Zakat & Beyond
Zakat Conditions & Calculation
When Does Zakat Become Obligatory?
Zakat falls due when three conditions converge for a person and his wealth:
- One is a Muslim.
- One’s zakatable wealth rises to a minimum threshold (nisâb).
- A lunar year (hawl) passes while one’s zakatable wealth sustains the minimum threshold.
Is Zakat Imposed on Any Amount of Wealth?
No. Zakat is due only on zakatable wealth that reaches an established minimum threshold for that particular kind of wealth. That threshold is called nisâb, literally, ‘origin,’ or ‘beginning,’ for it is the amount wherein the poor’s right to one’s wealth commences. Different types of assets have different thresholds. For example, the nisâb on money is 85 grams of gold (approx. 3 OZ US; 2.74 TROY OZ). The nisâb on cows is 30 cows. The nisâb on grain is 653 kilograms. If the quantity of the zakatable possession is less than its prescribed nisâb, it is exempted from zakat. The table below illustrates the nisâb and zakat rates, for each category of zakatable wealth.
Is the Wealth of Muslim Minors Subject to Zakat?
Yes. Adulthood, unlike Islam’s other religious obligations, is not a limiting condition for zakat. Since zakat is the right of the poor in the ‘wealth’ of the rich, neither age nor mental competence applies. Eligibility for zakat by meeting the three conditions that make zakat due on wealth is the only prerequisite for its payment, whether an adult, a minor, or the mentally unsound hold it. The guardian of a child, an orphan, or a mentally incompetent person is obligated to pay zakat on their behalf from their wealth if it is at or above the minimum threshold (nisâb) (Fiqh-us-Sunnah, 9; Fiqh az-Zakât, 57).
What is Nisâb?
Nisab is the specific minimum amount in each zakatable category of wealth used for the purpose of calculating zakat. Nisab is calculated on a possession that remains with one on a zakatable category of wealth after one fulfills all basic living expenses for an entire lunar year. This excludes all existing necessities, such as one’s residence, vehicle, stored food, clothes, and furniture. So if someone makes a large sum of money and spends it all on basic needs—without unnecessary luxury—no zakat is due at the end of the lunar year. If, however, he or she saved part of that money in that lunar year, then zakat is payable on that remaining amount, provided it equals or exceeds nisab.
Table of Nisâb and Zakat Rates
NISAB (read as value of) Zakat Rates PERSONAL WEALTH 3 US OZ (PURE GOLD) 2.5% BUSINESS WEALTH 3 US OZ (PURE GOLD) Trade Goods 2.5% CURRENT WHOLESALE Exploited Assets 2.5% NET INCOME AGRICULTURAL PRODUCE 653 KG/1439 LBS Crops (Irrigated) 5% OF HARVEST Crops (non-irrigated) 10% OF HARVEST LIVESTOCK OVINE: 40
See Special Zakat Rate Table TREASURE TROVES 3 US OZ (PURE GOLD) 20%
Can Nisâb Be Equated with the Poverty Line?
Nisâb is not to be confused with the minimum standard of living, poverty line, or exemption limit. It is a well-defined term in the Sharî‘ah:
Nisâb is the specific minimum amount in each zakatable category of wealth used for the purpose of calculating zakat.
Some mistakenly define ‘nisâb’ as “an amount which is sufficient to sustain the minimum average family for one year.” This is unequivocally wrong. The Prophet said in one report (strengthened by others): “From gold, take nothing until it reaches 20 dinars. At 20 dinars, there is a half dinar due” (Ibn Hazm, Al-Muhalla, 6:69 Fiqh az-Zakât, 161). Based on hadîth similar to this one—but especially on the practice of the Companions and the consensus of Muslims of the early generations—the nisâb of gold or money counted for zakat is 20 dinars equivalent to 85 grams of pure gold (Fiqh az-Zakât, 168).
Nisâb is calculated on a possession that remains with one on a zakatable category of wealth after one fulfills all basic living expenses for an entire lunar year. This excludes all existing necessities, such as one’s residence, vehicle, stored food, clothes, and furniture. So if someone makes a large sum of money and spends it all on basic needs—without unnecessary luxury—no zakat is due at the end of the lunar year. If, however, he or she saved part of that money in that lunar year, then zakat is payable on that remaining amount, provided it equals or exceeds nisâb.
Can Different Types of Assets Be Added Together and Zakat Imposed If the Total Value Reaches Nisâb?
No. The Sharî‘ah does not support this method of calculation. If a person owns money and cattle, for example, but neither of them constitutes a nisâb, he or she should not combine the two in order to generate a nisâb.
One is, of course, free, and, indeed, encouraged to give as much as possible to charity. But zakat on each type of asset is calculated separately. If one owns, for instance, four cows and more than 85 grams of pure gold, or an equivalent in money, then he or she gives no zakat on the cows, but pays zakat on the gold or money. Now, wealth of a single type must be added together and zakatability assessed on the total. To give a very common example, all sources of money must be added together—savings, gold, stocks, etc.—and zakat paid if the total reaches nisâb.
How Does One Calculate the Passage of One Lunar Year?
A minimum of nisâb must have amassed and stayed in one’s possession for one full lunar year (hawl) before zakat is due. According to Abû Hanîfah, nisâb need only be available at the beginning and at the end of the zakat year. The other three major schools require that nisâb remains in ownership during the entire lunar year (hawl), not dipping below that threshold. This ruling is limited to livestock, money, and business assets. It does not include crops, fruits, honey, metals, and treasures. They are zakatable, and their zakat comes due when they are mined or harvested (Fiqh az-Zakât, 95-96, 98-99).
Zakat becomes due after the passage of 12 full lunar months. This can be determined either from the beginning of ownership of the nisâb in a category of wealth, or the past date of one’s zakat payment on that category. Thus to say that the passage of a lunar year is required on all zakatable wealth is incorrect. It is required only on nisâb.
Any increase of wealth—after it reaches its nisâb at any time during the year—must be included in the zakatable amount if that increase is maintained with one until the zakat due dates fall. So, the relevant standard of measure for the nisâb is what is present at the zakat due date, not the fluctuations during the year.
Can You Clarify this and Give Examples?
Any fluctuation during the year above nisâb is not relevant to paying zakat, as long as one maintains nisâb. For example, If one earns $5,000 the day before the zakat due date, one pays zakat on the total amount that remains in one’s possession on the zakat due date.
So in the case of a person who owns 35 head of cattle on the zakat due date, who maintains the nisâb of 30 or more head of cattle throughout the 12 lunar months in their entirety, zakat is due on all 35 cows.
This is considered the most applicable method and strongest opinion, held by the majority of scholars. Shaykh Yusuf al-Qardawi argues that the requirement of the passage of one year is not necessary on earnings or other zakatable wealth that is acquired and added to nisâb (Fiqh az-Zakât, 310, 313, 316, 321-325). In fact, all four Schools of Law concur, provided nisâb is maintained.
Likewise, for merchants and businessmen possessing nisâb from the first day of establishing their business, their zakat is due exactly one lunar year from that date.
Can You Recommend How I Should Calculate My Zakat Year?
A lunar year’s full cycle must elapse on nisâb 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 possess nisâb 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 favor Muharram because it is the first month of the Hijrî, lunar year. If, however, a Muslim polity centralizes zakat collection and distribution, zakat must be paid in the month determined by the legitimate authority.
Can Zakat Foundation of America (ZF) Help Me Calculate My Zakat?
ZF is exclusively focused on helping Muslims fulfill the middle pillar of their faith and on establishing the crucial cornerstone of charity in their worship. In response to the inquiries and needs of donors, we have developed these tools to help Muslims in the West accurately and easily calculate their zakat.