How to Calculate Zakat on Cash and Savings

Zakat on cash and savings is simple in principle but often confusing in practice. This guide explains what counts, what you can subtract, how to apply the 2.5% rate, and the points where scholars differ, without quoting a rupee nisab that changes with the market.

Add up your zakatable wealth (cash, bank balances, gold, silver, business stock and money owed to you that you expect back), subtract debts due now, and if the result is above the nisab and you have held it for a lunar year, pay 2.5%. Our zakat calculator does the arithmetic.

Choose a fixed date, such as 1 Ramadan, and use it every year. Zakat is due on the wealth you hold on that date, as long as you held a nisab through the year. If your wealth rises during the year, the extra is included on the zakat date.

• Cash in hand and at home.
• Bank accounts (savings and current).
• Gold and silver, including jewellery in the Hanafi school. See zakat on gold.
• Business stock held for sale, at market value.
• Money lent to others that you expect to be repaid.
• Shares and investments held for trade, at market value. Scholars differ on how to value long-term investment shares, so ask your scholar.
• Savings certificates and similar savings, subject to the rulings on their principal.

• Your own house, and a car for personal use.
• Furniture, clothes and household items.
• Tools you use for work (not stock).
• Property you rent out: the property itself is not zakatable, but the rent you save is.

Subtract debts that are due and that you have to pay now, such as unpaid bills, credit card balances and instalments that are currently due. In the Hanafi view, you deduct debts that are due immediately. Debts due over a long period, such as a mortgage, are treated differently by scholars, so ask yours about long-term loans.

The nisab is the minimum. In the Hanafi school, the gold nisab is 87.48 grams (7.5 tola) and the silver nisab is 612.36 grams (52.5 tola). The rupee value of each changes every day with the market. Many Pakistani scholars apply the silver nisab for cash and mixed wealth, as it is lower. Check the current price and ask your scholar which to use.

Multiply the total by 0.025. As a simple illustration only: if your zakatable total after debts is Rs 800,000, zakat is 800,000 × 0.025 = Rs 20,000.

• Provident fund and pension. Scholars differ on when and how zakat applies. Ask a scholar.
• Loans you gave: pay on those expected to be repaid. For doubtful debts, pay when you receive them.
• Money saved for Hajj or marriage: it is zakatable unless it is already due as a debt.
• Children's wealth: in the Hanafi school, zakat is not due on a minor's wealth, whereas the majority hold it is. Follow your school.
• Joint accounts: pay on your share.

The eight categories in Quran 9:60, including the poor, the needy and those in debt. In the Hanafi school, you cannot give zakat to your parents, grandparents, children or spouse. Give to eligible people or a trusted organisation, and do not use zakat for building mosques or paying for general costs unless a scholar confirms a category applies.

• Waiting for a perfect calculation. If you are unsure, estimate generously.
• Ignoring savings in bank accounts.
• Paying zakat to family you must support.
• Forgetting gold you rarely wear.