How does one calculate Zakaat on salaries and investments?

Answer

Many people are confused on this issue. We shall, Insha'Allah, explain in simple terms how Zakaat is to be calculated.

Zakaat becomes obligatory when you have a minimum amount which is called the Zakaat Nisaab. This Nisaab presently is approximately R3,000 (approximately $375). If 12 months later, i.e. from the date you had R3,000, you still have R3,000 or more, then you have to pay 2.5% Zakaat on the amount that you have at the end of the twelfth month.

The fluctuations in the amount during the course of the 12 months are of no consideration. In other words, you don't have to worry about how much salary you received or how much increase and decrease there was during the course of the twelve months. The only requirement is the amount you have at the end of the 12th month. If that amount is R3,000 or more, you pay Zakaat. If the amount is less than R3,000, Zakaat is not incumbent even if you had earned a million rand during the course of the year, but had spent the money or bought a vehicle or a house to live in.

Zakaat is paid on gold and silver, stock-in-trade, savings and cash. You are allowed to minus the debts you owe from the total sum of your Zakaat assets. Then pay Zakaat on the balance. The above is illustrated in the following example:

On 5th Ramadhaan 1430 (i.e. last year) you had R4,000. This is more than the Nisaab, hence it will be said that you are the owner of Nisaab from 5th Ramadhaan 1430. During the course of the year, this amount increased and decreased. You acquired salaries and profits which you used, spent, and part of it you saved.

At the end of the twelve months, that is, 5th Ramadhaan 1431 (the current year), your Zakaat asset position was as follows:

Cash on Hand

6,000 Gold Jewellery

4,000 Cash invested in a business 10,000 Savings in the bank

2,000

R 22,000 Less debt owed by you 2,000 Zakaat payable on R 20,000 2.5% Zakaat on R20,000 is R500.