Zakat is one of Islam's Five Pillars — yet many Muslims are unsure exactly which assets it applies to, how to calculate the Nisab threshold in rupees, or what counts as a valid deduction. This guide covers the complete calculation, the Hawl rule, zakatable and exempt assets, and who is eligible to receive Zakat.
Zakat (Arabic: زكاة, meaning "purification" or "growth") is obligatory almsgiving — the Third Pillar of Islam. Every adult Muslim who owns wealth above the Nisab threshold for a full Islamic lunar year is required to pay 2.5% of that wealth as Zakat each year.
Unlike voluntary charity (Sadaqah), Zakat is a binding religious obligation with a precise calculation. It simultaneously purifies the giver's wealth spiritually, reduces economic inequality, and provides structured support to eight categories of recipients identified in the Quran.
Nisab is the minimum amount of net wealth a Muslim must own before Zakat becomes obligatory. If your zakatable wealth is below the Nisab, no Zakat is due. It is derived from either of two standards:
| Standard | Weight | Approx. ₹ Value (2026) | Usage |
|---|---|---|---|
| Gold Nisab | 85 grams of gold | ≈ ₹5,95,000 – ₹6,30,000 | Higher threshold |
| Silver Nisab | 595 grams of silver | ≈ ₹50,000 – ₹60,000 | Lower threshold; preferred by many scholars |
Which Nisab to use? Scholars differ. Many contemporary scholars recommend the silver Nisab because it is lower and includes more people in the obligation, ensuring wider wealth distribution — in keeping with Zakat's social purpose. Others use the gold standard. Follow the ruling of your local scholar or Darul Ifta.
The Nisab value in ₹ changes daily with gold and silver market prices. Always check the current spot price before calculating — using an outdated figure can result in incorrect Zakat. ToolLoom's Zakat Calculator fetches the current rate automatically.
Hawl means that zakatable wealth must have been in your possession for a complete Islamic lunar year (approximately 354 days) before Zakat becomes due on it. There are two key rules:
If your wealth drops below the Nisab at any point during the Hawl, the year resets from zero. The Hawl clock restarts when your wealth rises above Nisab again.
If you receive additional wealth during the year — a salary raise, an inheritance, a business profit — many scholars add it to the calculation at year-end rather than starting a separate Hawl for each amount.
Most families pick the 1st of Ramadan as their personal Zakat anniversary — calculating and paying each year on the same date for simplicity. This is widely accepted and avoids confusion over multiple Hawls.
The 2.5% rate is the most widely applied rate for wealth Zakat (Zakat al-Mal) on gold, silver, cash, and investments held for a full Hawl. Note that agricultural produce (Ushr) and certain other categories have different rates — this guide focuses on wealth Zakat.
Only immediate liabilities may be deducted. Long-term debt such as a home loan does not fully offset zakatable wealth — most scholars allow deduction only for debts due within the current year, not the total outstanding mortgage balance.
| Asset Type | Zakatable Amount | Rate |
|---|---|---|
| Cash (at home or bank) | Full balance on Zakat date | 2.5% |
| Savings & deposits | Full balance including accrued interest (distribute interest separately) | 2.5% |
| Gold (above personal use threshold) | Current market value of the weight owned | 2.5% |
| Silver | Current market value of the weight owned | 2.5% |
| Business inventory | Market value of stock on Zakat date | 2.5% |
| Shares & mutual funds | Current market value of holdings | 2.5% |
| Receivables (money owed to you) | Amount realistically expected to be recovered | 2.5% |
| Rental income accumulated | Cash not yet spent on expenses | 2.5% |
On bank interest (riba): Many scholars hold that interest received from conventional bank accounts must not be retained — it should be given to charity (not counted as Zakat) to cleanse the wealth. The principal savings balance itself remains zakatable at 2.5%.
A simple rule of thumb: Wealth that is growing or stored is generally zakatable. Wealth that is in use for daily living or earning is generally exempt. When in doubt, consult a qualified Islamic scholar or Darul Ifta in your region.
Take a salaried Muslim in Mumbai with the following position on his Zakat anniversary date:
| Asset / Liability | Amount (₹) | Zakatable? |
|---|---|---|
| Savings bank balance | 3,20,000 | Yes |
| Gold jewellery (150g, valued at ₹7,200/g) | 10,80,000 | Yes (Hanafi) |
| Mutual fund portfolio (current value) | 4,50,000 | Yes |
| Money owed by business partner (expected recovery) | 80,000 | Yes |
| Personal car | 9,00,000 | Exempt |
| Home (self-occupied) | 60,00,000 | Exempt |
| Credit card bill due this month | −40,000 | Deductible |
| Home loan outstanding | −22,00,000 | Not deductible (long-term) |
₹3,20,000 + ₹10,80,000 + ₹4,50,000 + ₹80,000 = ₹19,30,000
₹19,30,000 − ₹40,000 = ₹18,90,000 net zakatable wealth
Silver Nisab ≈ ₹53,000 — wealth exceeds it comfortably. Zakat = 2.5% × ₹18,90,000 = ₹47,250
This person owes ₹47,250 in Zakat for the year — payable to eligible recipients before the next Zakat anniversary, or ideally distributed in Ramadan. Use ToolLoom's Zakat Calculator to run your own figures in seconds.
Gold and silver have special significance in Zakat — they are both the basis of the Nisab threshold and zakatable assets in their own right. The key question is weight, not cost price: Zakat is calculated on the current market value of the weight you own, not what you originally paid.
| Metal | Nisab Weight | ₹ Nisab (approx 2026) | Zakat on Excess |
|---|---|---|---|
| Gold | 85 grams | ≈ ₹5,95,000 – ₹6,30,000 | 2.5% of current market value of total gold owned |
| Silver | 595 grams | ≈ ₹50,000 – ₹60,000 | 2.5% of current market value of total silver owned |
Jewellery worn daily — the scholarly difference: The Hanafi school holds that all gold jewellery is zakatable regardless of use. The Shafi'i and Hanbali schools generally exempt jewellery in regular personal use. This is one of the most practically important differences across schools — follow your madhab or consult a scholar.
The Quran (Surah At-Tawbah 9:60) identifies exactly eight categories of people eligible to receive Zakat. Zakat cannot be given outside these categories — including to non-Muslims, to one's own dependants, or to the descendants of the Prophet's family (Banu Hashim).
Those with little or no income who cannot meet basic needs.
Those with some income but still insufficient to cover needs.
Those appointed to collect and distribute Zakat.
Those whose hearts are being reconciled toward Islam.
Historically, freeing enslaved people. Applied today to debt bondage in many rulings.
Those burdened by debt beyond their means to repay.
Those working in the way of Allah — scholars, Islamic education, da'wah.
A stranded traveller with insufficient funds to return home.
Zakat cannot be given to: non-Muslims, your spouse, your children, your parents or grandparents (direct dependants), or the descendants of the Prophet Muhammad ﷺ (Banu Hashim). Giving Zakat to these groups does not fulfil the obligation, even if the recipients are poor.