As a first step towards ascertaining Zakat liability, please determine your Zakat Due Date. It can be 1st Ramzan, 21st Ramzan, 1st Moharrum or any other convenient date of lunar calendar. Once fixed, it remains same year after year. Every year Zakat becomes due on your Zakatable-Wealth on the particular Zakat Due Date.
Zakat on gold should be calculated at 2.5% of the market value as on Zakat Due Date. Zakat is to be paid on silver in pure form or jewellery, utensils, decorative items and all household items including crockery, cutlery made of silver at 2.5% of the prevailing market rates.
Zakat should be paid at 2.5% on all cash balance and bank balances in your savings bank account, current a/c or FD account on Zakat Due Date.
Zakat is payable by you on loans you have given to your friends and relatives. If your loan/advance is doubtful or bad, you may not calculate it as your wealth. You can add it to your wealth on receipt of this loan/advance.
Zakat is payable on Govt Bonds, Public Sector Bonds, Pvt Sector Bonds, Insurance policies, voluntary contribution to Provident Fund, Gratuity amount received, PF Settlement, Commutation of pension received etc.
Zakat is not payable on personal residential house even if you have more than one and meant for residential purposes only. However, Zakat is payable on the rental income itself after deducting the maintenance and other expenses.
If your intention of holding properties is to sell at a future date, or as an investment, then Zakat is payable on the Market Value of the property. Also, if your intention of holding properties changes in the current year, i.e. from self-use to business then you need to pay Zakat on that Property Value.
If you are a businessman, trader, merchant or industrialist, please undertake valuation of all your inventory - raw materials, finished goods on Zakat Due Date. The stock of raw materials must be valued at its landed cost price and stock of finished goods should be valued at market sales price. If you have any bills receivable (sales given on credit) then you need to add the same towards calculations.
Similarly, deduct the amounts due to your suppliers and deduct the loans on stock on the date of calculation. Dead Stock should be calculated on scrap value or its saleable value. Damaged stocks should also be valued at its scrap value.
There is no Zakat on factory buildings, plant & machinery, equipment, furniture and fixtures used in the business. However, Zakat is applicable on products produced in the factory (i.e. finished goods value).
Zakat can be paid either by the firm or separately by each partner. If the firm is not paying, and the partner wants to calculate his share, he should take the amount standing to his capital and loan account as per the last balance sheet. Add his estimated share of profit till Zakat Due Date.
This can only be estimated as it is difficult to calculate the exact profit or loss between an accounting year.
Zakat is payable on all agricultural produce including fruits, commercially grown flowers, vegetables, and all types of grains at the harvest time itself. The passing of One year does not apply for agricultural produce.
If there are two or more crops on the same land per year, then Zakat has to be paid as many times on the crop, irrespective of the no of times.
The formula for Zakat calculation on agriculture is as follows:
On crops dependent purely on rain water it will be 10% of produce, On crops not irrigated through rain water but use Canal Water, Tank Water, Borewell and Open wells, the Zakat is 5% of the produce. For Crops dependent partly on Rain Water and partly on other water, the Zakat applicable would be 7.5% of produce.
Zakat is payable on all grazing animals, like goats, sheep, camel, cows and buffaloes.
Zakat on animals is payable every year, provided that the stock exceeds the threshold of Zakat. Also, such animals should be of the type that grazes naturally. In the case of sheep and goats, the minimum threshold is 40, when one sheep is due. Two sheep become due for 121, and three sheep for 201. Thereafter, one extra sheep is added for each 100.
With cows & buffaloes, the minimum threshold is 30, and the rate is one male or female aged one year. If the cows are 40, then one two-year old female cow is due. For 60 cows, two cows of one year of age. With 70, two cows, one of them one year old and the other two years. For 80 cows, the rate is two female cows of two years each. Then we move up 10 at a time, increasing the liability pro rata.
In camels the threshold is five camels when the rate is one sheep of more than one year of age. For ten camels two sheep, and the rate goes up at each stage of five extra camels.
For 25 camels the rate is a she-camel of one year of age, or a male camel who has passed two years of age. For 36 camels a she-camel of 2 years, and for 46, one over 3 years.
As for dairies and fisheries, they should be treated as commercial ventures, and the same that applies to business applies to them.
If you have taken any loans from any person or institution, and if you have not already deducted the same from any of the above sections, then you can deduct your payables over here. Please be truthful, as Zakat is a sure way of protecting ones wealth if Zakat has been paid on it regularly and fully.
Loans taken only for Zakatable-Wealth should be deducted. Cars, Houses, etc are not Zakatable wealth. So any loan taken for these purposes are not to be deducted.