1. How to Calculate Zakat on Money
When calculating Zakat, it is important to understand that Zakat is payable on all types of wealth or asset provided that its ownership is absolute and undivided. Assets to include are:
- Gold and silver (ornaments or jewellery)
- Cash held at home or in bank accounts
- Cash lent to others
- Property owned for investment purposes
- Stocks and shares owned directly or through investment funds
- Business stock in trade and merchandise
- Agricultural produce
What Is Nisab? What Is the Nisab Value in Gold and Silver?
Zakat is payable by any Muslim if their annual wealth exceeds a certain amount. This threshold is known as the Nisab.
‘And those within whose wealth is a known right, for the petitioner and the poor.’ – Holy Qur’an 70: 24-25
The Nisab value in gold is equivalent to 87.48g of gold.
The Nisab value in silver is equivalent to 612.36g of silver.
Scholars differ on which Nisab to use but the majority agree that it is better to use that which maximises the Zakat.
When Should I Pay Zakat?
A Zakat year starts on the day your wealth exceeded the Nisab and therefore is due on the anniversary of that date every year.
Zakat should be paid over as soon as possible and not delayed unnecessarily. Zohra Foundation takes the importance of Zakat as an act of worship extremely seriously and has extensive processes in place to ensure that it is only ever used for valid Zakat eligible programmes, which meet the criteria of one of the eight categories outlined in the Shariah.
You can choose from our Zakat eligible projects here.
Who Can Receive Zakat?
They ask you, [O Muhammad], what they should spend. Say, “Whatever you spend of good is [to be] for parents and relatives and orphans and the needy and the traveler. And whatever you do of good – indeed, Allah is Knowing of it.”‘ -Holy Qur’an 2: 215
The eight categories for which Zakat can be paid are:
- The poor
- The destitute
- Workers in Zakat administration or collection
- Those whose hearts are being reconcile—new Muslims who have recently accepted Islam
- Emancipation of slaves (it is generally agreed that this category no longer exists)
- People burdened by debt
- In the cause of Allah (swt)
- Travellers who don’t have the means to return home
Zakat cannot be paid on construction projects for buildings such as hospitals, mosques or schools, and infrastructure such as roads and canals.
Why Pay Zakat to a Grandparent?
In Islam we know the importance of caring for our elderly relatives. But, for the 65 million people in Pakistan who already live in extreme poverty, providing all the food, healthcare and basic costs for elderly relatives is a real struggle. Alongside this, the decreasing birth rates and increasing life expectancy in the region means millions of families are no longer able to properly provide for their relatives.
Narrated Abu Musa al-Ash’ari: “The Prophet (pbuh) said: Glorifying Allah involves showing honour to a grey-haired Muslim and to one who can expound the Quran…”[Sunan Abu Dawud].
So, how can we, as Muslims, turn away from providing these grandparents with the help they need?