Traders, Businessmen & Industrialists
- Firstly, determine your Zakat Due Date. If last year’s Zakat Due Date is known, the same date will be the Zakat Due Date this year.
- Ascertain value of unsold inventory in the shop, godown, factory on Zakat Due Date. Value stock of raw materials at its cost price and stock of finished goods at its market price. Add bank balance, cash balance and amount receivable from customers.
- Deduct outstanding amount to suppliers or service providers. Also deduct, if any, Short-term loan taken on trade goods. After deducting it, the remaining amount would be the Zakatable wealth.
- Please check whether the Zakatable wealth is above Nisab level or below Nisab If last year it was above Nisab level and this year also it is above Nisab level, then Zakat is payable.
- On the net Zakatable wealth of this year, calculate 2.50% Zakat. That is the amount payable on Goods in Trade.
- There is no Zakat on the shop, office, godown, factory, plant and machinery, equipment, furniture and fixtures used in the business.
- Nisab limit for Gold is 7 ½ tolas (87.479 grams) while for Silver it is 52 ½ tolas (612.35 grams) or its equivalent. The price of Gold on 26th March 2020 in Mumbai was 4217 per gram while the price of Silver was Rs. 41.81 per gram. Accordingly, Nisab level is established at Rs. 3,68,900/- for Gold and Rs. 25602/- for Silver. (Reference: www.goodreturns.in). Please check the applicable Nisab level on your Zakat Due Date.
- Apart from Trade, if you have personal wealth, for example, Gold, Silver, personal bank balance, etc., please ascertain its value on Zakat due date.
- Update all your accounts on the Zakat Due Date: Bank Balance, Fixed Deposits, Mutual Funds, Investment in Shares, or Bonds or foreign currency, etc. please add the balances of all these financial instruments to your Zakatable wealth.
- If you have invested in plot of land or building (with the intention of resale) check its market value and add it to your Zakatable wealth.
- Make sum total of all your Zakatable wealth. Calculate your Zakat liability to be 2.50% of your Zakatable wealth.
Salaried Class
- Firstly, determine your Zakat Due Date. If last year’s Zakat Due Date is known, the same date will be the Zakat Due Date this year.
- Update all your accounts on the Zakat Due Date: Bank Balance, Mutual Funds, Fixed Deposit, Government Bonds, Shares, Debentures, Security Deposit, Gift Card balance and cash in hand.
- Ascertain the quantity and value of Gold and Silver in your possession on the Zakat Due Date.
- If you have invested in plot of land or building, with an intention of resale, check its market value and add it to Zakatable wealth.
- Please check whether the Zakatable wealth is above Nisab level or below Nisab If last year it was above Nisab level and this year also it is above Nisab level, then Zakat is payable.
- Make sum total of all the Zakatable assets. Calculate your Zakat liability at the rate of 2.50% of Zakatable wealth.
- There is no Zakat on personal wealth – food, clothing, residence, car, scooter, motorcycle. Perquisites provided by the employer; like free housing, free or concessional food, free education or transport or hospital facilities, club facilities, holiday homes, etc., do not become part of Zakatable wealth.
- Zakat is not attracted on contributions made to retirement benefits like Provident Fund, Gratuity, Leave Encashment, Superannuation Fund, etc. If any amount is withdrawn for a specific purpose from these funds and already spent for that particular purpose (e.g. education or marriage of son/daughter), such withdrawals will not attract Zakat. If any amount remains unspent, then it would attract Zakat.
- Medical reimbursement or allowance, bonus, LTC, productivity incentive, honorarium, or any other benefit given by the employer becomes part of Zakatable wealth if it remains unspent.
Professionals
Professionals are those who have high level of knowledge and skill in a particular domain. They could be working independently or working with other professionals through a partnership firm or limited liability partnership LLP. Professionals include: Doctors, Chartered accountants, Lawyers, Architects, Engineers, Writers, Interior decorators etc. rendering different services.
- Firstly, determine your Zakat Due Date. If last year’s Zakat Due Date is known, the same date will be the Zakat Due Date this year.
- Ascertain the quantity and value of Gold and Silver in your possession on the Zakat Due Date. Ascertain the total amount of cash in hand and bank.
- Update all your accounts on the Zakat Due Date: Mutual Funds, Fixed Deposit, Shares, Bonds, Debentures, etc. Also make a list of your investments in properties, commercial shops or other Fixed assets. Your Niyyat (intention) at the time of making the investment is most important. As per your niyyat, these assets will fall in two categories:
- Fixed assets or Long-term Investments (say 5 years, 10 years or held for maturity). Such assets could be in Shares, Bonds, Mutual Funds, land, shops, flats, building and similar other assets.
- Short-term Investments (held for trade), such as Shares, Bonds, Mutual Funds, plots of land, flats, shops, currencies, Bitcoins (cryptocurrencies), commodities, and other similar assets intended for sale within a year’s time
- If an investment is made in a plot of land or building, with an intention of resale, check its market value and add it to the Zakatable wealth.
- Check whether sum total of your personal wealth is above Nisab level or below Nisab
- As per principles of Zakat, investment in land (Fixed asset) is not subject to Zakat. However, the produce coming from land, is subject to Zakat 10% (un-irrigated land). On the same basis, all the annual returns or yields (including rent on property) arising from Long-term assets or Fixed assets would be subject to Zakat 10%. Further, the Long-term asset is sold, the profit on sale will attract Zakat 10%.
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Short-term investments, like any other merchandise of buying and selling, would be subject to Zakat 2.50% on the market value of investments on Zakat Due Date. Similarly, cash balance, bank balance, Gold and Silver will attract Zakat 2.50%.
Investors
- Firstly, determine your Zakat Due Date. If every year, you are already using a particular date as the Zakat Due Date, please continue using it.
- Update all your accounts on the Zakat Due Date: Bank Balance, Mutual Funds, Fixed Deposit, Shares, Bonds, Debentures, etc. Also make a list of your investments in properties, commercial shops or other Fixed assets. Your Niyyat (intention) at the time of making the investment is most important. As per your niyyat, these assets will fall in two categories:
- Fixed assets or Long-term Investments (say 5 years, 10 years or held for maturity). Such assets could be in Shares, Bonds, Mutual Funds, land, shops, flats, building and similar other assets.
- Short-term Investments (held for trade), such as Shares, Bonds, Mutual Funds, plots of land, flats, shops, currencies, Bitcoins (cryptocurrencies), commodities, and similar other assets intended for sale within a year’s time
- Check whether sum total of your personal wealth (including the wealth from other sources), is above the Nisab level or below it.
- Find out the market value of all your Short-term assets (held for trade) on the Zakat Due Date. These rates are available from stock exchange for securities and from real estate brokers in respect of properties.
- Find out how much Dividend or rent or monetary gain is credited in your bank account on your investments held in Long-term assets or Fixed assets.
- In case, any Fixed assets or Long-term assets, have been sold out during the year, please find out how much profit you have earned on it. Profit here means (Sale Price – Purchase Price).
- As per the principles of Zakat, investment in land (Fixed asset) is not subject to Zakat. However, the produce coming from land, is subject to Zakat 10% (on un-irrigated land). On the same basis, all the annual returns or yields (including rent on property) arising from Long-term assets or Fixed assets would be subject to Zakat 10%. Further, when you sell the Long-term asset or Fixed asset, the profit on sale will attract Zakat 10%.
- Short-term investments, like any other merchandise of buying and selling, would be subject to Zakat 2.50% on the market value of investments on Zakat Due Date. This will be considered under the category “Zakat on Trade”.
Zakat on Gold and Silver
- Firstly, determine your Zakat Due Date. If last year’s Zakat Due Date is known, the same date will be the Zakat Due Date this year.
- Ascertain the quantity and value of Gold and Silver on Zakat Due Date. Ascertain the total amount of currencies, cash in hand and bank.
- Nisab limit for Gold is 7 ½ tolas (87.479 grams) while for Silver it is 52 ½ tolas (612.35 grams) or its equivalent. The price of Gold on 26th March 2020 in Mumbai was 4217 per gram while the price of Silver was Rs. 41.81 per gram. Accordingly, Nisab level is established at Rs. 3,68,900/- for Gold and Rs. 25602/- for Silver. (Reference: www.goodreturns.in). Please check the applicable Nisab level on your Zakat Due Date.
- Sum total of currencies, cash balance, bank balance, Gold and Silver will form the Zakatable wealth and it will attract Zakat 2.50%.
- There is no Zakat on gems, diamonds, pearls and precious stones. If these items are embedded into jewelry, ascertain the net weight of Gold in these ornaments. Zakat will apply on Gold contents only. Take the help of an expert jeweler in ascertaining Gold quantity and its value.
Consolidate your Zakat
Please do not disburse your Zakat amount without making a thorough background check of the recipient. Your Zakat amount can bring a transformation in the Society. Consolidate your Zakat at an institutional level, so that it is disbursed in an organized way.
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