Choose either the gold or silver rate, not both. The nisaab is the cash equivalent of 3 ounces/87.48 grams of gold or 21 ounces/612.36 grams of silver. For example, if each gram of silver rate is ₹ 43.00, the nisaab using the silver calculation is ₹ 26331.48 (₹43 X 612.36gm). If your personal wealth is above ₹ 26331.48, you owe zakat. Gold calculation, if the price of 1 gram gold today is ₹ 3465.00, so the nisab is ₹ 303118.20 (₹ 3465 X 87.48 gm).
The nisab is calculated on the price of either silver or gold and applied whichever is the low. So the nisab amount is ₹ 26331.48 in the above case.
** Please note the price of gold and silver taken only for example, you need to check the current price for calculation.
Determine the Zakat Calculation Cycle
Zakat is an annual duty. It’s due one lunar year, or hijiri, from the first day you exceeded the nisab threshold or from the day you last paid zakat. If you know your personal wealth is always above zakat, select any date during the year to pay. Keep track of the date so you remember when it’s due the next year. Many people choose Ramadan as the month they pay zakat. Ramadan is one of the five pillars of Islam. It’s a sacred time when Muslims read the Koran and fast from dawn to dusk. Paying zakat is another way to cleanse the soul during this holy period.
Identify Your Overall Assets
Start calculating your assets, or what you own. This is the first step is figuring out how much zakat you’ll pay. You exclude the assets you use for everyday life. For example, your primary residence, car, clothes and business equipment are not used in your zakat asset calculations. It’s based on what’s left after you take care of you and your family’s living expenses.
Some examples of zakat-eligible assets include stocks, savings, investment properties, cash, business income or precious metals such as gold.
Determine how much your zakat-eligible assets are worth for the year.
Identify & Calculate Your Liabilities
Debt from credit cards, college or other loans subtracts from your personal net worth. These outstanding debts are deducted from your total zakat-eligible assets.
If you obtained a personal loan of any type (car, home, cash), then look at how much you pay per month to your creditors, not the entire outstanding debt.
Add up how much you owe each month to your creditors. Multiple this amount by 12 to calculate your annual liability amount.
** Note: We are not encouraging anybody to pursue a loan from bank or elsewhere. It is strongly prohibited to lend money on load when interest (Sood) is involved. You must consult with the experts.
Determine Your Net Zakat Worth
Suppose your net value of cash + stocks + bonds + saving + assets + metals etc. = 1 Lac Rs, and you have overall debt of 50 thousand Rs, then
Zakat Net Worth = (100000 – 50000) = 50000
In the above example Zakat Net Worth (₹50000) is greater than the nisab (₹26332.48), so you owe Zakat. If the Zakat Net Worth amount is lesser than the nisab you don’t owe zakat.
The Zakat Amount you need to pay is minimum 2.5% of ‘Zakat Net Worth’, so the net zakat amount is 50000 X 2.5% = ₹1250.00 (if a person is financially able, he/she can pay more than 2.5%)
** Must Consult with experts/Ulema before finalizing the Zakat