The Sacred Pillar of Zakat
Zakat is the third pillar of Islam, a divine obligation that transcends mere charity. It is a comprehensive system of wealth redistribution designed by Allah (SWT) to purify both the soul and society. The word "Zakat" itself derives from the Arabic root meaning "to purify" and "to grow" - symbolizing that through giving, your wealth is cleansed and blessed with Barakah.
"Take from their wealth ˹O Prophet˺ charity to purify and bless them, and pray for them—surely your prayer is a source of comfort for them. And Allah is All-Hearing, All-Knowing." - Quran 9:103
In the year 2026, as global wealth accumulates in new forms - from cryptocurrency to digital stocks, from international real estate to freelance income - the timeless principles of Zakat remain as relevant as ever. HISABIFY stands as your trusted companion in navigating these modern financial waters while staying firmly rooted in authentic Islamic jurisprudence.
Spiritual Dimensions of Zakat
The spiritual essence of Zakat extends far beyond the mathematical calculation of 2.5%. It is a comprehensive spiritual exercise that:
Purifies the Heart
By voluntarily parting with wealth, you uproot greed, miserliness, and attachment to material possessions. This creates space for divine love and contentment in the heart.
Establishes Justice
Zakat is Allah's mechanism for social equity, ensuring that wealth circulates rather than concentrates in the hands of the few. It recognizes that the rich have obligations toward the poor.
Cultivates Blessing
The Prophet (PBUH) taught that charity does not decrease wealth. Through Zakat, the remaining 97.5% of your assets are blessed and protected from calamity.
Historical Context
Zakat was mandated in the 2nd year of Hijrah, shortly after the establishment of the Islamic state in Madinah. The Prophet Muhammad (PBUH) personally oversaw its collection and distribution, appointing dedicated officers ('Amileen) to ensure transparency and efficiency.
During the Caliphate of Abu Bakr (RA), the nascent Muslim community faced its first major crisis when some tribes refused to pay Zakat after the Prophet's passing. The firm stance taken by Abu Bakr - declaring that he would fight those who distinguished between Salah and Zakat - established the non-negotiable nature of this obligation.
The golden age under Umar ibn Abdul Aziz witnessed such effective Zakat administration that historians record instances where collectors could not find eligible recipients in certain regions - the entire population had been lifted above the poverty line.
Understanding Nisab: The Wealth Threshold
Nisab is the minimum amount of wealth a Muslim must possess before Zakat becomes obligatory. This threshold serves as a protection mechanism - ensuring that only those with surplus wealth contribute, while those struggling to meet basic needs are exempt and may even be recipients of Zakat.
The Two Standards: Gold and Silver
Islamic jurisprudence recognizes two Nisab thresholds, based on the precious metals that formed the basis of currency in the time of the Prophet (PBUH):
| Standard |
Quantity |
2026 Approximate Value (USD) |
Recommended For |
| Gold Nisab |
87.48 grams (7.5 Tolas) |
$5,800 - $6,500 |
Gold jewelry, luxury investments |
| Silver Nisab |
612.36 grams (52.5 Tolas) |
$450 - $650 |
Cash, savings, general assets |
Scholarly Consensus in 2026: The majority of contemporary scholars recommend using the Silver Nisab for calculating Zakat on cash and liquid assets. This is because silver has depreciated significantly relative to gold over the centuries, making the silver threshold lower and thus more beneficial for the poor. Using the silver standard means more people become eligible to pay Zakat, resulting in greater wealth circulation.
The Hawl: One Lunar Year
It is not sufficient to merely reach the Nisab threshold once. For Zakat to become due, you must maintain wealth at or above the Nisab for one complete lunar (Hijri) year. This is called the Hawl.
Practical Example: Tracking Your Hawl
Day 1 (1st Ramadan 1447): Ahmad has $1,000 in savings. Silver Nisab is $500. His Hawl begins.
Day 180 (15th Safar 1448): Ahmad's account temporarily drops to $300 for one month.
Day 210: Balance rises back to $800.
Day 354 (1st Ramadan 1448): Ahmad has $2,500. His Hawl is complete. Zakat of $62.50 (2.5%) is due.
Note: The temporary dip below Nisab does not reset the Hawl according to the Hanafi school, which is more accommodating. Other schools may require the Hawl to restart.
Who Must Pay Zakat?
A Muslim
Zakat is obligatory only upon Muslims. Non-Muslims have their own forms of charity and social obligations.
Sane & Mature
While most scholars exempt children and the mentally incapacitated, the Maliki school holds that guardians should pay Zakat on behalf of minors if they possess wealth.
Complete Ownership
You must have full, unencumbered control over the wealth. Frozen assets, jointly owned property without clear division, or wealth you cannot access does not count.
Zakatable Assets
Not all possessions are subject to Zakat. Your primary residence, personal vehicle, and household necessities are exempt.
Zakat on Gold, Silver & Precious Metals
Gold and silver hold a special place in Islamic economics as they were the primary mediums of exchange and stores of value in the time of the Prophet (PBUH). Today, whether in the form of jewelry, coins, or bullion, these precious metals remain subject to Zakat.
The Jewelry Debate: Personal Use vs. Investment
One of the most frequently asked questions in contemporary Zakat jurisprudence concerns gold jewelry. The scholars have differed on this matter:
Hanafi Position
Zakat is due on ALL gold and silver jewelry, regardless of whether it is worn regularly or kept in storage. The reasoning is that gold and silver are inherently wealth, and the form they take does not change their essence.
Shafi'i, Maliki & Hanbali Position
No Zakat on jewelry meant for personal adornment within customary limits. However, if you have excessive jewelry, or jewelry held as an investment, Zakat becomes obligatory.
HISABIFY Recommendation: In the spirit of piety and maximizing benefit to the needy, we encourage following the Hanafi position or, at minimum, paying Zakat on jewelry you rarely wear. Many contemporary scholars note that in affluent societies, what was once "normal" jewelry has often exceeded reasonable limits.
Calculating Zakat on Mixed Karat Gold
Modern jewelry often comes in various purities: 24K (pure), 22K, 21K, and 18K. To calculate Zakat accurately, you must determine the pure gold content:
Step-by-Step: 22K Gold Necklace
Step 1: Weigh your jewelry. Let's say your 22K necklace weighs 100 grams.
Step 2: Calculate pure gold content: 100g × (22/24) = 91.67g of pure gold.
Step 3: Check if it exceeds Nisab: 91.67g > 87.48g (Yes, Zakat is due).
Step 4: Find current market rate for 22K gold: Let's say $60 per gram.
Step 5: Total value: 100g × $60 = $6,000
Step 6: Zakat payable: $6,000 × 2.5% = $150
| Type of Gold/Silver Asset |
Zakat Status |
Valuation Method |
Notes |
| Gold/Silver Bullion |
Always Zakatable |
Current market price |
Pure investment asset |
| Gold/Silver Coins |
Always Zakatable |
Market value or face value (higher) |
Includes collectible coins |
| Personal Jewelry (Hanafi) |
Zakatable |
Current market/resale value |
All personal jewelry |
| Personal Jewelry (Other schools) |
Exempt if reasonable |
N/A |
Must be for personal use only |
| Diamonds, Rubies, Pearls |
Exempt (unless for trade) |
N/A |
Only the gold/silver setting is zakatable |
| White Gold |
Zakatable |
Based on gold content |
Treated as regular gold |
Zakat on Cryptocurrency & Digital Assets
The emergence of cryptocurrency has created one of the most discussed topics in contemporary Islamic finance. Bitcoin, Ethereum, and thousands of other digital currencies represent a new form of wealth that didn't exist in classical Islamic jurisprudence. However, the fundamental principles of Zakat remain applicable.
Is Cryptocurrency Halal?
Before discussing Zakat, we must address permissibility. Scholars have varying opinions on cryptocurrency:
Permissible View
Many contemporary scholars (including Mufti Taqi Usmani, Sh. Joe Bradford) view cryptocurrency as a permissible digital asset, similar to commodities like gold. They are Zakatable if held as investment.
Cautious View
Some scholars express concern about excessive speculation, lack of intrinsic value, and use in illicit activities. They advise caution but don't outright prohibit ownership.
Case-by-Case View
Others differentiate between cryptocurrencies: utility tokens for blockchain services may be permissible, while purely speculative coins are questionable.
HISABIFY Position: We follow the permissible view for mainstream cryptocurrencies like Bitcoin and Ethereum, treating them as digital commodities subject to Zakat. However, we strongly advise avoiding meme coins, gambling tokens, or projects with no real utility.
How to Calculate Zakat on Crypto
Cryptocurrency should be treated similarly to gold - as a store of value. The calculation is straightforward:
Example: Mixed Crypto Portfolio
Portfolio Holdings (Zakat Date: 15th Ramadan 1448):
- 0.15 BTC @ $85,000 = $12,750
- 3.5 ETH @ $3,200 = $11,200
- 5,000 USDT (Stablecoin) = $5,000
- Various Altcoins = $2,800
Total Portfolio Value: $31,750
Check Nisab: $31,750 > $550 (Silver Nisab) ✓
Zakat Due (2.5%): $31,750 × 0.025 = $793.75
Special Crypto Considerations
| Crypto Type |
Zakat Treatment |
Reasoning |
| Bitcoin, Ethereum (HODLing) |
2.5% on market value annually |
Treated as investment/store of value |
| Stablecoins (USDT, USDC) |
2.5% annually |
Equivalent to cash holdings |
| DeFi Staking Rewards |
Zakat on profits when withdrawn |
Similar to business income |
| NFTs (held for resale) |
2.5% on market value |
Trade inventory |
| NFTs (personal collection) |
Exempt |
Like personal art or collectibles |
| Mining Rewards |
Zakat when sold/one year after receiving |
Treated as business income |
"The principle in Shariah is that all forms of wealth are subject to Zakat unless specifically exempted. Cryptocurrency, as a modern form of wealth, falls under this general rule." - Islamic Fiqh Council
Zakat on Stocks, Shares & Equity Investments
The stock market represents one of the most common modern investment vehicles. For Muslim investors, understanding how to calculate Zakat on stocks is essential, but the method differs based on your investment strategy.
Two Types of Stock Investment
Trading Stocks
You buy and sell frequently (day trading, swing trading). Your intention is to profit from price movements. Zakat is due on the FULL market value at 2.5%.
Investment Stocks
You hold for long-term dividends and growth. Your intention is to own part of the company. Zakat is due only on the Zakatable assets of the company (proportional to your shares).
Detailed Calculation Methods
Method 1: Trading Stocks (Simple)
Scenario: Fatima actively trades stocks with a portfolio worth $50,000 on her Zakat date.
Calculation: $50,000 × 2.5% = $1,250 Zakat
This is straightforward because trading stocks are treated like inventory in a business - you intend to sell them for profit.
Method 2: Investment Stocks (Complex)
Scenario: Ahmad owns 100 shares of XYZ Corporation, each worth $200 (Total: $20,000). He holds them for long-term dividends.
Step 1: Obtain the company's balance sheet and identify Zakatable assets:
- Cash & Cash Equivalents: $10 million
- Accounts Receivable: $5 million
- Inventory: $8 million
- Fixed Assets (buildings, equipment): $50 million
Step 2: Calculate Zakatable portion: ($10M + $5M + $8M) / Total Assets = $23M / $73M = 31.5%
Step 3: Apply to your shares: $20,000 × 31.5% = $6,300 (Zakatable portion)
Step 4: Calculate Zakat: $6,300 × 2.5% = $157.50
Practical Simplification: Finding detailed balance sheet information can be challenging for average investors. Many contemporary scholars permit a simplified approach for long-term investors: pay Zakat on 1/3 of the stock value (33%), as this roughly approximates the liquid asset ratio of most companies. This would mean Ahmad pays: $20,000 × 33% × 2.5% = $165.
ETFs, Mutual Funds & Index Funds
These investment vehicles pool money to invest in multiple stocks. The same principles apply:
| Investment Type |
Zakat Approach |
Rate |
| Shariah-Compliant Stock Fund (Long-term) |
Zakatable assets method or 33% simplification |
2.5% on zakatable portion |
| Index Fund (S&P 500, etc.) |
Cautious approach: 2.5% on full value |
2.5% |
| Bond Funds |
Not permissible in Islam (Riba) |
Dispose of and pay Zakat on principal |
| Money Market Funds |
Treat as cash |
2.5% |
Dividends and Capital Gains
When you receive dividends or sell stocks for profit, these earnings are immediately subject to Zakat once they've been in your possession for one lunar year (along with your other wealth). Many people pay Zakat on dividends immediately to avoid tracking complexity.
Zakat for Freelancers & Modern Professionals
The digital economy has created new categories of income earners - freelancers, remote workers, gig economy participants, and content creators. These modern professions require special consideration when calculating Zakat.
Zakat on Earned Income: A Key Distinction
It's crucial to understand that Zakat is NOT an income tax. You don't pay Zakat on your salary or freelance earnings the moment you receive them. Instead, Zakat is due on what remains of your earnings after one lunar year.
Example: Software Developer Freelancer
Background: Bilal is a freelance web developer earning $6,000/month ($72,000/year).
His Expenses: Rent, food, utilities, family support, business tools = $4,500/month
Monthly Savings: $1,500
Zakat Calculation (After one year):
- Accumulated savings: $1,500 × 12 = $18,000
- Existing assets (laptop for work): Exempt (business tools)
- Checking account balance: $2,000
- PayPal/Stripe pending: $800
Total Zakatable Wealth: $18,000 + $2,000 + $800 = $20,800
Zakat Due: $20,800 × 2.5% = $520
Digital Payment Platforms & Zakat
Modern freelancers often have money scattered across multiple platforms:
| Platform/Account Type |
Zakat Status |
Notes |
| PayPal Balance |
Zakatable |
Include full available balance |
| Stripe/Payment Gateway |
Zakatable |
Funds pending transfer count |
| Upwork/Fiverr Earnings |
Zakatable |
Even if not yet withdrawn |
| Apple Pay/Google Pay |
Zakatable |
Digital wallets are cash equivalents |
| Business Tools (Subscriptions) |
Exempt |
These are expenses, not assets |
| Laptop, Camera (for work) |
Exempt |
Tools of trade are not zakatable |
Content Creators & Influencers
YouTube creators, Instagram influencers, and other content monetizers face unique Zakat situations:
Ad Revenue
YouTube AdSense, Instagram partnerships, and sponsorship money is zakatable once it reaches your account and meets the Nisab threshold for one year.
Merchandise Sales
If you sell branded merchandise, the inventory is zakatable as trade goods. Calculate Zakat on the current value of unsold stock plus cash profits.
Patreon/Membership
Recurring subscription income is treated like regular freelance earnings. Zakat is due on accumulated savings after one year.
Special Note for High Earners: If your monthly income vastly exceeds your expenses, you may reach Nisab multiple times during the year with different "batches" of money. Advanced tracking involves setting separate Hawl dates for major deposits, but for simplicity, many scholars allow calculating Zakat once annually on your total accumulated wealth.
Ushr: Zakat on Agriculture & Farm Produce
Ushr represents one of the most ancient forms of Zakat, dating back to the earliest days of Islam. Unlike wealth-based Zakat which requires a one-year holding period, Ushr is due immediately upon harvest. This reflects the immediate blessing and provision that agricultural produce represents.
The Divine Legislation
"O you who believe! Spend from the good things you have earned and from what We have brought forth for you from the earth." - Quran 2:267
The Prophet Muhammad (PBUH) established clear guidelines for agricultural Zakat, differentiating based on the level of effort and cost required for irrigation:
| Irrigation Method |
Ushr Rate |
Reasoning |
Examples |
| Natural (No cost) |
10% (1/10) |
Allah provides water freely |
Rainwater, rivers, springs, floods |
| Artificial (Costly) |
5% (1/20) |
Farmer bears expense of irrigation |
Wells, tube wells, pumps, purchased water |
| Mixed (Both methods) |
7.5% |
Average of natural and artificial |
Partial rain + supplemental irrigation |
What Crops Are Subject to Ushr?
Ushr applies to crops that are:
- Staple foods: Wheat, rice, barley, corn, dates
- Storable: Crops that can be dried and stored (excludes highly perishable items like leafy vegetables in some opinions)
- Above Nisab: The harvest must equal or exceed 5 Wasqs (approximately 653 kg or 1,440 lbs)
Practical Ushr Calculation
Farmer Profile: Yusuf owns 10 acres of wheat fields in Punjab, Pakistan
Irrigation: 60% rainwater, 40% tube well irrigation
Harvest: 5,000 kg of wheat
Market Price: $0.50/kg
Total Value: 5,000 kg × $0.50 = $2,500
Ushr Calculation: Since irrigation is mixed (60% natural), we use a proportional rate:
(0.60 × 10%) + (0.40 × 5%) = 6% + 2% = 8%
OR use the standard mixed rate of 7.5%
Ushr Due: $2,500 × 7.5% = $187.50 (or 375 kg of wheat)
Fruits, Vegetables & Modern Farming
Contemporary agricultural practices have introduced questions about greenhouse farming, hydroponics, and year-round harvests:
Orchards & Fruit Trees
Fruits like dates, olives, grapes, and mangoes are subject to Ushr. Some scholars include all fruits if they meet the Nisab threshold, while others limit it to storable fruits.
Vegetables
Highly perishable vegetables (lettuce, tomatoes) are exempt in some schools but zakatable in others if they represent significant commercial farming. The Maliki school is more inclusive.
Hydroponic Farming
Modern soil-less farming is treated as artificial irrigation (5% rate) due to high operational costs and technology investment.
Practical Tips for Farmers
- Deduct Farming Costs First: According to some scholars, you may deduct essential farming costs (seeds, labor, fertilizer) before calculating Ushr, especially if these costs are substantial.
- Multiple Harvests: If you harvest the same crop twice in one year (e.g., rice in summer and winter), Ushr is due on each harvest separately.
- Shared Crops: If you sharecrop or rent farmland, Ushr is due on the actual owner's portion based on the agreement.
- Cash vs. Kind: You may pay Ushr in the form of the crop itself (preferred) or its cash equivalent value.
Zakat on Livestock (An'am)
Zakat on livestock is one of the earliest forms of Zakat, meticulously detailed in the Hadith of the Prophet (PBUH). It applies to three main types of grazing animals: camels, cattle (cows/buffalo), and sheep/goats.
Conditions for Livestock Zakat
Grazing Animals
The animals must graze freely on open pasture for the majority of the year (more than 6 months). If you feed them purchased fodder year-round, they are exempt.
Not Working Animals
Animals used for labor (plowing, transportation) are exempt. Only animals kept for breeding, milk, or eventual sale are zakatable.
One Year Ownership
Like other Zakat, you must own the animals for one complete lunar year for the obligation to become due.
Detailed Zakat Tables
Sheep and Goats (Ghanam)
| Number of Animals |
Zakat Due |
Notes |
| 1 - 39 |
None |
Below Nisab threshold |
| 40 - 120 |
1 sheep/goat |
Must be at least 1 year old |
| 121 - 200 |
2 sheep/goats |
- |
| 201 - 399 |
3 sheep/goats |
- |
| 400 - 499 |
4 sheep/goats |
- |
| 500+ |
1 per every 100 |
- |
Cattle (Cows & Buffalo)
| Number of Animals |
Zakat Due |
| 1 - 29 | None |
| 30 - 39 | 1 Tabi' (1-year old calf) |
| 40 - 59 | 1 Musinnah (2-year old cow) |
| 60+ | 1 Tabi' for every 30, or 1 Musinnah for every 40 |
Zakat on Business Assets & Inventory
If you are a business owner (Retail, Wholesale, or E-commerce), you must pay Zakat on your trade goods. This is calculated on the current resale value of your stock, not the cost price.
Business Formula
Zakatable Assets = Cash + Finished Goods Value + Raw Materials + Trade Receivables
Deductions = Immediate business debts (salaries, electricity bills, supplier payments due).
Zakat is 2.5% on the Net Zakatable Assets. Note: Office furniture, machinery, and delivery vans are Exempt.
Where Does Your Zakat Go? (Asnaf)
The Quran (Surah At-Tawbah, Verse 60) explicitly mentions eight categories of people eligible to receive Zakat:
1. Al-Fuqara
The poor with minimal income.
2. Al-Masakin
The extremely needy.
3. Al-Amileen
Zakat administrators.
4. Al-Mu'allafah
To reconcile hearts.
5. Fir-Riqab
Freeing captives.
6. Al-Gharimeen
Those in debt.
7. Fi-Sabilillah
In Allah's cause.
8. Ibnus-Sabil
The stranded traveler.
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