Important Notes: Please read the below summary for more details.

Zakat Due Date

As a first step towards ascertaining Zakat liability, please determine your Zakat Due Date. It can be 1st Ramzan, 21st Ramzan, 1st Moharrum or any other convenient date of lunar calendar. Once fixed, it remains same year after year. Every year Zakat becomes due on your Zakatable-Wealth on the particular Zakat Due Date.

Zakat on Gold and Silver

Zakat on gold should be calculated at 2.5% of the market value as on Zakat Due Date. Zakat is to be paid on silver in pure form or jewellery, utensils, decorative items and all household items including crockery, cutlery made of silver at 2.5% of the prevailing market rates.

Zakat on Cash and Bank Balances

Zakat should be paid at 2.5% on all cash balance and bank balances in your savings bank account, current a/c on Zakat Due Date.

Zakat on Loans & Advances given

Zakat is payable by you on loans you have given to your friends and relatives. If your loan/advance is doubtful or bad, you may not calculate it as your wealth. You can add it to your wealth on receipt of this loan/advance.

Zakat on Investment in Govt. Instruments

Gratuity amount received, PF Settlement, Commutation of pension received etc. As noted, any investent in fixed securities which give fixed amount of income is not allowed. Incase of Gratuity amount recieved, non-voluntary president fund settlement, pension, etc. The Zakah will be calculated one the income comes under posession and a full year passes on it.

Zakat on Landed Property

Zakat is not payable on personal residential house even if you have more than one and meant for residential purposes only. However, Zakat is payable on the rental income itself after deducting the maintenance and other expenses.

ZIf your intention of holding properties is to sell at a future date, or as an investment, then Zakat is payable on the Market Value of the property. Also, if your intention of holding properties changes in the current year, i.e. from self-use to business then you need to pay Zakat on that Property Value.

Zakat on Business

If you are a businessman, trader, merchant or industrialist, please undertake valuation of all your inventory - raw materials, finished goods on Zakat Due Date. The stock of raw materials must be valued at its landed cost price and stock of finished goods should be valued at market sales price. If you have any bills receivable (sales given on credit) then you need to add the same towards calculations.

Similarly, deduct the amounts due to your suppliers and deduct the loans on stock on the date of calculation. Dead Stock should be calculated on scrap value or its saleable value. Damaged stocks should also be valued at its scrap value.

There is no Zakat on factory buildings, plant & machinery, equipment, furniture and fixtures used in the business. However, Zakat is applicable on products produced in the factory (i.e. finished goods value).

Zakat on Partnership Firms

Zakat can be paid either by the firm or separately by each partner. If the firm is not paying, and the partner wants to calculate his share, he should take the amount standing to his capital and loan account as per the last balance sheet. Add his estimated share of profit till Zakat Due Date.

This can only be estimated as it is difficult to calculate the exact profit or loss between an accounting year.

Zakat on Agricultural Products

Zakat is payable on all agricultural produces which can be measured, and all types of grains at the harvest time itself. The passing of One year does not apply for agricultural produce.

If there are two or more crops on the same land per year, then Zakat has to be paid as many times on the crop, irrespective of the no of times.

The formula for Zakat calculation on agriculture is as follows:

On crops dependent purely on rain water it will be 10% of produce, On crops not irrigated through rain water but use Canal Water, Tank Water, Borewell and Open wells, the Zakat is 5% of the produce. For Crops dependent partly on Rain Water and partly on other water, the Zakat applicable would be 7.5% of produce.

Zakat on Animals

Zakat is payable on livestock and it is based on headcount.

For sheep/lamb/goat below is the zakat calculation.

a. If the headcount is between 1 to 39 — Zakat is not applicable.

b. If the headcount is between 40 to 120–1 animal is paid as zakat.

c. If the headcount is between 121 to 200–2 animals are paid as zakat.

d. If the headcount is between 201 to 300–3 animals are paid as zakat.

e. If the headcount is between 301 to 400–4 animals are paid as zakat.

f. For every 100 more — zakat will be plus 1 animal per 100.

For cattle/buffalo below is the zakat calculation.

a. If the headcount is between 1 to 29 — zakat is not applicable.

b. If the headcount is between 30 to 39–1 yearling animal is paid as zakat.

c. If the headcount is between 40 to 59–1 (2-year old) animal is paid as zakat.

d. If the headcount is between 60 to 69–2 yearling animals is paid as zakat.

e. Thereafter, in every thirty animals, one 1-year-old animal should be given; and in every forty, a 2-year-old animal should be given as Zakat.

Liabilities Deductions

If you have taken any loans from any person or institution, and if you have not already deducted the same from any of the above sections, then you can deduct your payables over here. Please be truthful, as Zakat is a sure way of protecting ones wealth if Zakat has been paid on it regularly and fully.

Loans taken only for Zakatable-Wealth should be deducted. Cars, Houses, etc are not Zakatable wealth. So any loan taken for these purposes are not to be deducted.