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Who pays Zakah?

Zakat is obligatory upon a person if:

  1. He or she is an adult, sane, free, and Muslim
  2. He/she must possess wealth in excess of the specified minimum (Nisaab), excluding his or her personal needs (clothing, household furniture, utensils, cars, etc. are termed articles of personal needs).
  3. It should be possessed for a complete lunar year.
  4. It should be of productive nature from which one can derive profit or benefit, such as merchandise for business, Gold, silver, livestock, etc.
  5. The amount of wealth that makes one liable for Zakat is called Nisaab. The Nisaab, as fixed by Prophet Muhammad (P.B.U.H), is as follows.

He or she is an adult, sane, free and Muslim

He/she must possess wealth in excess of specified minimum (Nisaab) excluding his or her personal needs (clothing, household furniture, utensils, cars etc. are termed article of personal needs).

It should be possessed for a complete lunar year.

It should be of productive nature from which one can derive profit or benefit such as merchandise for business, gold, silver, livestock etc.

The amount of wealth which makes one liable for Zakat is called Nisaab. The Nisaab as fixed by Prophet Muhammad (P.B.U.H) is as follows.

       Grams     Tolas      Grains     Troy Oz.
 GOLD:      87.48       7.50         1350       2.8125
 SILVER:   612.36     52.50       9450      19.6875

      Grams     Tolas      Grains     Troy Oz.
 GOLD:      87.48       7.50         1350       2.8125
 SILVER:   612.36     52.50       9450      19.6875

Nisaab of cash, stock or bonds, and other cash assets is the equivalent amount of Gold or Silver. Nisaab is calculated by adding up the cash value of all the assets, such as Gold, silver, currency, etc., and if it is equal to or in excess of the minimum Nisaab as specified in the above table, the Zakat is due at the rate of 2.5%.

The payment of Zakat is compulsory on the excess wealth or effects which is equal to or exceeds the value of Nisaab and which is possessed for a full Islamic year. If such wealth decreases during the course of the year and increases again to the value of Nisaab before the end of the year, the Zakat then must be calculated on the full amount that is possessed at the end of the year.

Types of wealth on which Zakat is imposed:

  1. Gold and silver, in any form.
  2. Cash, bank notes, stocks, bonds, etc.
  3. Merchandise for business, equal to the value of Nisaab.
  4. Pension
  5. On income derived from the rental business.
  6. Debts owed to you
  7. Farming & livestock

Gold and silver, in any form.

Cash, bank notes, stocks, bonds etc.

Merchandise for business, equal to the value of Nisaab.

Live stock.

On income derived from rental business.

Pension.

Calculation of Zakat:

  1. To calculate Zakat on jewelry etc., one must first determine the gold or silver content and then calculate the Zakat according to the current market price.
  2. If the Gold possessed is less than 87.48 grams or if the silver possessed is less than 612.36 grams, but the value of both combined is equal to or exceeds the Nisaab of either Gold or Silver, the Zakat will be due.
  3. In the event of an article not being of pure Gold or pure silver but containing a mixture of other metals and the Gold or silver content is more than the other metal, it will be regarded as Gold or silver, and Zakat will be due. But in the case where another metal/s is of greater quantity than either Gold or silver, Zakat will not be due in this article.
  4. For stocks (shares held in a company), Zakat is calculated based on the current market value. As machinery, land, fixtures, fittings, furniture, buildings, etc. are exempt from Zakat, one is allowed to subtract these from the total asset. This could be obtained from annual reports. For example, if one has shares worth £1000 and machinery, land, etc., are worth 5% of the total asset, then deduct £50 for these assets, and afterward deduct the liabilities of the company proportionately to the percentage of shares held.
  5. Zakat = (Asset – Liabilities) x 2.5%

To calculate Zakat on jewellery etc. one must first determine the gold or silver content and then calculate the Zakat according to current market price.

If the Gold possessed is less than 87.48 grams or if silver possessed is less then 612.36 grams, but the value of both combined is equal to or exceeds the Nisaab of either Gold or Silver, the Zakat will be due.

In the event of an article not being of pure gold or pure silver, but containing a mixture of other metals and the gold or silver content is more than the other metal, it will be regarded as gold or silver and Zakat will be due. But in the case where other metal/s is of greater quantity than either gold or silver, Zakat will not be due on this article.

For stocks (shares held in a company), Zakat is calculated based upon the current market value. As machinery, land, fixtures and fittings, furniture, buildings etc. are exempt from Zakat, one is allowed to subtract these from the total asset. This could be obtained from annual reports. For example, if one has shares worth £1000 and machinery, land etc., are worth 5% of the total asset, then deduct £50 for these assets, afterwards deduct the liabilities of the company proportionately to the percentage of shares held.

Zakat must be calculated on the balance.

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