Have you been searching for how to calculate Zakat in Nigeria? It is the month of Ramadan, and at this time many of us are wondering how to calculate Zakat. But let’s take a step back and take the time to appreciate, what is Zakat? Why does it hold such importance in Islam?
At a time when many services and businesses are restricted, when borders are closed and many people’s livelihoods are uncertain, charities continue to provide aid and support. All over the world, humanitarian organizations are trying to make sure the most vulnerable people are not overlooked during this pandemic.
What is the meaning of Zakat?
One of the Five Pillars of Islam, Zakat is a fundamental part of being a Muslim. Meaning purification, Zakat is the act of giving a set percentage of your total wealth to charity each lunar year and is required of every sane, adult Muslim whose accumulated wealth exceeds the current Zakat nisab value.
Zakat is so much more than just giving to those in need; paying Zakat is an act of worship.
Considering all the different items and details that must be kept in mind when calculating Zakat, understanding the Zakat Nisab value, when to pay Zakat and who we can give it to, the whole process can be complicated. We are here to help, though; we have put together a brief guide around how to calculate Zakat, including the correct Zakat percentage of your wealth to be paid, and whether any Zakat tax is applicable in the UK.
What is Nisab?
Firstly – what is the nisab threshold? The Zakat nisab value is the minimum threshold required for an individual to be eligible to pay Zakat in that specific lunar year. Your total overall wealth must meet or exceed the nisab value in order for you to be eligible to pay Zakat.
The nisab value is directly related to the current values of gold and silver. In the Holy Qur’an, the nisab value is described as 612.36g of silver or 87.48g of gold. Originally, these values of silver and gold were equal but in the current day, they have become different, with the silver nisab being significantly lower than its gold counterpart.
You can calculate the nisab value at any given time by converting these weights into your local currency.
What is the Zakat Percentage? How to Calculate Zakat!
Your Zakat donation should amount to 2.5% of your total wealth accumulated over the year. As an example, if your total assets (after any debts owed) amounted to N4,000,000.00 (Four Million Naira Only), then you would be required to pay N100,000 as Zakat.
Also Read: Ramadan Guide For Women, During Menstruation and Postnatal Bleeding.
What is Zakat Due On?
When calculating your total wealth and assets, you must consider the following:
- The value of gold and silver items owned
- Money in your bank accounts or cash at home
- Loans that you have given out
- Pensions, stocks, shares and investments
- Property owned as an investment (excluding the property you live in)
- Farm and agricultural produce
You can use our Zakat calculator for gold, silver, cash and other assets to determine your overall wealth, and subsequently work out how much Zakat you need to pay. Please note that any debts you currently have outstanding, including any form of a loan, are ineligible for Zakat so they must be deducted from the overall total.
Zakat Rules on Tax in Nigeria
In Nigeria, tax can impact Zakat in a variety of different ways but there are Zakat rules to help guide you should you have any queries.
For most, personal taxes like road and income tax are not exempt from Zakat. The only exception to this is when the taxes being paid are overdue, in which case they become a deductible debt, though this is a rare situation.
For some, especially business owners, filling in UK tax returns is an important part of being self-employed. In this situation, many individuals will keep money in their bank specifically for when they fill in their tax returns. This figure being saved for tax is deductible from the Zakat total.
Paying your Zakat
Hopefully, you will now know exactly how much Zakat to pay and you are ready to make your payment. As an obligatory act of worship, your payment should go towards helping Zakat-eligible individuals, as decreed by the Prophet Muhammad (PBUH).
When to pay Zakat?
Zakat is typically based on a full lunar year, and as such, most Muslims pay this towards the end of the year. While this can be paid at any time, many choose to pay Zakat during Ramadan.
Who can we give Zakat to?
Zakat payments are divided between those most in need, as determined by the Holy Qu’ran:
- The poor
- The needy
- Travelers in need
- Those in debt
- Those being held against their will or in slavery
- New Muslims and friends of the Islamic community
- Those in the cause of Allah
Thanks for reading please share with friends and family.
Join Ebira Online Newsletter
Subscribe to our mailing list and get interesting stories and updates to your email inbox.
This is lovely
Thanks for your comment