Zakat Faq » Serve Ummah, Serve Humanity

What is Nisaab?

Nisab is the minimum limit of wealth below which Zakat is not payable by the owner of the wealth. However, if it exceeds this minimum level, Zakat is payable. The Nisab limit is different for different classes of wealth. For example, exemption limit on Gold is 7 ½ tolas or 87.48 grams of pure Gold, 52 ½ tolas of Silver or 612.35 grams of pure Silver, 5 camels, 40 goats, 30 cows and 653 kg of agricultural produce.

Zaid is a rich person, staying in a bungalow, having two cars and enjoys a comfortable lifestyle. He determines his Zakat liability on 1st Ramzan each year. His net personal wealth after meeting all his personal needs of household expenses, is a Bank balance of Rs. 1,00,000 and Cash at hand of Rs. 20,000 on 1st Ramzan. Is he liable to pay Zakat?

The sum total of net personal wealth is Rs. 1,20,000. Nisab level of Gold is Rs. 3,68,900 and that of Silver is Rs. 25602/- as per current market value of 7.5 tolas of Gold and 52.5 tolas of Silver respectively. He does not hold any Gold or Silver. However, the value exceeds the Nisab value of Silver, although, it does not exceed Nisab value of Gold. Under such circumstances, it is better to take lower of the two values and pay Zakat on full amount of Rs. 1,20,000. This would give benefit to the poor people

Bakar is a fresh MBA Professional. He is absorbed by a multinational company with effect from 1st July 2019. He received his first pay cheque of Rs. 5 lakhs on 1st Aug 2019 (i.e. 28th Ziqaad 1440 H). He has worked for 9 months till 30th April 2020, with accumulated savings of Rs. 25 lakhs. Is he liable to pay Zakat during Ramzan 1441 H starting in April 2020 ?

Although, his saving is above Nisab level, however, he is not liable for Zakat payment in the month of Ramzan 1441 H as he has not completed Hawl period i.e. one complete lunar year. He will be liable for Zakat payment with effect from 28th Ziqaad 1441 H.

For the first time, Umar’s net personal wealth of Rs. 4 lakhs reached Nisab level on 1st May 2019 ( 25th Shabaan 1440 H). In subsequent months, his Bank balance started increasing every month to reach a maximum level of Rs. 50 lakhs by March 2020. Then, he bought a Car worth Rs. 20 lakhs for his own use and bought Gold worth Rs. 25 lakhs for his mother and his Bank balance reduced to Rs. 1 lakh on 25th Shabaan 1441 H). Is he liable for Zakat payment? If so, on which amount? What if his closing Bank balance on 25th Shabaan 1441 H was Rs. 20000? What are the Zakat implications of Gold in the hands of his mother?

Umar is liable for Zakat Payment as he has completed 1 year of Nisab. He is liable for payment of Zakat on Rs. 1 lakh balance on completion of lunar year from the date of last Nisab. Although Rs. 1 lakh is lower than the Nisab level of Gold, but it is higher than the Nisab level of Silver, he is liable for Zakat payment as per Nisab level of Silver.
In case, after meeting all his personal expenses, his Bank balance is Rs. 20,000, it is lower than the Nisab value of Silver (say Rs. 25600 on 25th Shabaan 1441H). He is not liable for Zakat payment.
Mother has received gift of Gold from her son worth Rs. 25 lakhs. If she is already having a Nisab level last year, then, this value of gift would be added to her Zakatable wealth. She will have to ascertain the value of Gold on her Zakat Due Date and pay Zakat on the total Zakatable wealth. However, if she was not having Nisab last year, then on the date of receipt of this gift of Gold, she has attained Nisab level. After passage of a lunar year, she would be liable for payment of Zakat.

Abdul’s wealth on 1st Ramzan 1440 was more than Nisab level i.e. Rs. 20 lakhs. During the year, there were number of deposits in his Bank account and number of pay-outs also. His Bank balance went up as high as Rs. 80 lakh and as low as Rs. 5 lakhs. Finally, on 1st Ramzan 1441, his balance is Rs. 15 lakhs. Is he liable for Zakat payment? If so, on what amount?

Abdul remained throughout the year above the Nisab level. Fluctuations in Zakatable wealth during the year have no bearing on Zakat liability. He will be liable for payment of Zakat on the balance as on 1st Ramzan 1441 H, i.e. Rs. 15 lakhs.

Bakar is a rich man. On 1st Ramzan 1440, his Zakatable wealth was Rs. 200 lakhs. He undertook construction of a House for own use worth Rs. 120 lakhs, he bought a Car worth Rs. 20 lakhs while he spent on his daughter’s marriage Rs. 30 lakhs. His cash balance was Rs. 20000 after spending remaining amount towards household expenses and his son’s education. Is he liable for Zakat payment on 1st Ramzan 1441?

Although he was a Sahib-e-Nisab last year, he is no more so this year. He has spent the entire Zakatable wealth on basic necessities of his life. His saving of Rs. 15000 is lower than the Nisab level of Silver as on 1st Ramzan 1441. Hence, he is not liable for Zakat payment.

Zaid owns 100 acres of agricultural land worth Rs. 10 crores. He has reaped Kharif crop of 100 tons of Pulses in Oct 2019 and reaped 120 tons of Paddy in Rabi crop in March 2020. Ramzan is starting in April 2020. Is he liable for Zakat? If so when?

Nisab level for Agricultural crop is 653 kg. In both the cases of Kharif crop and Rabi crop, his Zakatable wealth exceeds Nisab level. There is no requirement of completion of lunar year for calculating Zakat on agricultural crops. Immediately upon completion of harvesting of the Kharif crop in Oct 2019, Zakat is payable on the full quantity. Similarly, Zakat is payable immediately on harvesting of Rabi crop. There is no need to wait till onset of Ramzan. The rate of Zakat is 10% if non-irrigated land and rate is 5% if it is irrigated land.

Altaf is a businessman running a shoe factory. He prepares a balance sheet every year on 31st March and undertakes valuation of his business inventory as on 31st March, since it is a statutory requirement. For all his personal net worth, he has decided 1st Ramzan as Zakat Due Date. However, he is unable to undertake stock valuation of his business assets as on 1st Ramzan. In such circumstances, how can he pay Zakat on his business inventory.

Gregorian calendar year is 365 days whereas Lunar calendar year is 354 days. That means it is bigger by a factor of 1.03 (i.e. 365/354). At the time of making payment of Zakat in the month of Ramzan, he can pay Zakat 2.5% on his net personal wealth. However, on his business wealth, he can pay Zakat at a higher rate i.e. 2.575% (arrived at when normal rate of 2.5% multiplied by calendar factor 1.03).

When should Zakat be paid?

Zakat must be paid for Gold and Silver Jewelry, Money, Merchandise Stock, Animal Stock after completion of one year of possession with the owner. In case of crops and some fruits it has to be paid on harvesting.

Zakat should be paid on the money left after meeting the expenses for such necessities as food, clothes, housing, vehicles and trade/craft machines. A complete year of Islamic calendar should pass, starting from the very day of achieving the Nisab level.

Can Zakat Payment be deferred?

Deferring payment of Zakat is prohibited, unless the Giver has some valid reason and cannot pay it on time. In such a case, he may wait until he is able to pay it.

Is it permissible to pay Zakat each month in advance?

There is nothing wrong in paying Zakat in advance during the year. Zakat is a right of the needy and the underprivileged and in case you are paying in advance, it is a meritorious deed. It should start with Niyyat (intention) to make the payment. Sum total of these advance payments should be calculated and compared with the actual liability at the end of Zakat period. Any deficiency should be made good on the last date when Zakat is due.

Should I pay Zakat in money or can I pay in kind? Whether I should tell the receiver that it is Zakat money?

It is not necessary to tell the receiver that it is Zakat money. You can simply give the money to that person without stating anything.

You should give the Zakat in the form of money because it is easier for the receiver to apply it for his needs as per his priority. Zakat in kind (food, clothes, etc.) can also be given if the Giver is a Trader or Manufacturer of those items.

I paid a large part of my Zakat money and there is still a small part to be given to certain people; is it allowed to delay Zakat? Or should it be paid in time or before time?

You should pay Zakat in its specified time and it is not allowed to delay it while giving to its recipients. You may defer it due to some compulsions, however, you should ensure to discharge the obligation at the earliest.

Is it permitted to buy specific things by Zakat money to be given to a person who demands these things?

It is allowed to replace Zakat money with contributions in kind according to the needs of the poor.

How is Zakat calculated on the income of a Trader?

The Trader should prepare a balance sheet showing the closing balance of stocks and cash/Bank balance and outstanding debtors. The outstanding debts should be deducted. On the remaining balance, Zakat should be paid 2.5 %. The stocks should be valued at current prices.

I have bought some plots of land which are now lying vacant and unproductive. I wish to sell them at a profit at a later date. On one plot, I wish to construct a house, and, on another plot, I wish to build a shopping complex. Please let me know whether Zakat should be given on this unproductive land.

Plots of land with the intention of re-sale are items of trade or merchandise items. You need to have a Fixed Zakat Due Date for lunar calendar every year. On that date, market value of these plots needs to be ascertained and Zakat paid thereon 2.50%. However, Zakat is not payable on that land which is meant for construction of dwelling house. The other plot on which you intend to construct a shopping complex is a commercial commodity. On the day when your Zakat falls due, you should estimate the value of the land and pay Zakat.

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