Zakat Summary

Zakat is an obligatory act of worship and one of the Five Pillars of Islam. It requires eligible Muslims to give 2.5% of their qualifying wealth each lunar year to specified categories of people in need. It purifies wealth and helps redistribute resources within the community.

Who Must Pay Zakat?

You must pay Zakat if all of the following apply:

• You are a Muslim.
• Your zakatable wealth has been at or above nisab for a full lunar year.
• Your wealth is fully owned and not consumed by due debts.
• Your wealth is of a zakatable type (cash, gold, silver, trade goods, certain investments, etc.).

If any of these conditions is not met, Zakat is not due on that wealth.

Nisab (Minimum Threshold)

Nisab is the minimum wealth level that makes Zakat obligatory. It is measured using either:

• Gold nisab: Value of ~87.48 g of gold.
• Silver nisab: Value of ~612.36 g of silver.

Because prices change, nisab should be calculated using the current market value in your local currency. Many scholars use whichever (gold or silver value) is more favorable to the payer. If your net zakatable wealth is below nisab, no Zakat is due; if it is at or above, Zakat is due on the full net amount.

How to Calculate Zakat

Step 1: Add Up Zakatable Assets

Include (using current market values):

• Gold and silver (ornaments, bars, coins).
• Cash and bank balances (cash at home, savings, FDs, RDs, accessible funds).
• Shares and mutual funds held as investments: commonly, 40% of their current market value is treated as zakatable, and you pay 2.5% on that portion (equivalent to about 1% of the total market value).
• Other zakatable assets:
• Money you have lent out and reasonably expect to be repaid.
• Business inventory and goods for sale.
• Livestock (for those who own them, according to their specific rules).

Sum these to get your total assets.

Step 2: Subtract Immediate Liabilities

Subtract only debts and obligations that are currently due or due in the near term (e.g., payments due this year). Do not subtract long‑term future installments that are not yet due.

Net wealth = Total zakatable assets − Debts due now.

Step 3: Apply the Zakat Rate

If your net wealth is at or above nisab:

• Zakat = Net wealth × 2.5% (0.025)

Example pattern:

• Net wealth: Rs 6,50,000
• Zakat: 6,50,000 × 0.025 = Rs 16,250

When to Pay Zakat

• Zakat is due once every Islamic (lunar) year after your wealth first reaches nisab.
• Many people fix a recurring date (e.g., in Ramadan or the date they first became liable) and calculate/pay Zakat on that same date each year.

Who Can Receive Zakat?

The Qur’an specifies eight categories of eligible recipients, including:

• The poor.
• The needy.
• Those in debt.
• Stranded travelers in need.
• Other specified categories mentioned in the verse of Zakat.

Zakat should be given directly or via a trustworthy charity that distributes it strictly according to these rules. For example, Kashmir Imdaad Foundation states that it uses 100% of Zakat donations directly for people in need, with no overhead.

Tools and Related Guides

• Use our Zakat Calculator to input your assets and liabilities; it uses current nisab values and does not store your data.
• Read How to Calculate Zakat on Gold for gold ornaments and bullion rules.
• Read How to Calculate Zakat on Stocks and Mutual Funds for investment rules.
• Read What is Sadqa Fitr Amount in Kashmir for Eid ul Fitr obligations.

You can donate your Zakat here to help people in need. Kashmir Imdaad Foundation ensures 100% of Zakat goes directly to beneficiaries.