Zakat is an important part of the Islamic faith and is one of the five pillars of Islam. It is a form of charity that encourages Muslims to give a portion of their wealth to those less fortunate than themselves. While the Zakat system has been around for centuries, it has evolved in recent years to include new types of investments such as gold and silver.
With heightened demand for these precious metals, this article will explore what Zakat on gold may look like in 2023. We’ll discuss why investors are turning towards gold and how this shift could impact the system of Zakat.
What is Zakat in Islam?
Zakat is an Islamic religious obligation, typically involving the giving of 2.5% of one’s wealth to charity. In Islam, money and other possessions are seen as a test from Allah, and zakat is seen as a way of purifying one’s wealth.
Gold is often considered one of the most valuable possessions someone can have, so paying zakat on gold is seen as a way of showing thankfulness to Allah for His blessings. If you to know more about Zakat then visit What is Zakat.
Meaning of Zakat?
Zakat is an Islamic obligation that requires Muslims to give a set percentage of their wealth to charities and those in need. The word “zakat” means “purification” or “growth.” Zakat is one of the Five Pillars of Islam and is required of all Muslims who have the means to do so.
Zakat Percentage
“The amount of zakat on Gold that a Muslim must pay depends on the amount of gold they possess. For example, those who have more than 7.5 grams of gold must pay 2.5% of the total value as zakat. Zakat on gold can be paid in cash or kind.”
While zakat is often thought of as a way to help the poor and needy, it can also be used for other purposes such as supporting mosques, madrasas (Islamic schools), and other charitable causes. However zakat is spent is up to the individual, but it should be used in a way that benefits society as a whole.
Narrated Abu Huraira:
“ Allah’s Apostle said, “Whoever is made wealthy by Allah and does not pay the Zakat of his wealth, then on the Day of Resurrection his wealth will be made like a bald poisonous male snake with two black spots over the eyes.
The snake will encircle his neck and bite his cheeks and say, ‘I am your wealth, I am your treasure.’ ” Then the Prophet recited the holy verses:– ‘Let not those who withhold . . .’ (to the end of the verse). (3.180).”
Zakat on Gold calculation Method
There are two methods to calculate Zakat on Gold which are given below.
- The first method is the Nisab method, which is based on the value of gold in circulation. This method is used to calculate Zakat on gold that is not in storage. To calculate Zakat using the Nisab method, you will need to know the value of gold in circulation. This can be found by checking the live spot gold price on Kitco’s charts. Once you have this information, you will need to multiply the total value of gold by 2.5%. This 2.5% is the zakat that is due on the gold.
- The second method, the storage method, is used to calculate Zakat on gold that is stored away. To calculate Zakat using the storage method, you will need to know the value of your stored gold and how long it has been stored. The Zakat on stored gold is calculated at 1/40th of the total value. So, if you have 100 grams of stored gold that is worth $1,000, your zakat would be $25 ($1,000 x 0.025). If you want to know more about zakat meaning go to zakat calculation.
How much Zakat on 1 Tola Gold?
Zakat is an Islamic obligation that requires Muslims to give 2.5% of their wealth to charity each year. This includes money, gold, silver, and other assets. So, if you have 1 tola (11.66 grams) of gold, you would need to give 2.5% of that as Zakat. This comes out to 0.2917 grams or about $4.50 at the current gold price.
Zakat Nisab Calculation Formula
Several organizations have introduced different Zakat calculators that are according to the right Nisab standards for each year. You can get help from these to calculate your zakat accurately. You could also consult a Ulema.
- Rate of Gold in Pakistan * 7.5 tola/3 ounces/87.3 grams of gold = Gold Nisab
- Rate of Silver in Pakistan * 52.1 tola/21 ounces/612.36 grams of silver = Silver Nisab
- Let’s assume that the rate of gold per tola on a specific day in 2022 is Rs. 136,583. So,
Rs. 136,583 * 7.5 tola = Rs. 1,024,372 - Now, let’s calculate the Zakat Nisab according to the silver standard at a rate of Rs.
1600 per tola.
Rs. 1600 * 52.1 = Rs. 83,360
Explanation
The most important thing to consider here is that the assets must be worth more than the Nisab limit during a full lunar year. If the assets are below the Nisab limits, you are not a Sahib-e-Nisab.
Also, once you have assets worth more than the Nisab limit, the first day will be used to figure out your Zakat. However, if you are Sahib-e-Nisab all year, you can set a date accordingly. Many people prefer Ramadan to pay their zakat.
Best time to pay Zakat?
The best time to pay Zakat on gold is during the Hajj season. This is because, during this time, there is a higher demand for gold and its value appreciates. Therefore, paying Zakat on gold during the Hajj season will ensure that you are contributing a greater amount of money to charity.
5 Powerful Benefits of Paying Zakat?
There are many benefits to paying Zakat for gold. Here are just a few of them:
- It aids in the purification of your possessions. Purification of your possessions and yourself is one of the primary goals of Zakat. By paying Zakat on your gold, you are taking a step towards achieving this goal.
- It provides financial assistance to those in need: When you pay Zakat on your gold, the money goes to help those who are in need. This is one of the main purposes of Zakat and is a great way to give back to the community.
- It shows your commitment to Islam: paying Zakat is one of the Five Pillars of Islam and by doing so, you are showing your commitment to the religion.
- It can be used as an investment: Some people choose to pay Zakat on their gold because they see it as an investment. The money that you pay can be used to help others in need and also has the potential to grow over time if invested properly.
- It is a way of thanking Allah: Ultimately, paying Zakat is a way of thanking Allah for His blessings. By giving back some of what He has given us, we show our appreciation for all that He has done for us.
Conclusion
As the value of gold continues to increase, it is important for all Muslims to understand their Zakat obligations and how they might be impacted by changes in market conditions. In this article, we talked about what might happen to Zakat payments if the price of gold keeps going up in 2023.
We gave an overview of the current zakat rates and gave suggestions for how you can make sure your zakat payments stay accurate even if the price of gold goes up or down. You can always meet your religious obligations as long as you know about these changes and keep up with them.
Frequently Asked Questions (FAQs)
Q: How much Zakat is due on gold?
Answer: 2.5%
Zakat must be paid at a rate of 2.5% of the value of the gold that you own.
Q: Is there Zakat on 1 tola gold?
Answer: To be eligible for Zakat, a Muslim must have 87.48 grams (7.5 tolas) of gold or 612.36 grams (52.5 tolas) of silver as net capital.
Q: What is the minimum amount of gold for Zakat?
Answer: Zakat is calculated at 2.5% of wealth above the Nisab. A Nisab is equivalent to 85 grams of 24k gold, which is the minimum wealth requirement for zakat payment.
Q: Do we need to pay Zakat on gold for personal use?
Answer: For the years when you were unaware that zakaah was required on jewelry prepared for use, you are not required to pay it
