Brief Guide of Giving Zakat

Although Zakat can be paid at any time of the year, after the completion of 1 years' possession of wealth, it is common for Muslims to synchronise their Zakat payment with the month of Ramadan. Hence we feel it appropriate to provide some useful information on Zakat in this leaflet.

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Zakat is an obligation upon a person if s/he is a Muslim, sane, and owns wealth equal to the value of the Nisab. The Nisaab is the amount of wealth which makes one liable for payment of Zakat and must remain in his/her possession for one Lunar year. The value for the Nisab varies according to fluctuation in the market prices of Gold and Silver.

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CURRENT VALUE OF NISAAB:

For Gold = 85g
For example if 1 gram of gold is £20 – therefore £20x85=£ 2700
For Silver = 595g
For example if 1 gram of silver is £2- therefore £2x595gm = £1190
The lowest of these two values (£1190) is safest to consider the value of Nisaab.

If one has in his/her possession mixed wealth (e.g. gold, silver, cash etc) equal to (£1190) that has remained in his/her possession for one whole lunar year then Zakat of 2.5% (1/40) of the total aggregate balance (after deducting debts) is due.

 

BUSINESS GOODS:
Zakat is due on goods that are bought and sold for the purpose of trade and profit, which are called “trade goods”. If a person has any property or real estate – land, houses or shops – which he has acquired for the purpose of trade, buying and selling, then he should work out their value at the time when zakat becomes due and pay 2.5%.

 

PROPERTIES:
If the property was bought with the intention of Renting and not for Reselling then Zakat will only be liable on accumulative Rent and not on the value of the property.

 

SHARES:
The shares in which a person deals buying and selling, are subject to the zakat on trade goods, so at the end of the year you should estimate their value and pay zakat at 2.5%.

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If the shares make a loss, then their value should be worked out; if it reaches the Nisaab, then zakat must be paid on them. What counts is not the capital with which you bought the shares, but their value at the end of the year. If a person buys shares for ten thousand, for example, and their price falls and at the end of the year they are worth three thousand, then zakat is due on three thousand, not ten thousand.