Guidelines

Zakat on gold and silver Zakat is due on gold, once gold reaches the quorum of twenty mithqals, (85 grams of pure gold). Zakat is due on silver, once silver reaches the quorum of 200 Islamic dirhams (595 grams of pure silver). If the gold or silver reaches the aforementioned quorum, then it is subject to Zakat. Hereby, a Muslim individual must pay a quarter of a tenth of it or of its value (2.5%). As narrated by Ali ibn Abi Talib, the Prophet said: “When you possess two hundred dirhams and one year passes on them, five dirhams are payable. Nothing is incumbent on you, that is, on gold, till it reaches twenty dinars. When you possess twenty dinars and one year passes on them, half a dinar is payable. Whatever exceeds, that will be reckoned properly” [Narrated by Abu Dawud] Ali also narrated the following: Prophet Muhammad (peace and blessings of Allah be upon him) said: (I have given exemption regarding horses and raqiq; with regard to coins ( ): however, you must pay a dirham for every forty (dirhams), but nothing is payable on one hundred and ninety. When the total reaches two hundred, five dirhams are payable.) [Narrated by Abu Dawud] Raqiq is silver. The owner of gold or silver shall calculate the value of a gram on the day Zakat is due, then multiply it by the number of grams, to establish the value of the gold or silver he owns on the day Zakat is due. Then, the result shall be divided on forty to receive the value required to be paid: Quarter of a tenth. First Equation: The price per gram on the day that Zakat is due × the number of grams owned by the Zakat payer = the value of gold or silver that he owns. Second Equation: The price of gold or silver that he owns ÷ 40 = due Zakat. For example: Khaled buys 150 grams of gold on Rabi` al-Akhir 4 1443 AH. On Rabi` al-Akhir 5 1444 AH he must pay Zakat. If the price of a gram of gold on Rabi` al-Akhir 5 1444 AH is 70 riyals, Zakat shall be calculated as follows: The number of grams (150) × today’s price per gram (70) = (the full value of gold according to today’s price) 10,500 riyals. Due Zakat - a quarter of a tenth - is calculated by dividing the full price of gold according to the price on the day that Zakat is due (10,500 riyals) ÷ 40 = 262.5 riyals, so 262.5 riyals will be given to the poor. 3.2.1 Zakat on gold mixed with other metals If gold is mixed with other metals, the foreign metals must first be extracted from it, then its Zakat is calculated. The following equation can be followed: (Weight of gold × type of karat × price per gram (on the day Zakat is due) × 2.5%) ÷ 24 3.2.2 Zakat on jewelry intended for use or lending Zakat is not due on jewelry intended for personal use or lending, Prophet Muhammad said: (Zakat is not due on jewelry) [narrated by Tabarani], because by using it, it is no longer intended for growth, and it has become another property on which Zakat is not due, such as clothes, cars, and houses. But if it is not intended for personal use or lending, such as trading in it, renting it, or saving it to sell it when needed without using it, then Zakat shall be obligatory on it, because the basic principle is that Zakat is obligatory on gold and silver, but such obligation is relinquished for jewelry that is intended for personal use or lending. 3.2.3 Zakat on precious stones Zakat is not due on precious stones, such as diamonds, no matter how valuable they are, because they are not cash, they are neither gold nor silver, nor can they take be their equivalent such as banknotes. They are often intended for personal use, unless they are offered for trade, in which case, Zakat is due. Ibn Abdulbar said: (They unanimously agreed that Zakat may not be due on precious stones such as gems, pearls or amber free of gold or silver, unless it is for trade.)