The Practical Guide to Calculating Gold Zakat: Everything You Need to Know

Zakat is one of the five pillars of Islam, and it is an obligation that does not fall away from a Muslim who owns wealth reaching the legally specified minimum threshold. With the spread of gold as a safe savings medium against inflation and economic crises, many questions have arisen regarding how to calculate zakat on it and determine who must pay it. This guide explains everything related to gold zakat in a practical and easy way.

Understanding the Basics of Gold Zakat

Gold is not just a metal for adornment; it has been considered a real wealth and a store of value throughout history. Islamic law obligates Muslims to pay 2.5% of the value of their gold if certain conditions are met. This percentage remains fixed regardless of the form or type of gold.

The Prophet صلى الله عليه وسلم warned severely: “No owner of gold or silver who does not pay its right but that on the Day of Resurrection, plates of fire will be made for him.” This highlights the great religious importance of fulfilling this duty.

Gold Nisab: The Minimum Threshold for Zakat

The nisab of gold is 85 grams of pure gold. This means that if you own 85 grams or more of pure gold and a full lunar year passes on your ownership, zakat becomes obligatory upon you.

However, gold comes in different purity grades:

If you own gold with a lower karat than 24, you should convert the weight to its equivalent in pure gold to determine if it reaches the nisab.

How to Calculate Gold Zakat: Step by Step

Step 1: Determine the actual weight of pure gold

If you have 150 grams of 21-karat gold:

• Weight × Purity Percentage = Pure Gold
• 150 × 0.875 = 131.25 grams of pure gold

Step 2: Know the market price

Suppose the current price of 1 gram of pure gold is 500 SAR:

• 131.25 × 500 = 65,625 SAR

Step 3: Calculate the zakat

• 65,625 × 2.5% = 1,640.625 SAR (approximately 1,641 SAR)

Practical Examples of Calculating Zakat

Example 1: 24-karat gold

You own 120 grams of pure gold (24 karat), with a price of 450 SAR per gram:

• Total value: 120 × 450 = 54,000 SAR
• Zakat due: 54,000 × 2.5% = 1,350 SAR

Example 2: 18-karat gold

You own 200 grams of 18-karat gold (75% purity), with a price of 400 SAR per gram:

• Pure gold: 200 × 0.75 = 150 grams
• Value: 150 × 400 = 60,000 SAR
• Zakat: 60,000 × 2.5% = 1,500 SAR

Example 3: Gold bars

You have 95 grams of pure gold bars (24 karat), with a price of 550 SAR per gram:

• Value: 95 × 550 = 52,250 SAR
• Zakat: 52,250 × 2.5% = 1,306.25 SAR

Types of Gold and Zakat Rulings

Gold kept for savings or investment

This gold is in the form of bars, coins, or gold investment funds. Zakat is obligatory on it by consensus among scholars if it reaches the nisab. This also includes:

• Gold ETFs
• Shares of mining companies (if held for savings)
• Hidden gold intended to increase capital

( Jewelry used for daily adornment

Here, scholars differ:

• Majority of scholars )Malikis, Shafi’is, Hanbalis###: No zakat is due on a woman’s jewelry if used for regular adornment, as it resembles clothing and personal tools.
• Hanafi: Zakat is obligatory on all gold, even if used for decoration.
• Some Malikis: Zakat is only due once on gold jewelry.

( Men’s gold

Gold is forbidden for men in Islam )whether jewelry or otherwise###, but if a man owns gold for any reason, zakat is obligatory upon him even if possession is forbidden.

Conditions for Paying Zakat

1. Full ownership: You must fully own the gold without dispute
2. Reaching the nisab: Zakat is only due if you own 85 grams or more of pure gold
3. Lunar year passing: A full lunar year must pass on your ownership
4. Being a Muslim, adult, and sane: Zakat is obligatory for adult, sane Muslims
5. Gold free from forbidden elements: Zakat is not valid if the gold is mixed with usury or forbidden wealth

Who is eligible for gold zakat?

Islam specifies eight categories deserving zakat:

1. The poor: Those who cannot meet their daily needs

2. The needy: Those who have some resources but not enough

3. Zakat collectors: Officials and collectors involved in gathering and distributing zakat

4. Those whose hearts are to be reconciled: People given to strengthen their faith or ward off evil

5. For freeing slaves and captives: To free slaves and those in debt for emancipation

6. Gharimun (debt-ridden): Those burdened with debts they cannot pay

7. In the cause of Allah: Spending on what benefits Islam and defending the community

8. Ibn al-sabil (traveler stranded): The traveler who has lost their money in a foreign land

Who should not receive zakat?

There are groups who should not be given zakat:

• Ahl al-Bayt of the Prophet صلى الله عليه وسلم and Banu Hashim: Zakat is considered impure and not permissible for them
• The wealthy: Those whose income and wealth suffice their needs
• Able-bodied lazy workers: Those capable of earning but choose not to
• Kafir (non-Muslims): Zakat is only for Muslims
• Those whose expenses you are obliged to pay: Parents, spouses, children—expenses are to be covered from your personal wealth

Shariah guidelines for paying zakat

When paying zakat, adhere to these rules:

• Do not delay it without a valid reason after reaching the nisab and passing the lunar year
• Do not count it as part of old debts
• Do not spend it outside the eight categories specified
• Avoid showing off or personal favoritism
• Do not reduce the weight or price of gold to evade zakat
• Pay it fully without deficiency

Frequently Asked Questions

Q: Is zakat obligatory on gold investment funds (ETFs)?

Yes, if the funds are backed by actual gold. Zakat is paid at 2.5% of their market value when the lunar year passes if the value reaches the nisab.

Q: How do I calculate zakat on mixed gold of different purities?

Calculate the pure gold from each purity separately, then sum the results. For example: 50 grams of 24-karat + 100 grams of 18-karat = 50 + 75 = 125 grams of pure gold.

Q: When should I pay zakat — at the beginning or end of the lunar year?

It is recommended to pay it immediately after the lunar year completes. It is not obligatory before a full year, but it is permissible to pay early if you do so fully.

Q: Is zakat payable on inherited gold?

Yes, if it reaches the nisab alone or combined with other gold you own, and the lunar year is counted from the date you acquired it.

Q: Can I pay zakat in cash instead of gold?

Yes, it is permissible to pay it in cash equivalent to the market price of gold at the time of payment.

Summary

Gold zakat is an obligatory duty on a Muslim who owns 85 grams or more of pure gold for a full lunar year. The rate is 2.5% of its market value. Zakat covers all forms of gold, whether jewelry for savings, bars, or investment gold. It should be paid only to the eight specified categories, without delay once the conditions are met. By paying zakat sincerely, Muslims purify their wealth and promote social solidarity within the Muslim community.