As a first step towards ascertaining zakat liability, please determine your Zakat Due Date. It can be 1st Raman, 21st Ramzan, 1st Moharrum or any other convenient date of lunar calendar. Once fixed, it remains same year after year. Every year zakat become due on your zakatable wealth on the Zakat Due Date.
Zakat on gold should be calculated at 2.5% of the market value as 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 the 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.
Zakat is not payable on personal residential house even if you have more than one and meant for residential purpose 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, finsihed 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.
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 stock 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 agrultural 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 time.
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.
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.