Questions on Zakat


Suppose you’re just coming up in the world and now have enough money to begin paying zakat. How do you begin? Ie. you need to set a “starting date” – how do you decide when that is? Is it just as soon as you have the nisab? I see mention of nisab on gold and one on silver. How does this work today given we use paper money and plastic?

Now another case, you have been doing well but you weren’t paying zakat and now decide to do so. What is “starting date” in that case? Do you pay the owed back-zakat immediately? If unable, can it be paid over time?

What do you pay zakat on? Is it just on cash on hand and banks, or on possessions? Investments? If home is included and you have a mortgage how would you calculate the zakat on your home? Would you pay zakat on income tax or on income tax refund?

Who do you pay zakat to given there is no Bait al-Mal?


When a certain amount of money, called the nisab, is reached zakat becomes obligatory. The nisab of gold is about 85 grams of pure gold. This means the nisab of money is the value of 85 grams of pure gold on the day when zakat is paid. Use this link to find out about current gold prices.

Zakat is due after a time span of one lunar year. Then the owner is to pay 2.5% of the money in the control of it’s owner. It is okay to give zakat little by little throughout the lunar year (355 days). However Ramadan is the best time to pay zakat.

Scholars maintain that, according to a hadith about debt, any missed zakat must be paid immediately to the deserving. In the case of a dead person, the inheritors are urged to pay from his inherited portions.

If you pay mortgage and the loan is bigger than the asset zakat will not be obligatory. If the remainder is to the value of the nisab, one must pay zakat from it. You don’t pay zakat on the house/apartment in which you reside. You are to pay Zakat on expected receivables such as refundable deposits, tax refunds etc.

You pay zakat on:

Gold and Silver
Mutual Funds
Stock Options
Business Merchandise Inventory
Private Companies, Corporations and Partnerships
Retirement Plans (401K, IRA, etc.)
Real Estate Investments in Property Owning Companies
Accounts Receivable
Profits from Investments
Long-Term Insurance (Life Insurance)
Lump Sum Payments in Terms of Compulsory Pension and Provident Funds
Severance Package
Income Tax
Liabilities which may be deducted
Buried Precious Metals or Minerals (Rikaz)
Livestock, Animals, Cows, Sheep, Camels
Agricultural Produce

In the absence of Baytul-Mal and Muslim State, zakat is to be handled by an Islamic organization. The recipients of zakat are:

Alms are for the poor and the needy, and those employed to administer (he funds); for those whose hearts have been (recently) reconciled (to truth); for those in bondage and in debt; and for the wayfarer: (Thus is it) ordained by Allah, and Allah is full of Knowledge and Wisdom.” {Qur’an 9:60}

Imam Senad Agic
American Islamic Center – Chicago
Majlis #1 Head Imam (IABNA)

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