How should I calculate my annual zakath especially emphasizing what are the expenses I could deduct from my income?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

If a person has personal wealth which is more than his personal needs and the wealth is equivalent to or more than the amount of Nisaab (Quantum) and that wealth is in one’s possession for one lunar year, then one has to pay 2.5% of that wealth. The Nisab is 20 Mithqals (87.479 g) for gold and 200 Dirhams (612.35 g) for silver. Any currency equal to the amount of any of these Nisab (Quantums) will also render Zakat binding.

If one’s wealth decreases below the Nisab during the year but before the expiry of the year, it reaches the Nisab, Zakat will be binding contrary to the case of the wealth not rebounding to amount of Nisab upon the expiry of the year. However, if one loses his entire wealth, a new lunar cycle will begin after reaching the Nisab for the second time.

All debts and liabilities will be deducted from his wealth before calculating his estate. Only that particular year’s liabilities will be deducted from long-term debts such as car / home financing. Loans given and other receivables into one’s estate will be accounted for even if the person is not paid by his debtor for several years.

Any gold or silver items such as jewelry, ornaments etc. will also form part of Zakatable assets as long as the percentage of gold or silver in the item is more than the metal alloy with which it is amalgamated.

All items/goods purchased for trade will be subject to Zakat and must be accounted for in the calculation. The actual ruling of calculating merchandise for Zakat is that 2.5% of the actual goods themselves should be given away. However, one may also pay 2.5% of the present value of the goods, not the value at the time they were bought. (Jadeed Fiqhi Masail, Vol.1 Pg.71 – Kutub Khana Na’eemiyah, Deoband)

A person should add his / her cash savings, values of gold and/or silver, value of the merchandise of trade and any receivables from debts etc. Thereafter, he / she should deduct the amount of debts owed to others. If the value of the net total equals the Nisab of gold or silver, he / she will have to pay 2.5% of the amount in Zakat.

Kindly refer to the following Zakaat calculation table for more details:

Personal Wealth	Amounts:
1.   Amount of Cash and Savings at home or in the bank	R 10,000
2.   Current value of any gold and silver jewelry, coins, utensils etc	R 5,000
3.   Value of  assets and merchandise for trade	R 20,000
4.   Receivables and loaned amounts to others	R 5,000
Total these amounts here:	R 40,000
Amount Debts to be paid:	R 20,000
Subtract the total amount of debts for the year from the above amount.
Nett Total of Zakatable Wealth	R 20,000
if the net total of Zakatable Wealth is more than the Nisab amount then…

And Allah Ta’āla Knows Best                                       

Ismail Desai,
Durban, South Africa

Checked and Approved by,
Mufti Ebrahim Desai.