A Complete Guide to Zakat and How to Calculate It

Zakat is the third pillar of Islam. It is not charity in the ordinary sense — sadaqah is the voluntary giving — but an obligation with a threshold, a rate, a due date, and named recipients. A Muslim whose wealth crosses the threshold owes it, and the Quran lists who receives it.

This page explains the mechanism. It does not calculate your zakat for you, because the threshold moves with metal prices and the treatment of a particular asset can turn on details of your own situation.

Who Owes It

Zakat is due from a Muslim who owns wealth above a minimum, called the nisab, and has held it for one full lunar year.

The nisab is defined in the sources by weight rather than currency: the value of 85 grams of gold, or 595 grams of silver. Those two are not equivalent in modern prices — silver gives a much lower threshold and therefore catches more people. Many scholars and zakat institutions recommend the silver measure precisely because it means more people give and more of the poor receive; others hold that gold reflects the intent better. Both positions are argued from the sources.

The rate on monetary wealth is 2.5 percent, that is one fortieth.

The Lunar Year

Zakat is not owed on money that passes through your hands. It is owed on wealth that stayed. The condition is that the amount sat above the nisab for one hawl — one lunar year, about 354 days.

In practice most people pick a fixed date in the Hijri calendar, often in Ramadan, and calculate on that date every year. Whether you dipped below the nisab briefly during the year is a point the schools differ on; the common institutional position is that what matters is holding nisab at the start and at the end.

What Zakat Is Owed On

Cash, whether in hand or in a bank account. Gold and silver, including jewellery in the Hanafi view — the other schools generally exempt jewellery in regular personal use, which is one of the more consequential differences for ordinary households. Shares and investments, on the zakatable portion. Money lent out that you expect to be repaid. Business stock, valued at what it would sell for.

Zakat is not owed on the house you live in, the car you drive, the tools of your trade, personal clothing and furniture, or your salary as it arrives — only on what remains and completes a year.

Debts you owe are generally deducted before calculating, though the schools differ on whether long-term debt such as a mortgage is deducted in full or only the instalments due within the year. The latter is the more common institutional practice.

Who Receives It

The Quran names eight categories and no others: the poor, the needy, those employed to administer it, those whose hearts are to be reconciled, freeing those in bondage, those in debt, in the path of God, and the traveller in need.

The categories are the limit of where zakat may go. Zakat cannot be given to your own parents, children, or spouse, since supporting them is already an obligation on you. It cannot be given to build a building or fund an organisation except through one of the eight categories.

Zakat al-Fitr Is a Different Thing

Zakat al-Fitr is paid at the end of Ramadan, before the Eid prayer, by every Muslim who has food beyond their needs for that day — including on behalf of children and dependants. It is a fixed small measure of staple food, roughly the equivalent of a few kilograms of the staple in your country, or its value.

It is not related to the nisab and not related to the annual calculation. Many people confuse the two and think they have discharged their zakat by paying it. They have not.

Working Out Your Own

Add what you hold: cash, bank balances, gold and silver, investments, receivable loans, business stock. Subtract the debts your school allows you to subtract. If the result exceeds the current value of the nisab in your currency, multiply by 0.025.

Check the metal price on the day you calculate rather than using a number you remember. That is the single most common source of a wrong figure, and the reason no page can print your nisab for you.

Where an asset is unusual — a pension you cannot access, a property held for resale, shares in a company you do not control — take the question to a scholar or to an established zakat body in your country. These are the cases where the schools genuinely differ, and a confident answer from a general page would be worth less than the question deserves.

Work It Out

The zakat calculator applies the threshold and the 2.5 per cent rate to figures you enter, and the Hijri converter fixes the date your year turns on.