the above

Amount eligible for Zakat x 0.025

£         –      

 
Zakat on Shares
 
If the shares are bought only for the sake of reselling them to make a profit (Capital Gain), then Zakat will have to be paid on the market value of the shares.
 
If shares are bought with the intention of benefiting from the dividend then, if the company is trading, e.g. if it is dealing in cloth, iron, steel, machinery goods, cement, or supplies electric power etc, then Zakat will have to be paid on the market value of the shares and the dividend. However, machinery used in the business, factories/buildings, land, fixtures and fittings, and furniture are all exempt and one is allowed to subtract these from the total assets. (These figures can be obtained from the Annual Report). e.g.. If a share worth £100 comprises of the following, then Zakat is only payable on £40.
 
If the company does not trade but realises rent (i.e. bus, train, air companies), then Zakat will only be paid on the dividend and not on the value of the shares.
  
***If the wealth decreased lower than the Nisab in the course of the Year but it was equivalent or more than the Nisab in the beginning and at the end of the year, it will be considered as if he/she owned the Nisab for the full year.
  
WHITE GOLD:  Due to the fact that 75% of White Gold consists of REAL GOLD and 25% of other material – ALL OF IT WILL BE CONSIDERED AS GOLD, Hence ZAKAT will have to be given on White Gold.
 
BUSINESS GOODS:  What is bought with the intention of selling with the profit.  If at the time of buying intention of business was not made it will not be defined as business goods.
 
PROPERTIES: If the property was bought with the intention of Renting and not for Reselling than Zakat will only be liable on accumulative Rent and not on the value of the property.
  

Zakah Course Recording