How to calculate the Zakah (Zakat Part 2)

How to calculate the Zakah (Zakat Part 2)
-By Zakia Usmani 

The simple method of calculating the zakah is to add the all the assets (money, stocks, jewellery) and if it is above the nisab then pay Zakah on the total amount. To clarify, this method requires the individual to pick any day in the year to pay Zakah and then to add all Zakat-able wealth that one has on that day and pay 2.5% of that amount. This is the simpler method and also the fatwa of many of the scholars today.

The Nisaab for silver is 200 Dirhams – which is 595 grams of Silver. When one owns more than 595 grams of silver, he should give 2.5% (5/200 Dirhams) as Zakat.

For Gold, the Nisaab is measured in Dinars. The Nisaab for Gold is 20 Dinars, which equates to 85 grams of Gold. When one owns more than 85 grams of Gold, he should give half a Dinar i.e. 2.5% (0.5/20) as Zakah.

Zakah becomes due on the entire amount of wealth as soon as it passes nisaab and if it was intact for an entire lunar cycle.

Note: if one is using the solar calendar to work out Zakah then the amount is not 2.5% but 2.575% to account for the 10 day difference from a lunar year.


Which nisaab does one associate the value of the currencies to, gold or silver?

The nisaab for currency – dollar, euros, riyals – trading stock and other assets etc is pinned to either the amount of silver or gold or the higher of the two – depending on which opinion one follows.

The majority of scholars hold that one uses the nisaab of silver. Their proofs are:

There is Ijma’ of the scholars on the nisaab value of 595 grams for silver because of strong evidence for this. This in contrast to the nisaab of gold which has some difference of opinion.

Usually, silver is the lesser of the two in value. If the currency is attached to silver, more people will be eligible to give the Zakah and that would be the safer option for the masses.

Scholars who hold that currencies should be tied to the nisaab of gold argue that:

The purpose of Zakah is to give from the rich to the poor. If the nisaab of silver is used, then even the poor would be obliged to give Zakah. The person who has nisaab equal to the value of gold may not be rich, but at least this individual is in a better state of the two options.

By default, there is no Zakah obligated on an individual until it becomes certain that one qualifies to have it obligated on him. If one said that the obligation of Zakah for cash currency and other assets is with the Nisaab of Silver, then there is some uncertainty – the correct application of pinning such assets could have been to pin it to the Nisaab of Gold. If on the other hand one pins the currency to Gold, then there is certainty that nobody is being forced to pay Zakah unnecessarily.

In short, every person is free from the obligation of paying Zakah until there is certainty and that certainty is only with the Nisaab of Gold.

Question: If this same person also inherited a large sum of money during the hawl – for instance, a week before the hawl ended – then is this new sum of money included in the Zakah calculation?

According to the majority of scholars, this person does not have to include the money inherited in the same hawl for Zakah calculation. The inherited wealth has its own hawl as it was not linked in any way to the original business capital – it’s not the product or derivative of the business capital.

Imam Abu Hanifa and the Hanafi madhab hold that one does have to add this wealth as part of the same hawl for Zakah calculation. This also simplifies the calculation of Zakah and poses no problems legally as one is allowed to pay Zakah earlier.

To sum up, if one has gold, silver, trading stock, money owed to you, then these should be added up, then the debts for that year (not long term debts) should be removed, then 2.5% of whatever is left is Zakah.