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Zakat – Case Study Example
May I request that a sample calculation be shared for illustration purposes for someone who earns salaried income, has stocks, investments in bonds, real estate plots for children’s education and marriage? Further, would like to clarify the application of zakat on balance sheet basis vs income statement basis. Ie 2.5% of annual cash and investment balance vs 10% on salary and then again 2.5% if the annual savings and idle cash+investments are above nisab?
From a balance sheet perspective 2.5% is paid till perpetuity so long the balance is above nisaab. Theoretically, this means 100,000 will get reduced by 2.5% each year if it stays idle in the account. Since all income will ultimately convert to savings could one use the balance sheet approach or is the hybrid of income and balance sheet approach the correct way?
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3 Replies
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Zakat – Case Study Example
updated 3 years, 7 months ago
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Replies
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Please play around with our Zakat Calculator and plug in any numbers you like in appropriate boxes. Each box has a detailed description of what goes in it. When you reach the end, it will generate a statement showing you exactly what percentage is applied to what and how much you owe.
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Sir Thanks. I have been using the calculator and it is very helpful. One aspect that I would like to clarify is regarding salary income which attracts 10% zakat in the first instance and then if there are any savings from that salary leads to wealth on the assigned day of zakat calc( assume above nisab). I have been using the wealth basis for zakat payment at 2.5% and nothing on the salary assuming that after expenditure the net savings are included in the zakat pool. I would like to confirm this because according to this I will need to treat gross income at 10% (offset by any taxes)and then wealth at 2.5% ( will include residual from zakat paid income). Please confirm if my understanding is correct.
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I think that you might be overthinking this. Quite simply, you owe 10% on your salary when you receive it. Then on the day your zakat is due once a year, you owe 2.5% on the current value of all of your assets, regardless of how you acquired them.
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