The principles of Zakat are important in knowing your duties as a Muslim. This article guides you step by step in determining your personal Zakat. However, further advice will be needed if you own a business.
Steps
Step 1. Calculate the Nisab (minimum proportional)
The Nisab is equivalent to the value of 612.35 grams of pure silver, established on the average market value at the time of the calculation
Step 2. Set the dates for your Zakat cycle
As this is an annual financial obligation, the start and end dates of the Zakat cycle must be clearly defined according to the dates of the Islamic calendar. To convert Gregorian dates to Islamic ones, take a look at: Date Conversions Between Islamic and Gregorian Calendar on IslamicFinder
Step 3. Base your Zakat calculations on silver:
calculating the Zakat according to the price of silver, now much lower than that of gold, represents the choice that allows a greater number of people to pay the Zakat and consequently also to receive it. However, the calculations for Zakat can also be based on the price of gold.
- The start date is set once your Zakat resources exceed the Nisab limit
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The end date is determined one lunar year after the departure date.
Example: if a gram of pure silver costs € 0.45, the departure date will be when your Zakat resources coincide with the Nisab (612.35 grams X 0.45 € = 275.557 €). If the start date was for example 2014-08-02, the end date (or effective date) will be 2015-08-01
Step 4. Update your financial situation
Prepare detailed information regarding tangible objects you own according to their (current) market value on the effective date
Step 5. Identify the Zakat assets
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The assets to be considered for Zakat consist of what you actually own at the actual date of Zakat; to add together. Some examples are:
- Liquidity: any type of liquidity that is cash, current account, deposit account, savings books, term deposits, any sum deposited in your name in a bank or post office.
- Securities: shares, stocks, mutual fund holdings, bonds and sukuk estimated at the closing price of the stock market.
- Your current stake in a company you are a partner of
- Savings plans: the redemption value of your savings plans
- Investments in gold: as per market value
- If the receipt of any amount of money was intended for the Zakat cycle in question but did not occur, you must add the expected value to the goods from Zakat.
- Personal material possessions such as a home or car should not be considered Zakat assets.
Step 6. Identify your Zakat liabilities
- Zakat liabilities constitute your financial obligations. Any obligations you have fulfilled during the cycle in question will no longer have to be taken into account. However, if there is any amount of money that was supposed to be paid during the Zakat cycle in question but is still outstanding, you must add the expected value to your Zakat liabilities.
- If you have obtained a personal loan of any type (car, house, cash) you must consider the installments to be paid during the next Zakat cycle. It has nothing to do with a full outstanding debt.
Step 7. Calculate Zakat Resources
Zakat assets = Zakat assets (step 5) minus Zakat liabilities (step 6)
Step 8. Compare them to the Nisab
If the result of the Zakat resources exceeds the Nisab limit, you will need to donate the Zakat as shown in step 9
Step 9. Calculate the Zakat Due
- Zakat due = Zakat resources (step 7) X 2, 557%. The result will be the Zakat to be donated.
- The proportion due for Zakat is 2.5% when calculated using the Islamic lunar calendar while it is 2.557% using the Gregorian calendar.
Advice
- The value of a car or house that you are renting to others is not to be considered. The profit deriving from any type of investment, on the other hand, yes.
- Your home and car are not considered.
- Any earnings generated by sources that do not comply with Sharia law, such as interest on shares for example, are not considered. However, the value of any conventional financial obligation is to be considered.
- The calculations for Zakat will not be affected if the resources drop below the Nisab limit during the Zakat cycle in question, as long as the resources available at the actual date meet the requirements shown in step 7.
