How Zakat Is Calculated
Zakat is 2.5 percent of your net zakatable wealth, paid once every lunar year. The calculation has three parts. First, add up your zakatable assets: gold, silver, cash, bank balances, business inventory held for sale, market value investments, and money reliably owed to you. Second, subtract your deductible liabilities: debts due now and immediate unpaid obligations. Third, compare the result with nisab. If your net wealth meets or exceeds nisab and has done so for a full lunar year, you pay 2.5 percent of the whole net amount, not just the part above the threshold.
Understanding Nisab: Gold vs Silver Standard
Nisab is the minimum wealth that makes Zakat obligatory, defined in the Sunnah as 87.48 grams of gold or 612.36 grams of silver. When these were fixed, the two amounts had similar purchasing power. Today gold is worth far more, so the two standards produce very different thresholds. The silver standard gives a much lower threshold, meaning more people qualify to pay Zakat and more money reaches the poor. That is why many scholars, particularly in the Hanafi school followed by most of South Asia, prefer the silver standard when wealth is mixed (cash plus gold plus other assets). The gold standard is commonly applied when someone owns only gold. This calculator supports both, shows you each threshold in your currency, and lets you follow the position of the scholars you trust.
What Is Zakatable and What Is Not
Zakat is due on
- Gold and silver in any form, including jewellery according to the Hanafi position
- Cash at home, bank balances, and foreign currency
- Business inventory and trade goods at their current resale value
- Shares, mutual funds and crypto held as investments, at market value
- Money lent to others that you realistically expect back
- Committee or BC payouts due to you, and prize bonds
Zakat is not due on
- The home you live in and the car you drive
- Personal belongings: clothes, furniture, phones, appliances
- Property or equipment used to run your business (the shop itself, machinery, delivery vehicle)
- Diamonds and gemstones kept for personal use (their gold setting is still zakatable)
The Hawl: Your Zakat Year
Zakat becomes due when your wealth has stayed at or above nisab for one complete lunar year, called the hawl, which is about 354 days. The practical method used by most families is simple: fix one Zakat date, very commonly a date in Ramadan for the extra reward, and every year on that date calculate everything you own and owe as of that day. Money that arrived last week is included with the rest; the majority position is that you assess your total holdings on your Zakat date rather than tracking each rupee separately.
Who Receives Zakat
The Quran names eight categories of eligible recipients in Surah At Tawbah, verse 60, including the poor, the needy, those in unpayable debt, stranded travellers, and those whose hearts are to be reconciled. Zakat cannot be given to your own dependents (spouse, children, parents) and, in the majority view, not to the descendants of the Prophet. Giving locally to people whose situation you know, or through a trustworthy verified charity, ensures it lands where it is owed.