A Guide to Calculating Your Zakat for 2022

Zakat is one of Islam’s five pillars, and it must be paid once a year (also known as the lunar year). This means you must set aside one date each year to calculate your Zakat based on all of your assets accumulated during the year. Many Muslims use the beginning of Ramadan to calculate and pay Zakat.

You must first determine whether you are Sahib-e-Nisab before calculating your Zakat. In other words, Muslims who have more than a certain amount of savings and assets are only required to pay Zakat. You can calculate Zakat once you’ve determined if you’re eligible to pay it.

Am I Eligible to pay Zakat as per the Nisab?

If the total value of your assets for a full lunar year exceeds 7.5 tola/3 ounces/87.48 grams of gold or 52.5 tota/21 ounces/612.36 grams of silver, you are Sahib-e-Nisab and eligible to pay Zakat.

Because gold and silver are no longer used as currency, it is necessary to convert the Nisab into your local currency using the current gold or silver rate on the day of calculation.

Please keep in mind that while we’ll be using Pakistani Rupees (PKR) as the default currency in our examples to show you how to calculate Zakat in Pakistan, the rates and currency values will differ depending on when you calculate your Zakat and which country.

For Example

How to Calculate Nisab for Both Gold and Silver in Pakistan

Assume you’re calculating your zakat on a day when gold is worth PKR 133,300 per tola in Pakistan. Thus:

PKR 999,750 = PKR 133,300 * 7.5 tola [Nine lakh, nine lakh, seven hundred and fifty rupees]

If, on the other hand, the Nisab is calculated using silver, and the rate of silver in Pakistan at the time is PKR 1,749 per tola, the total would be:

PKR 1,749 * 52.5 tola = PKR 91,823 [91,823 rupees]

Explanation

This means that if you calculate your Zakat using the gold Nisab and your savings and assets are worth more than PKR 999,750 for a full lunar year, you are required to pay Zakat on them. Meanwhile, if your assets and savings exceed PKR 91,823 based on the silver Nisab, you must pay Zakat on them for a full lunar year.

It’s important to note that your net worth must exceed the Nisab for the entire lunar year. If your assets fall below PKR 91,823 (for example) during the lunar year, your lunar year will begin again when you are above the Nisab, and the Islamic calendar’s restarting date should essentially be the day for calculating Zakat after a year has passed.

If you are Sahib-e-Nisab all year, on the other hand, you can choose any day of the year to calculate your wealth, but as previously stated, many people choose Ramadan for this charitable act.

Which Nisab should be chosen- Gold or Silver?

Now it’s up to you to decide which Nisab to go with. There is a way to determine which Nisab to use, even though the silver Nisab is considered Afzal or more rewarding, both for the giver and the recipient.

In general, if you only have gold assets and savings, you should use the Nisab. The silver Nisab, on the other hand, is ideal if you have silver savings and assets or a mix of assets, such as cash, gold, silver, and other tradable commodities.

Please keep in mind that different religious sects may have differing views on which Nisab you should follow, so if you’re unsure, it’s best to seek advice from an Aalim-e-Deen.

Calculating Zakat for 2022

So you’ve worked out your Nisab and discovered that you’re eligible to pay Zakat in 2022. While there are a number of online Zakat calculators, the majority of them will not show you how they calculated Zakat for a specific year. In contrast, we’ll walk you through a step-by-step procedure for calculating Zakat on gold and all of your other assets over the course of a lunar year.

To begin, keep in mind that Zakat applies to any savings or assets that are in excess of your personal belongings. As a result, your home, clothes, car, appliances, and other daily necessities are not included in the Zakat calculations.

So you’ve worked out your Nisab and discovered that you’re eligible to pay Zakat in 2022. While there are a number of online Zakat calculators, the majority of them will not show you how they calculated Zakat for a specific year. In contrast, we’ll walk you through a step-by-step procedure for calculating Zakat on gold and all of your other assets over the course of a lunar year.

To begin, keep in mind that Zakat applies to any savings or assets that are in excess of your personal belongings. As a result, your home, clothes, car, appliances, and other daily necessities are not included in the Zakat calculations.

Asstets to be Include in Zakat

You should pay attention to the following savings or assets:

  • Whether it’s at home or in the bank, cash.
  • You own foreign currency (valued at the conversion rate of the local currency)
  • Savings are set aside for a specific purpose, such as Hajj, marriage, or the purchase of a car.
  • In your local currency, the value of all the gold and silver you own.
  • If you want to sell any shares you own, the market price will tell you how much they are worth.
  • Dividend gets from shares; in case not planning to sell them in comings days.
  • Money that is owed to you and will be paid to you soon
  • The value of the stocks that a company owns should also be included on the balance sheet.
  • Rental property owners should also keep track of any rental income that has been saved.
  • If a property is purchased as an investment to be sold, its market value must be taken into account.
  • The profit that is expected to be made on the sale of an investment asset in the near future.

Liabilties to Exclude

Liabilities such as the ones listed below should not be factored into your Zakat calculations:

  • The sum of all outstanding utility and credit card bills.
  • You owe your landlord any unpaid rent.
  • The balance of any personal loans or mortgages you’ve taken out.
  • The market value of a property you’ve rented out to a tenant.
  • Any money owed to your workers as a salary

Sample Calculation for Assets and Liabilities

Infographic Showing How to Calculate Your Net Worth for Zakat

Assume you have PKR 300,000 in cash, PKR 350,000 in gold and silver jewelry, and PKR 250,000 in foreign currency, based on the above criteria for assets and liabilities (value converted into Pakistani rupees at the market rate, on the day of Zakat calculation).

As a result, you have:

[Total Assets for a Full Lunar Year] PKR 300,000 + PKR 350,000 + PKR 250,000 = PKR 900,000

You can tabulate the total worth of your liabilities once you’ve calculated your assets. Assuming that you owe PKR 12,000 in unpaid utility bills and PKR 38,000 in unpaid rent to your landlord, your total liabilities are as follows:

[Immediate Liabilities to Exclude From Your Total] PKR 38,000 + PKR 12,000 = PKR 50,000

As a result, your net worth in Zakat is:

900,000 PKR – 50,000 PKR = PKR 850,000 [Zakat’s Net Worth]

We will consider the silver Nisab, which qualifies you to pay Zakat, due to the presence of mixed assets.

The Rate of Zakat

Infographic Showing How to Calculate Your Zakat in Different Ways

The applicable Zakat rate is 2.5 percent or the 40th percentile of your total wealth for one lunar year. As a result, we’ll multiply the net worth we just calculated by this rate:

[Zakat to be Paid This Year] PKR 850,000 * 2.5 percent = PKR 21,250

You could also multiply the calculated net worth by 0.025. You’ll get the same results either way:

[Zakat to be Paid This Year] PKR 850,000 * 0.025 = PKR 21,250

Another option is to multiply the calculated net worth of assets by 40, as Zakat only applies to the 40th percentile of our wealth.

[Zakat to be Paid This Year] PKR 850,000/40 = PKR 21,250
It’s important to remember that the Zakat rate is the bare minimum that every Sahib-e-Nisab Muslim is required to pay. However, there is no upper limit, and you can choose to give more Zakat on gold and other assets than is required if you want to help the poor Muslims in your community.

Where will zakat be distributed?

Now that you know how to calculate your Zakat, let’s look at how it’s distributed:

The calculated amount of Zakat can be paid in one transaction or in installments over the course of the year until the next lunar year begins. Zakat, on the other hand, can only be given to those who fall into one of the Quran’s eight categories.

The Quran specifies the following eight categories of people as legitimate Zakat recipients:

  • Fuqaraa [people who are poor or have a low income]
  • Masakeen [needy Muslims who are deprived of even the most basic amenities]
  • Aamileen [officials tasked with collecting Zakat for an Islamic State]
  • [New underprivileged Muslims should incline their hearts even more towards Islam] Muallafat-ul-Quloob
  • [slaves and captives, to free them from their masters] Ar-Riqaab
  • Al-Gharimeen [debt-ridden Muslims]
  • [Needy Muslims who are away from home to perform good deeds such as Hajj or Jihaad] Fi Sabeelillah
  • [A traveler who is in need for the duration of the journey] Ibn-us-Sabeel

We hope this log helps you a lot to understand the conpect of zakat in a good way. Stay tune for more blogs regarding this.

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