Each year, Muslims that possess wealth above a certain amount have to give some part of it as Zakat. It creates a flow of wealth from rich to poor and maintains balance in society. In modern times, it can be a bit challenging to calculate how much Zakat one owes. This guide on the calculation of Zakat in 2023 will help you do so.
Who Has To Pay Zakat (زكاة)?
Individuals that have wealth equivalent to or more than 3 ounces or 85.04 grams of gold are eligible to pay Zakat. For an asset to be accountable in the calculation, it must be held for at least one full lunar year.
Rates of gold fluctuate throughout the year and Zakat is usually paid in the form of cash. Hence, Zakat donors need to know the updated prices of gold to calculate Zakat. Transparent Hands’ Online Zakat calculator uses the latest rates to provide an accurate amount.
Accountable Assets in Zakat
Assets that are accountable for Zakat vary between different schools of thought.
As per Fiqh-e-Hanafi metals that are eligible for Zakat include gold and silver. Jewelry made up from platinum or any other metal is spared from the calculation. It is because the two mentioned metals have intrinsic monetary value.
Other assets that need to be accounted for in calculations include cash at home, cash in bank accounts, bonds, investment certificates, shares, money lent to others, and purchased stocks.
In Fiqh-e-Jafria Zakat is obligatory on nine objects which include:
Since cash is not included in the list, banks do not deduct Zakat from account holders belonging to Fiqh-e-Jafria.
Calculation of Zakat
In order to calculate Zakat, individuals have to add the monetary value of all accountable assets together. Again, only those assets are accountable that have been in your possession for at least a lunar year. Liabilities are also calculated and subtracted from the total and 2.5% is given out of the final sum.
Let’s assume you have 100g of gold, 5 lacs in cash, lend PKR 1 lac to someone and owe 50,000 PKR to someone else. This is how you would calculate the Zakat:
1g of 22 Karat Gold = 9,869.51
100g of 22 Karat Gold = 9869510
Cash = 500,000
Loan to others = 100,000
Cumulative Assets = 10,469,510
Zakat = Cumulative Assets – Liabilities
10,469,510 – 50,000 (amount you owe in loan) = 10,419,510
10,419,510 is the monetary value of the total asset that you own. Now the owed Zakat is 2.5% of this amount and that will be 260487.75.
Can Taxes Be Subtracted from Owed Zakat
Taxes are paid to the government to build infrastructure, ensure governance, and help run the country. All the citizens receive the benefits from the infrastructure that is built using these taxes. In contrast, Zakat is paid to the needy who are eligible for it so they can survive in society. Taxes are imposed by the government while Zakat has been made an obligation by God Almighty. Hence, taxes cannot be subtracted from the Zakat one owes.
Recipients of Zakat (زكاة)
Muslim countries around the world have dedicated departments to keeps lists of individuals that are eligible for Zakat. Hence, when the banks deduct Zakat in Pakistan it goes to the Bait-ul-Maal which distributes it to these families. Such a system is not in place in non-Islamic countries and people in these countries have to have give it themselves. These individuals can donate Zakat to:
- Families with low income
- Individuals that are in financial trouble, i.e., lack resources for medical treatment.
- Newly converted Muslims
- Muslims in debt
- Muslims in captivity
- Cause of God
- People that are traveling with minimal resources
- People who collect and distribute Zakat (زكاة)
Zakat to NGOs
Zakat has to be distributed as per Islamic principles and strict criteria. Hence, there are special conditions that NGOs have to fulfill in order to become recipients of these donations. These include:
- The organization should be working for an Islamic cause
- The administrators of the NGOs should be trustworthy
- Zakat should not be used to pay out salaries of individuals working for NGOs
- NGOs should separate the individuals that are eligible for Zakat and those that are not
- NGOs should distribute the Zakat as per Islamic principles
Is Transparent Hands eligible for Zakat (زكاة)?
Transparent Hands is a Pakistan-based NGO that provides free surgical and medical treatments to deserving patients. It abides by all Islamic laws and distributes Zakat to only those individuals that are eligible for it.
Charitable Organizations Eligible For Zakat in Pakistan
- Transparent Hands
- Shaukat Khanum Memorial Cancer Hospital and Research Center
- Edhi Foundation
- Sahara For Life Trust
- Chhipa Foundation
- Akhuwat Foundation
- SOS Villages Pakistan
- Shifa Foundation
- Al-Khidmat Foundation
- Minhaj Welfare Foundation
- Shahid Afridi Foundation
- Aga Khan Foundation
God Almighty has made Zakat obligatory and promised rewards in the afterlife for those that practice it. Although all religions encourage charitable donations, Islam is the only one that has made it mandatory for wealthy individuals. Zakat donations help thousands of families survive in society and help them cope with financial struggles. It is usually better and more convenient to donate to charitable organizations. Some charitable organizations offer education, food and clean water, while others provide medical treatments. So, please donate to these causes.