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Zakaah Calculator and General instructions on Zakaah calculation

Dear Brothers and Sisters in Islam,

  السلام عليكم ورحمة الله وبركاته

Zakaah Calculator and General instructions on Zakaah calculation

الحمد لله  The Holy  Month of Ramadaan has been bestowed upon us by
Allah Subhaanuwa Tha’aala.

It is also the time for disbursing our Zakaah to the needy among us.

ZAKAAH is one of the five fundamental pillars of Islam, mandatory on all Muslims who are of eligible Nisaab Level of wealth.

Nisaab is the minimum amount of wealth required to make a person liable to pay Zakaah.  Nisaab is the equivalent to 87.5g of gold (or 7.5 tola/bori/vorii) in its current monetary value.The value of gold changes every day, so it is best to check on the day of calculation, to get the most accurate value. Whatever is the value of 87.5g of gold (or 7.5 tola/bori.vorii) is the Nisaab for that day.

ZAKAAH is due from and payable by a person on his wealth (and not his income), which has remained with him/her for one Islamic year.

It is difficult to calculate the completion of one year on each item of wealth, because purchase dates may vary.  To overcome this difficulty, a practical method is to fix a date (e.g. 1st of Ramadaan), compute your total wealth on that date and calculate  ZAKAAH, thereon.

The attached spreadsheet is a humble attempt at making the calculation process simple and consolidated, for all who are fortunate to be worthy of paying  ZAKAAH.

Details of Each Section to be used in conjunction with the Zakaah Calculator Spreadsheet in the attachment.

ZAKAAH on Pure Gold and Gold Jewellery

ZAKAAH should be calculated at 2.5% of the market value as on the date of valuation (In our case we consider 1st of Ramadhan).  Most Ulema favour the Market Value prevailing as on the date of Calculation and not the purchase price.
A Reduction of 2% from the weight of Jewellery can be allowed towards studded stones jewellery & 25% from the weight of Kundan Jewellery.

(Kundan Jewellery is actually a style of setting Gem in Jewellery. 24 carat Gold Foil used to set uncut Diamonds. Gold Foil is inserted between the stones and mount. Uncut Diamond is referred as Polki. Setting done in this manner is known as Jadau. (also called Jadai setting). In fact Jadau word was derived from Jadai. In normal Diamond Jewellery there are prongs which hold the stone. Same way in Kundan Jewellery, kundan holds the Diamond.The word Kundan in Sanskrit really means pure sparkling gold. In Kundan jewellery, purest form of molten gold is used to set stones.This is one of the oldest method or style of making jewellery in India introduced by the Mughals)

ZAKAAH on Precious and Semi-Precious Stones

There is some contention on whether these are to be considered for valuation.  In my humble opinion if they have a value, then they calculate towards your wealth, and it is on the wealth that ZAKAAH is mandatory.
One may calculate the saleable value of Items at hand on the date of ZAKAAH Calculation.
ZAKAAH on Silver.

ZAKAAH is to be paid on Silver in Pure form or Jewellery, Utensils, Decorative items and all household items including crockery, cutlery made of silver at 2.5% of the prevailing market rates.
ZAKAAH on Cash and Bank Balances

ZAKAAH should be paid at 2.5% on all cash balance and bank balances in your savings, current or FD accounts. The amount technically should be in the bank for one year. Usually it happens that the balance keeps on changing as per personal requirements.
You may make your best judgement and the best way is to pay on remaining amount on the day of calculation
ZAKAAH on Loans Given, Funds, etc

ZAKAAH is payable by you on loans you have given to your friends and relatives.  It should be treated as Cash in Hand.  You may deduct Loans Payable by you to arrive at the nett present value of your wealth.
ZAKAAH is payable on all Govt Bonds, Public Sector Bond, paid-up Insurance premiums, your paid-up portion of Provident Funds, Govt Bills receivables, etc.  
 ZAKAAH on Landed Property

ZAKAAH is not payable on personal residential House even if you have more than one and meant for residential purpose only.  Also ZAKAAH is not applicable on Property given on rent irrespective of how many. However ZAKAAH is payable on the rental income.
However if your intention of holding properties is to sell at a future date for a profit or as an investment, then ZAKAAH is payable on the Market Value.  Also, if your intention of holding properties changes in the current year, I.e. from self use to business then you need to pay ZAKAAH on that Property Value
ZAKAAH on Business:

This is for Business Persons only. No matter what business you are into, you’ve got to pay ZAKAAH on all STOCK-IN-TRADE.  The stock must be valued at its Landed Cost Price. If you have any  bills receivable (sales given on credit) then you need to add the same towards calculations.
Deduct the Amounts due to your suppliers and deduct the loans on stock on the date of calculation.  Dead Stock should be calculated on scrap value or its saleable value. Damaged stock should also be valued at its scrap value.  
Be honest in the calculations, as ZAKAAH is an INSURANCE on your STOCK directly from ALLAH and who better an insurer than Him.  
There is no ZAKAAH on Factory Buildings or any kind of machinery, but there is ZAKAAH on products produced in the factory (i.e. finished goods value).  Please refer to a competent Moulvi or a scholar who can shed more light on your specific issues.
ZAKAAH on Partnership Firms.

ZAKAAH can be paid EITHER by the firm OR separately by the owners.  If the firm is not paying, and the partner wants to calculate his share, he should take the amount standing to his capital and loan account as per the last balance sheet. Add his estimated share of profit till the date ZAKAAH is calculated.
This can only be estimated as it is difficult to calculate the exact profit or loss between an accounting year.
ZAKAAH on Agricultural Produce

ZAKAAH is payable on all Agricultural produce including fruits, commercially grown flowers, vegetables and all types of grains at the harvest time itself.  The passing of One year does not apply for agrultural produce.  If there are two or more crops on the same land per year, then ZAKAAH has to be paid as many times on the crop, irrespective of the time.
The formula for ZAKAAH calculation on Agriculture is as follows:
On crops dependent purely on rain water it will be 10% of produce,   On crops not irrigated through rain water but use Canal Water, Tank Water, Borewell and Open wells, the ZAKAAH is 5% of the produce.  For Crops dependent partly on Rain Water and partly on other water, the ZAKAAH applicable would be 7.5% of produce.    
ZAKAAH on Animals

On all grazing animals like goats, shee, camel, cows, broiler chickens, the consensus ZAKAAH payable is one animal/bird for every 40 animals owned. However you may wish to give cash in lieu of the animal/bird itself.
Please consult your local Scholar or Maulvi or Imaam who can guide you to the right direction, or refer to books of Fiqh if you would like to have first hand confirmation of the situation.
Liabilities Deductions

 If you have any pending tax payable to the govt, as of the date of ZAKAAH Calculation, then the same may be deducted before arriving at the net worth.  If you have taken any loans from any person or institution, and if you have not already deducted the same from any of the above sections, then you can deduct your Payables over here.  Please be truthful, as ZAKAAH is a sure way of protecting ones wealth if ZAKAAH has been paid on it regularly and fully.
PS: Please note that Interest in any form is Haram and strictly prohibited.  So please stay away from taking Loans on Interests AND Collection of Interests from any body or institution.

Please use the Zakaah Calculator Spreadsheet in the attachment to calculate your exact Zakaah.

Please enter the figures against each head of income/asset and you will get the Zakaah
amount you require to disburse each Head-wise and also the Total Zakaah Payable.

Also, please go through an exhaustive ‘ FAQ’s about Zakaah ‘ sent in a separate mail earlier.
May Allah Subhaanuwa Tha’aala Bless us with Abundant Sawaab in both Duniyah and Aakhiraah. امين

Please Share for the benefit of our Ummah. جزاك اللهُ خيراً

في امان الله

Your brother in Islam,
A Shabbir Ahmed

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