Every Islamic year, also known as the lunar year, requires the payment of zakat, one of Islam’s five pillars. As a result, you must set a specific date each year for calculating your zakat based on the total value of your assets for that year. It is typical for many Muslims to calculate and give Zakat at the beginning of Ramadan.
You must first decide if you are Sahib-e-Nisab before you can calculate your Zakat, though. In other words, only Muslims who have saved or have assets above a certain amount are required to pay Zakat. You can calculate your Zakat obligation once you’ve decided whether you’re required to pay it.
THIS RAMADAN, HELP THE PATIENTS’ AID FOUNDATION (PAF) IN ITS RELENTLESS PURSUIT OF SAVING LIVES OF NEEDY PATIENTS THROUGH YOUR ZAKAT & DONATION
If your total assets for a full lunar year equal or exceed 7.5 tola (3 ounces/87.48 grams of gold) or 52.5 tola/21 ounces/612.36 grams of silver, you are Sahib-e-Nisab and are required to pay Zakat. Since gold and silver are no longer used as forms of payment in our modern society, it is crucial to convert the Nisab into your local currency based on the price of either gold or silver on the calculation day.
Please be aware that although we will be using Pakistani Rupees (PKR) as the default currency in our examples to demonstrate how to calculate zakat in Pakistan, the exchange rates and currency values will vary depending on the situation. Here is a guide to calculating your Zakat for 2023.
Determine your Zakat-eligible assets:
Zakat is calculated on certain types of assets, including cash, gold, silver, stocks, business inventory, and rental income. Make a list of all your assets and determine which ones are Zakat-eligible.
Determine the nisab:
Nisab is the minimum threshold of wealth that one must possess before Zakat becomes mandatory. For 2023, the nisab is approximately 619 grams of silver or 87 grams of gold. You can use the current market value of silver or gold to determine the exact amount.
Calculate your Zakatable assets:
Subtract your debts and liabilities from your Zakat-eligible assets to determine the amount of Zakatable assets you have.
Calculate the Zakat rate:
The Zakat rate is 2.5% of your Zakatable assets.
Calculate your Zakat:
Multiply your Zakatable assets by 2.5% to calculate your Zakat for the year. For example, if your Zakatable assets are worth $10,000, your Zakat would be $250 (10,000 x 0.025).
Pay your Zakat:
Once you have calculated your Zakat, it is time to pay it. Zakat should be paid to those in need and can be given to various charitable organizations. You can also give it directly to those in need, such as family members or friends who are struggling financially.
It is important to note that Zakat is not the same as Sadaqah (voluntary charity). Sadaqah can be given at any time and in any amount, while Zakat is a mandatory obligation that is calculated and paid annually.