Finding out how much Zakat to pay as well as how to pay it can be complicated at times, and that is why we have written this short guide. We've answered some of the most frequently asked questions and dispelled some of the most prevalent myths about 100 zakat policy.

What is the concept of Zakat (Charity) In Islam?

‘You shall observe the Salah and give the obligatory charity (Zakat), and bow down with those who bow down.’ (Qur’an 2:43)

The third foundation of Islam is zakat. It is a compulsory charitable gesture equal to 2.5 per cent of a Muslim's annual savings. Zakat is meant to cleanse our riches not just physically, but also spiritually. It cleanses our hearts of selfishness while still protecting society's poorest from hunger and misery.

What is the eligibility Criteria for Zakat?

To be eligible for zakat, one's wealth must exceed a certain amount known as the "nisab."

There are two ways to calculate the nisab: gold or silver.
  • Gold: The gold standard defines the nisab as 3 ounces of gold (87.48 grammes) and its cash value. This is about $4,780.06 for gold on April 8, 2021, but will vary depending on gold market value. 
  • Silver: According to the silver mark, a nisab is 21 ounces of silver (612.36 grammes) or its cash equivalent. This equates to about $503.10 on April 8, 2021.

Is Zakat is a form of tax?

Can You Recommend How I Should Calculate My Zakat Year?

A lunar year’s full cycle must elapse on nisab for zakat to come due. This means the zakat-year can differ for people (and, possibly, for one person’s various wealth forms). However, considering that almost everyone possesses nisab for the entire year on the most common category of wealth (money), for most of us the only practical way to compute zakat is to specify a certain lunar calendar date and calculate your zakatable wealth on that day, and then pay zakat annually on the same lunar calendar date every year.

The first and 27th days of Ramadan and the first of Muharram are all popular zakat due dates. Many pay their zakat during Ramadan for the multiplied blessings of that month. Others favour Muharram because it is the first month of the Hijri, lunar year. If, however, a Muslim polity centralizes zakat collection and distribution, zakat must be paid in the month determined by the legitimate authority.

What is the maximum amount for Zakat?

Zakat must be paid on the basis of wealth instead of wages. For eg, if Adam (our fictional character) makes £20,000 a year and has £200 in savings, he will have to measure his Zakat based on the £200 in savings rather than his annual salary.

Zakat is not just charged on your bank account deposits. Zakat is needed on other types of investment too, such as:
  • Silver and gold
  • Money kept at home or in savings accounts
  • Stocks and bonds that are held directly or indirectly by hedge funds
  • Loaned money from others
  • Trade and merchandise stock in the business
  • Agricultural products
  • Cows, goats, and sheep are examples of livestock animals.
  • Pensions Property held for the purpose of investment

Are women exempted from Zakat?

An often asked question is either woman should pay Zakat on gold and silver jewellery. There are two schools of thought on this:

  • According to some scholars, you must pay Zakat on all silver and gold (above the Nisab level), even jewellery. Certain precious metals, such as silver, and precious gems, such as diamonds, do not require Zakat payment. Furthermore, according to some authors, mixed metals are only subject to Zakat if half or more of the alloy is gold or silver. 
  • Other scholars argue that if women only use jewellery for private ornamentation and not as a commodity, they should not have to pay Zakat upon this. 
  • If you purchase jewellery with the intention of acquiring money or selling it afterwards, or if you have what is called an expensive sum, the jewellery is no longer purely ornamentation, and you must pay Zakat upon that.

To whom Zakat funds should be given?

The poor, the needy, those in poverty, those in the cause of Allah, latest reverts to Islam, those administering Zakat, wayfarers, and those in bondage are the seven categories of citizens who may receive Zakat (The Noble Qur'an, 9:60).

When you give through Muslim Hands, you can be certain that your Zakat can be used to help disadvantaged communities in their fight against poverty. Zakat is a religious tax. It can be used to improve schooling, the climate, wellness, and food security, along with other things.

If you still have some query regarding paying your Zakat (charity), comment below or mail us here to get scholars’ opinion about your question. Or reach us here →