How to Calculate Zakat: A Clear Step-by-Step Guide

Zakat is one of the five pillars of Islam — an obligatory act of worship in which a Muslim gives a portion of their qualifying wealth to those in need. For many people the intention is firm but the arithmetic is confusing: Which assets count? What is nisab? How much is due on savings that changed during the year? This guide explains the widely used method in plain words so you can work out your zakat carefully and confidently.

Please note: this article is general educational information based on the commonly taught method, not a fatwa. Islamic schools of thought differ on some details (for example, women's jewellery and certain debts). For your personal situation, especially where amounts are large or circumstances are unusual, please consult a qualified scholar or your local mufti.

What Is Zakat and Who Must Pay It?

Zakat is due from an adult Muslim of sound mind whose wealth reaches a minimum threshold called nisab and who has held that wealth for one full lunar year (a hawl). The standard rate is 2.5% — one fortieth — of the qualifying wealth. Zakat is given to the categories of recipients named in the Qur'an (Surah At-Tawbah, 9:60), including the poor, the needy and those in debt.

Understanding Nisab

Nisab is the minimum amount of wealth that makes zakat obligatory. It is measured in gold or silver:

• Gold nisab: 87.48 grams of gold (7.5 tola).
• Silver nisab: 612.36 grams of silver (52.5 tola).

To use nisab today, convert it into money: multiply the weight by today's price per gram in your currency. Many scholars advise using the silver nisab for cash and savings, because its lower value means more people qualify to give, which benefits the poor; others use the gold nisab. Because gold and silver prices change daily, check the current rate on the day you calculate. If your total qualifying wealth is below nisab, no zakat is due. If it is above, zakat is calculated on the full amount, not just the part above nisab.

Which Assets Are Included?

Under the commonly used method, zakat applies to:

• Cash — at home, in bank accounts, and in mobile wallets.
• Gold and silver — jewellery, coins and bars, valued at their current selling price by weight. (Scholars differ on personal-use jewellery; ask a scholar if unsure.)
• Business goods — stock held for resale, valued at its current market price.
• Money owed to you that you realistically expect to receive back.
• Shares and investments held for trade, or the zakatable portion of long-term holdings (treatment varies — seek guidance for complex portfolios).

Zakat is generally not due on the home you live in, your car, furniture, clothing and other personal-use items. Outstanding debts and immediate living obligations are deducted by many scholars before calculating — this is another point where guidance helps.

Step-by-Step: Work Out Your Zakat

1. Pick your zakat date. Many people choose a fixed date in Ramadan each year. Consistency matters more than the specific day.
2. List everything. Add up cash, bank balances, gold and silver value, business stock and recoverable loans.
3. Subtract permitted deductions such as debts due now, according to the method you follow.
4. Compare with nisab. If the total is below nisab, nothing is due this year.
5. Calculate 2.5%. Divide the total by 40 — that is your zakat.

A simple example: suppose on your zakat date you hold PKR 300,000 in savings, gold worth PKR 500,000, and no deductions. Your total is PKR 800,000, which is above nisab. Zakat = 800,000 × 2.5% = PKR 20,000.

Rather than doing this by hand, you can enter the same figures into the free Loona Zakat Calculator, which applies the 2.5% rate and shows the result instantly. Enter today's gold and silver prices so the nisab comparison is accurate.

Frequently Asked Questions

Does the wealth have to stay above nisab for the whole year?

Under the view held by many scholars, what matters is that wealth is at or above nisab at the start and end of the lunar year; ordinary ups and downs in between do not cancel the obligation. Others require it throughout. This is a known difference of opinion — follow the guidance you trust.

Do I pay zakat on my salary each month?

Zakat is not a monthly income tax. It is assessed once a year on the qualifying wealth you hold on your zakat date, including whatever savings from your salary remain on that date.

Can I give zakat in instalments during the year?

Many scholars allow paying in advance in instalments, as long as the full amount is settled by your zakat date and reaches eligible recipients. Keep a simple record of what you have given so the year's total is easy to verify.

What if I am not sure about a particular asset?

Note it down and ask a qualified scholar before your zakat date. For everything straightforward — cash, savings, gold and silver — the method above and the Loona calculators will give you a clear figure.

Reminder: this guide is educational information only and not a religious ruling. May Allah accept your zakat and your intentions.