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al Ihsan Times

Ramadan Focus

N.B. Rulings are given in accordance with the Hanafi school of thought

How do I calculate my Zakah?

How do I calculate my Zakah?Q: I am somewhat perplexed by the determination of Zakat. Particularly the holding period for an investment or cash asset.

 

Q: I am somewhat perplexed by the determination of Zakat. Particularly the holding period for an investment or cash asset. I accrue capital throughout the year in the form of savings. This capital is invested in equities or cash based investments. When calculating Zakat, do I take into account the balance of cash on hand and the value of investments AT the date of calculation OR do i only take into account the value of cash on hand / investments that i had possession of for a preceding year?


 

A: There is a misconception regarding the issue of one year on Zakaatable wealth.
To qualify and for Zakaat to be incumbent on a person, a person must at least have the Nisaab amount at the two ends of his Zakaatable year. However the amount of Zakaat that is compulsory, is the entire zakaatable amount he has in his net-possession. Kindly see below;

ZAKAAT CALCULATION

Zakaat is payable on all Zakaatable assets to the value of Nisaab or more at the end of one's Zakaatable year. Zakaatable assets are generally gold, silver, cash, dividends/shares, debtors and trading stock.

The Zakaatable year is the lunar year after the day one had Zakaatable assets to the value of Nisaab.

Creditors are subtracted from the sum of Zakaatable assets and 2.5% of the balance is payable as Zakaat.

For example: A person owns Zakaatable assets to the value of Nisaab on the first day of Ramadhaan 1430 e.g. R 5 000. If on the first of Ramadhaan 1431 he still owns Zakaatable assets to the value of Nisaab (e.g. R 100 000 though the nisaab amount for e.g. is R 6 000)  then 2.5% of the total Zakaatable assets on hand on the first of Ramadhaan 1431 is liable for Zakaat irrespective of the fluctuation during the year and irrespective of whether some of these assets were in one’s possession for less than the lunar year. If, however, the amount during the year reached zero then a new year will start after one owns Zakaatable assets to the value of Nisaab again.

And Allah Ta'ala Knows Best
 
Was Salaam                                                    
                                                                     
M.D. Mangera (Mufti)
Fatwa Dept.

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