Types of wealth on which zakat is imposed: 1) Gold and silver, in any form. 2) Cash, bank notes, stocks, bonds etc. 3) Merchandise for business, equal to the value of Nisaab. 4) Livestock. 5) On income derived from rental business. Calculation of zakat: Zakat takes the form of a prescribed contribution based on a persons wealth and income. The rate of contribution varies with the kind of property owned but, on an average, works out to two and half percent of the total value. To calculate Zakat on jewellery etc. one must first determine the gold or silver content and then calculate the Zakat according to current market price. If the Gold possessed is less than 87.48 grams or if silver possessed is less than 612.36 grams, but the value of both combined is equal to or exceeds the Nisaab of either Gold or Silver, the Zakat will be due. For stocks (shares held in a company), Zakat is calculated based upon the current market value. As machinery, land, fixtures and fittings, furniture, buildings etc. are exempt from Zakat; one is allowed to subtract these from the total asset. This could be obtained from annual reports. For example, if one has shares worth $1000 and machinery, land etc., are worth 5% of the total asset, then deduct $50 for these assets; afterwards deduct the liabilities of the company proportionately to the percentage of shares held. Zakat must be calculated on the balance.
Posted on: Sun, 14 Sep 2014 11:33:03 +0000