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Zakat is one of the Five Pillars of Islam, made mandatory by Allah (S.W.T.) upon every Muslim under specific terms and conditions.
Various forms of wealth are subject to Zakat, and gold is one of the key commodities that has specific characteristics for its obligation.
The completion of one full lunar year is required before Zakat becomes due on such wealth. A specific percentage of Zakat on a specific quantity becomes obligatory after the completion of the year.
There are various Shariah bases for the obligation of Zakat; among them, some are as follows:
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Get fundedThere are two fundamental conditions for the obligation of Zakat on every individual. The first is Nisab, which refers to a specific minimum amount of wealth — in the case of gold,
85 grams as mentioned in the AAOIFI standard on Zakat.
The second condition is the passage of one Hawl (a lunar year of approximately 354 days) while possessing that amount. If both of these conditions are met, Zakat becomes due on the individual.
According to the AAOIFI Shariah standard, 35, “Gold and silver assets in any form: Zakah on such assets is to be assessed on the basis of their net weight or cash value.”
Regardless of the form of gold, scholars assess Zakat on gold based on its net weight. Therefore, if someone possesses gold in the form of jewellery, Zakat will be due on it according to the Nisab.
There are four main categories considered by scholars for the obligation of Zakat:
Gold that is owned without the intention of trade is still subject to Zakat, and if it is stored or preserved for investment purposes, then Zakat becomes obligatory upon it.
Read more about: Halal Silver Investment
Gold in any form (bars, jewellery, biscuit and coins) will be subject to the zakat and the gold nisab will be taken in consideration while calculating the zakat.
Regardless of the nature or source of ownership, any gold possessed by an individual will be subject to Zakat if the required conditions for Zakat are met.
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Example Calculation
If you own 150g gold for the complete lunar year. Zakat payable = 150*2.5% = 3.75g of gold or its equivalent cash value will be given in Zakat.
Yes, Zakat is due on white gold, just like any other type of gold. Regardless of its form or color, white gold is subject to Zakat if it meets the required conditions.
No current gold price will be used for the calculation of the Zakat.
If an individual’s separate holdings are each less than the Nisab, but their combined value exceeds the Nisab of gold, then Zakat becomes due on the total combined wealth. The Hanafi jurists have established the Silver Nisab — 612.3 grams of silver — as the benchmark for determining the obligation of Zakat on collective wealth.
Read more about: Zakat on Investment
yes, Zakat can be paid in cash (currency) equivalent based on the equivalent amount of gold due.
Read more about: Silver Investment vs Gold Investment
Discover Related Reads:
References:
i- Tafseer Ibn e Kaseer, Surah Al Baraah, Aayah number 34-35, Maktabah Rasheedia.
ii- (كتاب الزكاة، رقم الحديث:1573، ج:2، ص:10، ط:المطبعة الأنصارية بدهلي-الهند)
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Get fundedDisclaimer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
