Zakat FAQ

Nisab is the minimum limit of wealth below which Zakat is not payable by the owner of the wealth. However, if it exceeds this minimum level, Zakat is payable. The Nisab limit is different for different classes of wealth. For example, exemption limit on Gold is 7 ½ tolas or 87.48 grams of pure Gold, 52 ½ tolas of Silver or 612.35 grams of pure Silver, 5 camels, 40 goats, 30 cows and 653 kg of agricultural produce.
The sum total of net personal wealth is Rs. 1,20,000. Nisab level of Gold is Rs. 3,68,900 and that of Silver is Rs. 25602/- as per current market value of 7.5 tolas of Gold and 52.5 tolas of Silver respectively. He does not hold any Gold or Silver. However, the value exceeds the Nisab value of Silver, although, it does not exceed Nisab value of Gold. Under such circumstances, it is better to take lower of the two values and pay Zakat on full amount of Rs. 1,20,000. This would give benefit to the poor people.
Although, his saving is above Nisab level, however, he is not liable for Zakat payment in the month of Ramzan 1441 H as he has not completed Hawl period i.e. one complete lunar year. He will be liable for Zakat payment with effect from 28th Ziqaad 1441 H.
  1. Umar is liable for Zakat Payment as he has completed 1 year of Nisab. He is liable for payment of Zakat on Rs. 1 lakh balance on completion of lunar year from the date of last Nisab. Although Rs. 1 lakh is lower than the Nisab level of Gold, but it is higher than the Nisab level of Silver, he is liable for Zakat payment as per Nisab level of Silver.
  2. In case, after meeting all his personal expenses, his Bank balance is Rs. 20,000, it is lower than the Nisab value of Silver (say Rs. 25600 on 25th Shabaan 1441H). He is not liable for Zakat payment.
  3. Mother has received gift of Gold from her son worth Rs. 25 lakhs. If she is already having a Nisab level last year, then, this value of gift would be added to her Zakatable wealth. She will have to ascertain the value of Gold on her Zakat Due Date and pay Zakat on the total Zakatable wealth. However, if she was not having Nisab last year, then on the date of receipt of this gift of Gold, she has attained Nisab level. After passage of a lunar year, she would be liable for payment of Zakat.
Although he was a Sahib-e-Nisab last year, he is no more so this year. He has spent the entire Zakatable wealth on basic necessities of his life. His saving of Rs. 15000 is lower than the Nisab level of Silver as on 1st Ramzan 1441. Hence, he is not liable for Zakat payment.
Nisab level for Agricultural crop is 653 kg. In both the cases of Kharif crop and Rabi crop, his Zakatable wealth exceeds Nisab level. There is no requirement of completion of lunar year for calculating Zakat on agricultural crops. Immediately upon completion of harvesting of the Kharif crop in Oct 2019, Zakat is payable on the full quantity. Similarly, Zakat is payable immediately on harvesting of Rabi crop. There is no need to wait till onset of Ramzan. The rate of Zakat is 10% if non-irrigated land and rate is 5% if it is irrigated land.
Gregorian calendar year is 365 days whereas Lunar calendar year is 354 days. That means it is bigger by a factor of 1.03 (i.e. 365/354). At the time of making payment of Zakat in the month of Ramzan, he can pay Zakat @ 2.5% on his net personal wealth. However, on his business wealth, he can pay Zakat at a higher rate i.e. 2.575% (arrived at when normal rate of 2.5% multiplied by calendar factor 1.03).

Zakat must be paid for Gold and Silver Jewelry, Money, Merchandise Stock, Animal Stock after completion of one year of possession with the owner. In case of crops and some fruits it has to be paid on harvesting.

Zakat should be paid on the money left after meeting the expenses for such necessities as food, clothes, housing, vehicles and trade/craft machines. A complete year of Islamic calendar should pass, starting from the very day of achieving the Nisab level.

Deferring payment of Zakat is prohibited, unless the Giver has some valid reason and cannot pay it on time. In such a case, he may wait until he is able to pay it.
There is nothing wrong in paying Zakat in advance during the year. Zakat is a right of the needy and the underprivileged and in case you are paying in advance, it is a meritorious deed. It should start with Niyyat (intention) to make the payment. Sum total of these advance payments should be calculated and compared with the actual liability at the end of Zakat period. Any deficiency should be made good on the last date when Zakat is due.

It is not necessary to tell the receiver that it is Zakat money. You can simply give the money to that person without stating anything.

You should give the Zakat in the form of money because it is easier for the receiver to apply it for his needs as per his priority. Zakat in kind (food, clothes, etc.) can also be given if the Giver is a Trader or Manufacturer of those items.

You should pay Zakat in its specified time and it is not allowed to delay it while giving to its recipients. You may defer it due to some compulsions, however, you should ensure to discharge the obligation at the earliest.

It is allowed to replace Zakat money with contributions in kind according to the needs of the poor.

The Trader should prepare a balance sheet showing the closing balance of stocks and cash/Bank balance and outstanding debtors. The outstanding debts should be deducted. On the remaining balance, Zakat should be paid 2.5 %. The stocks should be valued at current prices.

Plots of land with the intention of re-sale are items of trade or merchandise items. You need to have a Fixed Zakat Due Date for lunar calendar every year. On that date, market value of these plots needs to be ascertained and Zakat paid thereon @ 2.50%. However, Zakat is not payable on that land which is meant for construction of dwelling house. The other plot on which you intend to construct a shopping complex is a commercial commodity. On the day when your Zakat falls due, you should estimate the value of the land and pay Zakat.

You have to pay Zakat upon the car trading. At the end of each year, you have to evaluate the value of the cars i.e. your stock-in-trade and calculate its total money value and add to it the cash/Bank balance you have and pay Zakat @ 2.5% of the total value.

However, Zakat is not payable on the car used for personal transportation.

After one complete year passes on your Trade, you have to value the closing stock on the date when Zakat is due. After calculating your total money, excluding debts, and other commitments, you have to pay 2.5% of the total money.

The following equation can illustrate the Zakat:

Zakat amount = (Value of the Goods + Cash in hand or Bank + Loans and Advances receivable – Loans and Advances payable) x 2.5%.

Zakat has to be paid on the items of Trade. Since the stock of Shares is meant for buying and selling, Zakat should be paid upon the market value of Shares on the Zakat Due Date.

Zakat on agricultural produce is due on its harvesting day. The minimum amount on which Zakat is liable is five Awsuq that equals (653 kilograms). If the crop attains this Nisab level, Zakat is payable @ 5% if irrigated land and @ 10% if it is unirrigated land

Ushr is a kind of charity levied on the produce of the lands. The farmers are required to pay 5% of the total produce, if land is irrigated and 10% of the total produce if land is not irrigated.

Zakat is paid on the rent only when this rent reaches the Nisab and one complete year passes, then Zakat at the rate of 10% should be paid.

You should define the date on which the money reaches the Nisab, then you start account for the year. It is Zakat Due Date. Once the value of possessions achieves Nisab level, Zakat is due from that date. No matter the money increases or decreases, if one complete year passes and the value of your possession remains at or above Nisab level on the Zakat Due Date, you must pay the Zakat which is 2.5% of the whole money.

Subsequent to the Zakat Due Date, if new income is received, it would not be subject to Zakat this year. However, this amount of Rs. 50000 will form part of next year’s Zakat liability.

Yes, after one year of inheritance passes by, then you have to pay @ 2.5%.

Yes, Zakat needs to be paid on the total amount in your Bank account on Zakat Due Date. You may have earmarked it for the purpose of Hajj or any other purpose, but Zakat is payable.

No Zakat to be paid upon the house in which you dwell. However, Zakat is payable on the Rental value @ 10%.

Zakat depends upon the purpose for which the land is acquired.
• If it is a personal property, no Zakat is to be paid
• If it is for commercial purpose, you have to wait till one complete year passes, if it is still in your possession, you have to estimate its value in money and pay 2.5% of this value.
• If it is rented out, you have to pay the Zakat upon the Rent value.

Yes, it is allowed to pay Zakat to your uncle due to his poverty and you will have two rewards: reward of charity and strengthening the relationship.

It is permitted to give them your Zakat as long as they need this money. You could also give them all your Zakat money to fulfill their needs if necessary.

If he/she is a relative from the first degree – Father, Mother, Wife, Sons; he/she does not deserve Zakat. Other than those mentioned above relatives like Brother, Sister or Uncle deserve Zakat. If he is poor, it is allowed to give him Zakat because house is a basic need.

Dubai Shopping Raffle prize of Rs. 20 lakhs is a windfall gain (unexpected income). It falls under the category of “Rikaz” – like hidden treasure troves. Accordingly, it would attract Zakat @ 20%.

Although, all of the above are charities given out during the year. They do not form part of Zakat. First of all, the person should make a Niyyat (intention)of Zakat prior to making the payment. Further, the recipients of such payments should further fall into one of the eight permissible categories of Zakat-recipients. In all the above cases, they do not fall under the category of Zakat.

Long-term investments in Mutual Funds (Dividend option) yield regular Dividend income every year. This Dividend is Zakatable each year and the rate of Zakat would be 10% on it. Just like the yield of Land, which is a Fixed asset, is subject to 10% Zakat. On a similar basis, Dividend on Long-term MF is subject to Zakat @ 10%.
Zakat is not payable though on the market value of MF units since, they are not held for routine trading i.e. buying and selling during the year.

PPF balance is a Long-term asset which is redeemed on maturity at the end of 15 years. Amount received in hand is Rs. 16 lakhs after having contributed Rs. 11.2 lakhs over the last 15 years. The differential amount of Rs. 4.8 lakhs is the gain on which Zakat is payable @ 10%. Just like the yield of Land, which is a Fixed asset, is subject to 10% Zakat. On a similar basis, Profit on redemption of PPF is subject to Zakat @ 10%.

Bonus Shares are an accretion to the assets already held. Immediately on getting the bonus Shares, its value amounted to Rs. 8 lakhs (1000 Shares @ Rs. 800 each). This would be Zakatable @ 10%. Just like the yield of Land, which is a Fixed asset, is subject to 10% Zakat. On a similar basis, bonus Shares are subject to Zakat @ 10%.