The amount of Zakah payable is two and a half percent (2.5%), or 40th portion of:
1. the value of gold and silver if it is equivalent to nisaab or above it.
2. trading stocks, or its value at the time of obligation of payment of Zakah, if the stock is equal to nisaab.
3. cash on hand if equal to nisaab.
Zakah on gold and silver
• Gold and silver are subject to Zakah regardless of whether they are owned for personal use or otherwise if the weight thereof equals the prescribed nisaab and one year elapses thereon. Gold and silver are also always liable to Zakah irrespective of the asset type (gold bar, jewellery, ingot, coin etc.)
• Zakah is not payable on any other kind of jewels, gems or precious stones, such as diamonds, rubies etc. If these metals are, however, acquired for business, then Zakah will be payable thereon as they would then constitute trading stock.
• If gold or silver is not pure, and some other commodity (such as copper etc) is added to it, then if the major portion of the element is of gold or silver, it is considered as gold or silver respectively and Zakah will be obligatory on it. And if gold and silver is in minor proportion, then it is not considered as gold or silver and no Zakah will be obligatory provided that it is not purchased with the intention of sale.
• If a person has some gold and silver and the independent amount of both of them does not reach nisaab, then if the combined value of gold and silver reaches nisaab of silver, the accumulated worth will be the subject matter of Zakah. And if the combined value of gold and silver does not reach nisaab of silver, Zakah is not obligatory.
• If gold and silver reaches nisaab independently, then valuation of the combined value is not needed. Rather, in this case, Zakah of gold and silver will be paid independently from the other.
• Someone has a complete nisaab of silver. He got some more silver or gold before the year completed. Zakah of that additional silver or gold will be obligatory alongwith the completion of the year of the already owned silver and gold4 i.e. no additional or a complete year is required for Zakah being obligatory on that additional gold and silver.
For example, the Zakah year of a person ends on 1st Ramadan. On 25th Shaban he has some gold and silver of the value of one hundred thousand rupees (Rs. 100,000/-). On 29th Shaban, he purchased additional gold valued two hundred thousand rupees (Rs. 200,000/-). Now on 1st Ramadan, the value of zakatable gold and silver of that person would be three hundred thousand rupees (300,000/-).
• A person has cash equivalent to the nisaab of silver. Some amount of more cash is achieved before the completion of the year. Then the added amount of cash will be deemed as subject matter of Zakah after completion of the year of the previous amount.
Zakah on cash
• Cash is fully subjected to Zakah. It includes bonds, travelers’ cheque, and other cash equivalents.
• If a person has cash equivalent to 87.48 gm of gold or 612.36 gm of silver, Zakah is obligatory on him, for cash comes under the same ruling as gold and silver in terms of paying Zakah.
• If a person has some amount of cash, some gold, and some silver and neither of the three individually reaches nisaab, then the value of gold and silver will be added to the amount of cash, and if the combined amount reaches nisaab, Zakah is obligatory. If the combined amount does not reach nisaab, no Zakah is to be paid.
• A person has cash equivalent to nisaab. He got some more cash a few days before completion of year. This more amount of cash will be subject to Zakah after completion of the year of previous amount of cash.
For example, the Zakah year of a person ends on 1st of Ramadan. He has Rs. 30,000/- on 28th of Shaban. On 29th Shaban, he receives Rs. 5000/- more. Now the zakatable cash of that person on 1st of Ramadan would become Rs. 35,000/-.