How Zakat is Calculated
Zakat is calculated at 2.5% of your total net zakatable wealth — that is, all eligible assets minus any immediate liabilities. The calculation only applies if your net wealth meets or exceeds the Nisab threshold and has been held for a full lunar year.
What is Nisab?
Nisab is the minimum amount of wealth a Muslim must possess before Zakat becomes obligatory. It is based on the market value of either 612 grams of silver or 87.48 grams of gold. Scholars generally recommend using the silver Nisab as it is lower and ensures more people can fulfil their obligation.
Which Assets Are Zakatable?
- Cash & Savings — Cash in hand, bank savings, and current accounts.
- Gold & Silver — Jewellery, bullion, and coins held as wealth.
- Business Inventory — Goods held for trade at their current market value.
- Investments — Stocks (the zakatable portion), savings plans, and mutual funds.
The 2.5% Rule
Once your net wealth exceeds the Nisab and has been in your possession for one full lunar year (Hawl), you must pay 2.5% of that total as Zakat. This purifies your wealth and contributes to those in need within the community.