Your practical guide to calculating the nisab of gold and the obligatory Zakat on you

Zakat is a great Islamic obligation that Allah has imposed on His servants to purify souls and wealth and to achieve social justice. When it comes to gold as one of the most important forms of wealth, understanding the rulings of its Zakat becomes essential for every Muslim who owns this precious metal. Allah Almighty says: ﴿Establish prayer and give Zakat﴾, highlighting the significance of this obligation in Islam.

With increasing interest in gold as an investment and a means of preserving wealth, there is a growing need for precise knowledge of the Nisab of gold and the amount that must be given. This guide explains how to accurately calculate your Zakat, whether you own traditional gold or modern gold investments.

How much is the Nisab of gold upon which Zakat is obligatory?

The Nisab of gold is the minimum amount that, if you possess it and a full lunar year passes over it, Zakat becomes due on you. Jurists estimate this Nisab at 85 grams of pure gold (24 karat) based on the noble Prophet’s hadith.

However, if your gold is of lower karat, the Nisab varies:

The simple idea is: the lower the karat, the greater the weight needed to reach the legal Nisab.

How to calculate Zakat on gold with practical steps

The basic formula for calculating Zakat:

Zakat on gold = 2.5% × Total market value of pure gold

Calculation steps:

1) Determine your total gold weight

• Add up all your gold, whether bars or jewelry prepared for saving

2) Calculate the actual pure gold weight

• Multiply total weight × purity percentage according to the karat
• Example: 100 grams of 21-karat gold = 100 × 0.875 = 87.5 grams pure

3) Determine the market value

• Multiply the pure gold weight × market price per gram

4) Pay the Zakat

• Multiply the total value × 2.5%

Practical examples for calculation

Example with 24-karat gold:

Owning 100 grams of 24-karat gold, with a price of 400 Riyals per gram:

• Pure gold: 100 × 1 = 100 grams
• Total value: 100 × 400 = 40,000 Riyals
• Zakat due: 40,000 × 2.5% = 1,000 Riyals

Example with 21-karat gold:

Owning 100 grams of 21-karat gold, with a price of 400 Riyals per gram:

• Pure gold: 100 × 0.875 = 87.5 grams
• Total value: 87.5 × 400 = 35,000 Riyals
• Zakat due: 35,000 × 2.5% = 875 Riyals

Example with 18-karat gold:

Owning 100 grams of 18-karat gold, with a price of 400 Riyals per gram:

• Pure gold: 100 × 0.75 = 75 grams
• Total value: 75 × 400 = 30,000 Riyals
• Zakat due: 30,000 × 2.5% = 750 Riyals

Types of gold and their different Zakat rulings

1) Investment gold and bars

Gold purchased for saving or increasing capital is subject to full Zakat at 2.5%, agreed upon by scholars. This applies to bars, gold coins, and gold-backed investment funds (ETFs).

2) Jewelry used in daily adornment

Scholars differ here: the majority believe that no Zakat is due on jewelry used daily such as rings, bracelets, and necklaces, while Hanafi and some Maliki scholars hold that Zakat is obligatory on it. It is more cautious to pay Zakat on jewelry.

3) Non-material gold (ETFs and gold stocks)

Exchange-traded gold funds: Treated as direct ownership of gold, Zakat is paid on their market value at 2.5%.

Mining company shares: If purchased for speculation (quick sale), Zakat of 2.5% is paid on the value. If it is a long-term investment, Zakat is paid only on the profits.

Conditions for Zakat obligation on gold

Zakat is due on your gold only if all the following conditions are met:

✓ Ownership of Nisab: Your gold must be at least 85 grams of pure gold

✓ Passing of a lunar year: A full Islamic year must pass over owning this amount

✓ Full ownership: The gold must be fully owned by you without any doubt

✓ Puberty and sanity: You must be an adult and sane (Zakat is not obligatory on minors and the insane)

✓ No heavy debts: If you have debts exceeding your wealth, Zakat may be waived

Who is eligible to receive Zakat on gold?

Zakat on gold should be spent on eight categories specified by Sharia:

1. The poor: Those who do not have enough for their daily needs
2. The needy: Those with some wealth but insufficient
3. Zakat collectors: Those appointed to collect and manage Zakat
4. Those whose hearts are to be reconciled: People hoped to be guided or strengthened in faith
5. Slaves and captives: Supporting those seeking emancipation
6. Debtors: Those heavily burdened by debts
7. In the cause of Allah: Expenses for spreading religion and charity
8. The wayfarer: The stranded traveler

Categories prohibited from receiving Zakat

The wealthy: Zakat should not be given to those who are self-sufficient financially

Kafir (disbelievers): Zakat is not paid to other Muslims who are not among the categories above

Those whose expenses you are obliged to support: Parents, spouses, and children are supported from your wealth, not Zakat

Family of the Prophet: Islam exempts the family of the Prophet ﷺ from Zakat

Able-bodied but lazy: Those capable of working but neglecting to do so

When is Zakat due?

Zakat on gold becomes obligatory when a full lunar year passes over your ownership of the Nisab. It is recommended to pay it immediately upon completing the lunar year without delay. You can pay either in cash equivalent to its market value or in kind, from the gold itself.

Very important points

⚠ Remember: Do not pay Zakat until you are certain you have reached the Nisab

⚠ Do not calculate Zakat on newly purchased gold that has not completed a full year

⚠ Use actual market prices at the time of paying Zakat, not old prices

⚠ Zakat is one of the pillars of Islam and a religious duty that must be fulfilled

⚠ Consult a knowledgeable Islamic scholar if your situation is complex or you have specific questions

Frequently Asked Questions about Zakat on gold

Q: Is Zakat obligatory on girls’ jewelry?

A: No, Zakat is only obligatory on adults who are sane. Jewelry of minors is not subject to Zakat.

Q: What if I cannot pay Zakat on time?

A: You should pay it as soon as possible. Delaying without a valid excuse is sinful.

Q: Can I give Zakat to my poor relatives?

A: Yes, if they are truly poor and not among those you are obliged to support financially.

Q: How do I handle gold that is pawned or borrowed?

A: Borrowed gold is not Zakatable; the owner of the pawned gold should pay Zakat on it.

Q: Is Zakat due on gold gifts?

A: Yes, if they have been owned for a full year and reach the Nisab, they should be Zakatable like any other ownership.