How do I calculate zakat?

As the holy month of Ramadan comes to an end and Eid approaches, people will be looking forward to giving zakat for the calendar year. Like every year, there will be young people, who will be giving zakat for the first time.

Do I need to give zakat?

Every able Muslim is expected to give zakat. If you're earning a certain amount of money over a period of a full lunar calendar year, or in possession of a certain amount of wealth over the same time, you need to give zakat.

The standards set for giving zakat apply for young-adult and adult Muslims. To know whether or not you need to give zakat, you must figure out a threshold known as 'Nisab'. There are two basic measures of Nisab that have been around since the early days – gold, or silver.

You must own seven and a half bhori of gold, or fifty-two and a half tola of silver (Note: 1 bhori = 1 tola, however, bhori is more widely used to measure gold), or its equivalent in cash.

Apart from gold and silver, zakat must also be given for excess property, which include

• Money that's in your bank accounts or at home
• Any loans you may have given out
• Investments, pensions, shares, and stocks
• Property you own as an investment, but not the property you live in
• Farm and agricultural produce

The amount of wealth, in these cases, has to equal the previous measure of seven and a half bhori of gold, or fifty-two and a half tola of silver. And that wealth needs to be with you for a full lunar calendar year.

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How do I calculate zakat?

According to Islamic law, you have to give zakat in the order of 2.5 percent of your excess property or wealth. Here's how you can calculate the amount of zakat you need to give:

Calculate your total income.

Total income = cash + gold and silver + debts owed to you + shares and stocks + investment properties + investments and saving funds + business assets

Calculate your living expenses.

Living expenses = daily expenses + debts you owe + business expenses

Calculate your zakat-able wealth.

Zakat-able wealth = your total income -  your living expenses

The total zakat amount you owe for that lunar year = Zakat-able wealth x 2.5%

Giving money as zakat is considered the best option by many. However, you are also allowed to give gifts as zakat if you are giving them with the intention of giving zakat. In such cases, the gifts you give need to amount to your total zakat amount.

However, there are different opinions regarding this. Hence, if you are confused about this, or still need to clear out certain doubts, talk to your local scholars.