Zakat & Beyond
Zakat Conditions & Calculation
When Does Zakât Become Obligatory?
Zakât falls due when three conditions converge in 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 Zakât Imposed on Any Amount of Wealth?
No. Zakât 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 in 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 (Zakât Calculation, 46). If the quantity of the zakatable possession is less than its prescribed nisâb, it is exempted from Zakât. The table below illustrates the nisâb and Zakât rates, for each category of zakatable wealth.
Is the Wealth of Muslim Minors Subject to Zakât?
Yes. Adulthood, unlike Islam’s other religious obligations, is not a limiting condition for Zakât. Since Zakât is the right of the poor in the ‘wealth’ of the rich, neither age nor mental competence applies. Zakatability, meaning the three conditions making Zakât on wealth due, is the only prerequisite for its payment, whether an adult, a minor, or the insane hold it. The guardian of a child, an orphan, or a mentally incompetent person is obligated to pay Zakât 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 Zakât 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 Zakât.
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 Zakât 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 Zakât is due at the end of the lunar year. If, however, he or she saved part of that money in that lunar year, then Zakât is payable on that remaining amount, provided it equals or exceeds nisâb. To confuse nisâb with the faulty definition of an average family’s yearly need—an idea accepted by no recognized scholar—is to equate Zakât with a government tax.
Can Different Types of Assets Be Added Together and Zakât 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 charitably. But Zakât on each type of asset is calculated separately. If one owns, for instance, four cows and more than 85 grams of purgold, or an equivalent in money, then he or she gives no Zakât on the cows, but pays Zakât on the gold or money. Now, the same type of wealth 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 Zakât paid if the total reaches nisâb (Zakât Calculation, 48).
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 Zakât is due. According to Abû Hanîfah, nisâb need only be available at the beginning and at the end of the Zakât 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 Zakât comes due, when they are mined or harvested (Fiqh az-Zakât, 95-96, 98-99).
Zakât 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 Zakât 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 Zakât due dates fall. So, the relevant standard of measure for the nisâb is what is present at the Zakât due date, not the fluctuations during the year (See graphs on previous page).
Can You Clarify this and Give Examples?
Any fluctuation during the year above nisâb is not relevant to paying Zakât, as long as one maintains nisâb. For example, If one earns $5,000 the day before the Zakât due date, one pays Zakât on the total amount that remains in one’s possession on the Zakât due date.
So in the case of a person who owns 35 cows (bovine) on the Zakât due date, who maintains the nisâb of 30 or more cows throughout the 12 lunar months in their entirety, Zakât 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 Zakât is due on exactly one lunar year from that date.
Can You Recommend How I Should Calculate My Zakât Year?
A lunar year’s full cycle must elapse on nisâb for Zakât to come due. This means the Zakât-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 Zakât is to specify a certain lunar calendar date and calculate your zakatable wealth on that day, and then pay Zakât annually on the same lunar calendar date every year. The 1st of Ramadan, 27th of Ramadan, and 1st of Muharram are all popular Zakât due dates (ZDD). Many pay their Zakât during Ramadan for the blessing of it. Others favor Muharram because it is the first month of the Hijrî, lunar year. If, however, a Muslim polity centralizes Zakât collection and distribution, Zakât must be paid in the month determined by the legitimate authority.
Can Zakât Foundation Help Me Calculate My Zakât?
Yes. The Zakat Foundation of America is exclusively focused on helping Muslims fulfill this essential middle pillar of their faith and on establishing the crucial cornerstone of charity in their worship. We are well acquainted with Zakât as it relates to the various types of wealth that Muslims in America and the West generally possess. We know the pressing Zakât and sadaqah questions and strive to provide religiously precise and socially relevant answers. In response to the inquiries and needs of many people like yourself, we have developed a model to help Muslims in the West accurately and easily calculate their Zakât, and we have reduced this model to an efficient Zakât worksheet. It is especially tailored to the Zakât calculation needs of the Muslim on salary, the small business owner, the stock market investor, and those with pension plans.