Zakat is an Islamic term that refers to the obligation of giving a portion of one’s wealth to those in need. Gold is one of the assets subjected to Zakat, and there are specific rules and guidelines for calculating Zakat on gold.
In general, Zakat nisab on gold is payable on any gold owned for one lunar year or more and meets the minimum weight requirement, which is 87.48 grams or approximately 3 ounces. The Zakat rate for gold is 2.5%, meaning that the gold owner must give 2.5% of the total value of the gold as Zakat.
How to Calculate Zakat on Gold?
Just like zakat on the property, you can also calculate zakat on gold. Here are the steps you need to follow to calculate it.
Step 1: Determine the current market price of gold
The first step in calculating Zakat is to determine the current market price of gold. This will help you choose the total value of your gold assets.
You can check the current market price of gold in your country through various sources, including local jewelers, financial websites, or the stock exchange.
Step 2: Determine the total weight of your gold
The next step is to determine the total weight of your gold assets. This includes any gold jewelry, coins, or bars you may own. You can use a digital or jeweler’s scale to weigh your gold.
Step 3: Calculate the value of your gold
Once you have determined the current market price of gold and the total weight of your gold, you can calculate the total value of your gold assets. To do this, multiply the current market price of gold by the total weight of your gold.
For example, if the current market price of gold is Rs. 7,000 per gram, and you own 150 grams of gold, the total value of your gold assets would be Rs. 1,050,000 (150 grams x Rs. 7,000 per gram).
Step 4: Determine the Nisab threshold
The Nisab threshold is a Muslim’s minimum wealth before Zakat becomes obligatory. The Nisab threshold is based on the value of silver and is equivalent to 87.48 grams of silver.
As of 2023, the current Nisab value in Rs. is approximately Rs. 82,575. If your total wealth, including your gold assets, is less than this amount, you are not obligated to pay Zakat.
Step 5: Calculate the Zakat due on your gold
Once you have determined the total value of your gold assets and confirmed that you meet the Nisab threshold, you can calculate the Zakat due on your gold. Zakat is calculated at a rate of 2.5% of the total value of your gold assets.
To calculate the Zakat due on your gold, multiply the total value of your gold assets by 2.5%. For example, if the total value of your gold assets is Rs. 1,050,000, the Zakat due on your gold would be Rs. 26,250.
An Example of How to Calculate Zakat Nisab on Gold
Here’s an example of how to calculate Zakat in Rs.:
Let’s say you own 150 grams of gold, and the current market price of gold in Pakistan is Rs. 7,000 per gram.
To calculate your amount, you would do the following:
- Determine the total value of your gold:
The total value of gold = 150 grams x Rs. 7,000 per gram
The total value of gold = Rs. 1,050,000 - Calculate 2.5% of the total value of your gold:
Zakat amount = Rs. 1,050,000 x 2.5%
Zakat amount = Rs. 26,250
So, in this example, your Zakat on gold would be Rs. 26,250.
This example is for illustration purposes only, and the actual market price of gold may vary depending on various factors such as location, time, and supply and demand.
History of Zakat
Zakat is a crucial Islam pillar with a long and rich history. The concept of Zakat was introduced by the Prophet Muhammad (peace be upon him) when Islam was first established in the 7th century CE. Zakat is derived from the Arabic word ‘zaka’, which means ‘to purify.’
Muslims initially gave Zakat voluntarily to support the poor and needy in the community. However, as the Islamic State grew and developed, it became an obligation for all Muslims who had reached a certain level of wealth.
The precise rules and regulations regarding Zakat were established during the time of the Prophet Muhammad and are recorded in the Islamic texts, including the Quran and the Hadith.
Zakat played an important role in the early Islamic state, redistributing wealth and providing for the community’s basic needs. It was used to support the poor, the needy, and other vulnerable groups, such as orphans and widows. It was also used to support religious scholars, the building of mosques, and other public works.
Over time, Zakat has evolved and adapted to changing circumstances. Today, Zakat plays a vital role in Islamic finance and is recognised as an essential means of promoting social justice, supporting those in need, and purifying one’s wealth.
Why do we pay zakat?
All Muslims who have reached a certain level of wealth must purify their wealth and give to those in need. Gold is one of the assets subject to Zakat, along with other forms of wealth such as cash, investments, and livestock. It is crucial to know how to calculate your zakat.
There are several reasons why Zakat is paid on gold. First, gold is a valuable asset often used to store wealth and is considered a means of protecting one’s financial resources.
However, as Muslims, we are also reminded that wealth is a blessing from Allah and should be used responsibly and ethically. Zakat serves as a means of purifying one’s wealth and reminding us of our duty to help those in need.
Secondly, it helps to promote social justice and reduce poverty within the community. Giving a portion of our wealth to those in need can help provide necessities such as food, shelter, and clothing. This helps to create a more equitable society where everyone has the opportunity to live a dignified and fulfilling life.
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FAQs
Is Zakat applicable on 1 tola gold?
Yes, Zakat is applicable on 1 tola gold if it meets the minimum threshold for Zakat eligibility.
How much is the Zakat rate on gold in Pakistan 2023?
The Zakat rate on gold in Pakistan in 2023 or any specific year may vary depending on the policies set by the government or the religious authorities. It is recommended to consult with local scholars or Islamic organizations for the most accurate and up-to-date information on Zakat rates in your region.
Is Zakat on 8 Tola gold?
If you possess 8 tola gold and it meets the threshold for Zakat eligibility, then Zakat is applicable on that amount.
How to calculate Zakat percentage?
To calculate the Zakat percentage on gold or any other assets, you typically follow these steps:
Determine the current market value of your gold.
Find out the Zakat rate for gold set by the relevant religious authorities in your region. This rate is usually a percentage of the gold’s value.
Calculate the total value of your gold and multiply it by the Zakat rate. The resulting amount is the Zakat due on your gold.
