Calculate Zakat On Gold? A Step-By-Step Guide

Calculating Zakat can help you find exactly what amount you need to pay for Zakat during this Ramadan. Zakat is among the five pillars of Islam, and Muslims, under specific conditions, or Nisab, need to pay Zakat every lunar month. Generally, the practice of distributing Zakat is followed in the Holy Month of Ramadan. However, Muslims can offer Zakat to eligible or deserving people at any time of the Lunar year. This article highlights what Zakat is and how one can calculate Zakat on Gold. So, let’s break down this calculation NOW!

What is Zakat?

Zakat is an obligatory form of charity, considered the third important pillar of Islam. Unlike Fitra or other Sadaqah, not everyone needs to pay or offer Zakat. The purpose behind giving Zakat is to purify your wealth, help needy people, and get Allah’s pleasure. Zakat is calculated as 2.5% of the total possession of every individual who meets the requirement, as dependent upon Nisab.

Who is Eligible to Give Zakat?

Sometimes, people get overwhelmed by who is eligible to pay Zakat. So, before calculating Zakat on Gold, let’s begin with the idea of who is eligible to give Zakat. People with the following criteria are required to pay Zakat:

> Muslims: As Zakat is an obligatory charity or pillar of Islam, it is only required for Muslims to pay Zakat in every Luna month.

> Adults and Sane: The Islamic Scholars state that Zakat is mandatory to pay only for adult muslims with a sound state of mind.

> Own Wealth Above the Nisab: People who own wealth equal to or above the Nisab threshold. Nisab is the minimum amount of wealth that makes Zakat compulsory for Muslims. The Nisab is calculated based on the value of silver and gold.

> Possess the Wealth for One Lunar Month: People who own the wealth that remains equal to or above the Nisan level for one full lunar or Islamic year need to pay Zakat.

> Have Complete Ownership of the Wealth: People who have complete possession of their wealth are subject to pay Zakat. The wealth includes Gold and Silver, cash, savings, business goods, investment profits, etc.

Who is Eligible to Receive Zakat?

Before paying zakat, one must also know who is eligible for Zakat. Remember that Zakat can only be given to specific categories of people mentioned in the Holy Quran:

“Alms-tax is only for the poor and the needy, for those employed to administer it, for those whose hearts are attracted ?to the faith?, for ?freeing? slaves, for those in debt, for Allah’s cause, and for ?needy? travellers. ?This is? an obligation from Allah. And Allah is All-Knowing, All-Wise.” (Quran, 9:60)

The Poor (Al Fuqara): People with little to no income who cannot meet their basic living standards, such as food, clothing, and shelter.

The Needy (Al Masakin): People with little or low income who are not eligible to cover their essential/basic living expenses.

Zakat Administrators: People who work as staff to collect and distribute Zakat charity fairly.

People with Reconciled Heart: People who are new to Islam or about to accept Islam and need financial support to strengthen their faith.

People who are in Bondage: People who are in severe oppression or captivity. Historically, this referred to freeing slaves.

People in Debt: Zakat can be given to people who are under permissible debts and are not eligible to repay them.

In the Cause of Allah (Fi Sabilillah): People who are struggling and fighting purely for the cause of Allah.

The Wayfarer: Zakat can be given to the stranded travelers. It means you can give Zakat to a traveler who is running out of money and cannot return home, even if he is wealthy back home.

How to Calculate Zakat on Gold?

People with Gold and silver jewelry that is equal to or above the decided nisab need to pay Zakat. The jewelry is subject to the current market value or prices. Below is the nisab threshold to Calculate Zakat:

> Gold: Equal to the value of 87.48 grams.

> Silver: Equal to the value of 612.36 grams.

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Frequently Asked Questions

Who is not eligible to give Zakat?

People who are under the set Nisab, 87.48 grams of gold and 612.36 grams of silver, are not required to pay Zakat.

Can I give Zakat to my relatives?

Yes, you can give Zakat to your distant relatives, including brothers, sisters, aunts, uncles, cousins, nephews, nieces, and any other relatives. However, you cannot give Zakat to your close blood relatives, including your parents, grandparents, children, and/or grandkids.

What is the minimum amount to pay as Zakat?

The standard rate of payable Zakat is 2.5% of your qualifying wealth. It includes gold and silver, cash and savings, investment profits, and business inventory.

Is Zakat due on personal belongings?

Personal belongings such as home, car, clothing, furniture, etc., are not subject to Zakat unless they are for business purposes.

What if someone does not pay Zakat?

Paying Zakat is a serious obligation - an important act of worship and purification of wealth. Refusing to pay Zakat is considered sinful in Islam. The Messenger of Allah (Peace Be Upon Him) said, “Whoever is made wealthy by Allah and does not pay the Zakat of his wealth, then on the Day of Resurrection his wealth will be made like a bald-headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and say, 'I am your wealth, I am your treasure.” (Sahih al-Bukhari 1403)