How Zakat works — simply explained
Zakat is the third pillar of Islam and is obligatory on every Muslim who possesses wealth above the Nisab (minimum threshold) for a full lunar year (Hawl). The rate is 2.5 percent of the net zakatable wealth. Zakat is a form of wealth redistribution — it purifies wealth and distributes it to those in need, including the poor, debtors, and travelers in difficulty.
Nisab — the minimum threshold
The Nisab is based on the current market value of either 87.48 grams of gold or 612.36 grams of silver, as established by the Prophet (peace be upon him). Because gold and silver prices have diverged significantly in modern times, using the silver Nisab results in a lower threshold, meaning more people are obligated to give — which is why most contemporary scholars recommend using silver Nisab. Enter today's local price per gram of silver to calculate your Nisab automatically.
Salary Zakat — two scholarly approaches
Contemporary scholars differ on whether Zakat on salary is paid monthly or annually. The monthly method (supported by Imam Yusuf Al-Qaradawi) treats each month's salary like a harvest — 2.5 percent is paid if the monthly net income meets the monthly-equivalent Nisab. The annual Hawl method accumulates income over a full lunar year and pays 2.5 percent on the remaining savings if they meet the Nisab. This calculator shows both results simultaneously so you can follow whichever your scholar recommends — both methods are Islamically valid.
Business and wealth Zakat
Business Zakat applies to liquid business assets: cash, stock (at market value), and receivables, minus trade debts. Fixed assets like machinery, vehicles, and property used in the business are not zakatable. Wealth Zakat applies to savings, gold and silver, investments, and receivables held for a full lunar year above the Nisab, minus debts due within the year.
Frequently Asked Questions
Is Zakat deducted automatically in Pakistan? Banks in Pakistan deduct Zakat automatically from savings accounts on the first of Ramadan if the balance meets the Nisab. You can submit a declaration form to the bank to opt out if you prefer to calculate and distribute Zakat yourself.
Who can receive Zakat? The Quran specifies eight categories: the poor, the destitute, Zakat administrators, those whose hearts are to be reconciled, slaves being freed, debtors, those striving in the cause of Allah, and wayfarers. Most Zakat is directed to the poor and destitute.
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