What is Zakat calculator and How to use it?

What is Zakat?

Zakat is an Islamic finance phrase that refers to an individual’s responsibility to contribute a set amount of their money to charitable purposes each year.

Zakat is a religious obligation for Muslims and is viewed as a form of devotion. Giving money to the needy is considered to purify yearly earnings that are in excess of what is necessary to meet a person’s or family’s basic requirements.

You can also check out this blog: What is Aqeeqah? Its purpose and background

What is a Zakat calculator?

Zakat calculator is a tool used by muslims to calculate the amount of zakat they are obligated to pay according to their wealth and assets. Zakat is frequently paid out at the end of the year after the remaining wealth has been calculated.

The poor and needy, suffering Muslim converts, enslaved people, persons in debt, troops battling to safeguard the Muslim community, and those stuck during their journeys are among those who benefit. Zakat collectors are also paid for their duties.

How to calculate Zakat?

Zakat is calculated depending on one’s income and the value of assets. The typical qualifying amount is 2.5 percent, or 1/40 of a Muslim’s total savings and wealth.

Zakat on Gold

Zakat should be determined at 2.5 percent of the market value as of the valuation date (Lunar date). The majority of Ulema prefer the market value as of the date of calculation over the purchase price.

Zakat on Precious and Semi-Precious Stones

Only the market value of these precious stones will be used for calculating zakat if they were obtained for commercial purposes (as inventory). On the day of Zakat calculation, one might determine the Saleable Value of items on hand.

Zakat on Silver

Zakat is to be paid on pure silver or silver jewellery, utensils, decorative objects, and any household products made of silver, including crockery and cutlery, at 2.5 percent of market value.

Zakat on Cash and Bank Balances

Zakat of 2.5 percent should be paid on any cash and bank balances in your savings, current, or FD accounts. The money should officially be in the bank for a year. It is common for the equilibrium to shift as a result of personal needs.

You may use your best judgement, and the best way to proceed is to pay the remaining money on the day of computation.

Zakat on Loans Given, Funds, etc

You are obligated to pay Zakat on loans made to friends and family. It should be regarded as if it were cash in hand. You may calculate the net present value of your wealth by subtracting your Loans Payable. However, if you are unsure about the return on your investment, you should not consider it as part of your wealth. However, if and when you receive your money, you can add it to your wealth retrospectively.

Zakat is payable on all government bonds, public sector bonds, the cash value of Takaful insurance, your paid-up part of BC/Committee (Bachat/voluntary contribution) that has not yet been received, government bills receivables, and so on. Please keep in mind what Sharia law says regarding insurance and other sorts of investing. It is not covered by this Zakat Calculator.

Zakat on Land

Zakat is not charged on personal residential houses, even if you own more than one, as long as they are solely used for domestic purposes. Furthermore, Zakat is not levied on the value of property rented out, regardless of the number of tenants. Zakat, on the other hand, is charged on the rental revenue itself, which must be paid until the day of Zakat.

However, if your plan is to sell the property at a later date for a profit or as an investment, Zakat is payable on the market value of the property on the Zakat day. For zakat click here: https://www.uhrelief.org/zakat-calculator/