Zakat is one of the most significant five pillars of Islam. The importance of financial institution of Zakat is unrivaled. If given properly and by every eligible Muslim, Zakat has the ability to eradicate all traces of poverty from Islamic societies all over the world. However, Muslims get troubled when they have to calculate Zakat at their own. In this article, I shall try to explain how to calculate Zakat on your wealth and get your property purified.
The Prerequisites/ Conditions for the Obligation of Zakat:
Zakat is not an obligation upon all Muslims; there are a few of conditions that need to be satisfied in order for Zakat to be declared mandatory upon a Muslim. These conditions are Islam, Sanity, Majority, ownership, in excess of necessity, Nisab and Due Date.
It is necessary for the payer of Zakat to be a Muslim. It is an exclusive obligation for Muslims and not for non-believers because Zakat is an act of worship.
The payer of Zakat has to be of sane mind. Insanity exempts Muslims form obligation of Zakat.
Only when a Muslim is major (Baaligh), he/she are required to pay off Zakat. Minors have no obligation of Zakat even if they possess Nisab.
Mere possession of an asset is not sufficient. It is necessary that the asset in question is in ownership of the payer of Zakat.
Excess of Necessity:
Assets that come under the ambit of basic necessities like furniture, utensils, and automobiles cannot become the subject matter of Zakat.
In order to be obliged to pay off Zakat; nisab is the least amount of wealth which is required of an owner to possess. It is 87.48 grams for Gold, and 612.36 grams for silver, or their equivalent in the form of assets or money.
Zakat becomes mandatory after one complete lunar year passes from the day the amount of nisab was obtained. For instance, Mariam got married on 7th Ramadan 1432 A.H. That day, she received a gift of 100 grams of gold jewelry from her in-laws. She will be required to pay off Zakat for that jewelry on 7th Ramadan 1433 A.H.
Amount of Zakat:
It is 2.5 percent of the Zakat-able assets if they are equal to or above than the amount of nisab.
Assets that Fall Under the Ambit of Zakat:
Following are the assets which are Zakat-able:
Gold and Silver:
Zakat has to be paid when the weight of gold and silver is equal to or above than the amount of nisab. It is irrelevant whether the gold/silver is in everyday use of the person or not. However, the jewels and precious gemstones do not come under the ambit of Zakat on gold/ silver.
Zakat on Cash:
Money equivalent to nisab of gold or silver is Zakat-able. Various forms of money like cheques, bank account, and prize bonds are also included in it.
If gold, silver, and cash do not reach the amount of nisab individually, they must be added together. If the sum reaches or exceeds nisab, Zakat is payable on it. If it doesn’t, no Zakat has to be paid.
Such goods which were bought with the intention to be sold afterwards are called trading assets. If their value is equal to nisab, Zakat must be paid thereon.
Shares come under the umbrella of Zakat, if they were bought with the intention of resale.
How to Calculate Zakat?
One must add up value of all their assets like gold, silver, cash in hand, cash in banks, cash as prize bonds/ cheques, shares, livestock, etc for attaining a total amount. Afterwards, all the debts and liabilities must be deducted from the total. Now, if the total amount is equal to or more than the nisab, Zakat must be paid on it.
Following is the detail of Mr. Hashmi’s assets subject to Zakat:
Gold = 20,00,000
Cash = 5,00,000
Stocks and Shares = 10,00,000
Total Value = 35,00,000.
Total liabilities and debts = 5,00,000
Net amount (after deducting liabilities) = 30,00,000.
Zakat payable = 2.5% of 30,00,000
I hope this article is helpful to all of you in understanding the concept and minutes of Zakat and in calculating it on our assets.
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