Zakat is an obligatory charity in Islam. It is paid at 2.5% on wealth that has been held for one full lunar year (Hawl) and meets or exceeds the Nisab threshold.
Scholars often recommend using the silver Nisab as it is lower, thus benefiting the poor more.
Assets: $10,000 cash. Nisab is $500. Zakat Obligatory: Yes. Zakat Due: 2.5% of 10,000 = $250.
Assets: $200 cash. Nisab is $500. Zakat Obligatory: No. Zakat Due: $0.
Assets: 100g Gold (value $7,000). Nisab threshold met. Zakat Due: $175.
1. When is Zakat due? Once wealth reaches the Nisab and one lunar year (Hawl) passes.
2. Do I pay on my house/car? Personal use items are generally exempt.
3. Which Nisab should I use? Silver Nisab is safer and preferred by many scholars for cash/business assets.
4. Are debts deducted? Yes, short-term debts you owe can be deducted from your total assets.