Zakat on Savings, Gold and an Uncertain Loan
An airman asks for help calculating his zakat. He holds 500,000 in a savings account that has been untouched for fourteen lunar months. He owns 60 g of gold that he has held for two years. Two years ago he lent 80,000 to a cousin, who has stopped answering calls and whose repayment is genuinely in doubt. He has a credit-card balance of 150,000 that is due now. His monthly rent is 40,000. Assume a gold price of 12,000 per gram and a silver price of 100 per gram; the nisab is 87.48 g of gold or 612.36 g of silver, and the rate is 2.5%.
1. Calculate his zakatable wealth and the zakat due, treating the loan to the cousin as recoverable. State the nisab check.
Read the worked answer
Step 1 - value the assets.
- Savings: 500,000
- Gold: 60 g × 12,000 = 720,000
- Loan treated as recoverable: 80,000
- Gross: 500,000 + 720,000 + 80,000 = 1,300,000
Step 2 - deduct the debt due now. 1,300,000 − 150,000 = 1,150,000
Step 3 - nisab check (both standards).
- Silver nisab: 612.36 × 100 = 61,236
- Gold nisab: 87.48 × 12,000 = 1,049,760
1,150,000 exceeds both, so zakat is due.
Step 4 - zakat. 1,150,000 × 0.025 = 28,750
Note on rent. The 40,000 monthly rent is a living expense already met from income; it is not deducted from zakatable wealth. Only debts actually owed at the zakat date are deducted. Treating rent as a deduction would wipe out a large part of the obligation and is a common error.
2. How does the answer change if the loan is treated as doubtful, and what does the choice of nisab standard do to the result?
Read the worked answer
If the loan is doubtful. The widely held position is that a debt owed by an unreliable debtor is not counted in zakatable wealth while recovery is uncertain; zakat is paid on it for the year in which it is actually received. Recompute:
- Assets: 500,000 + 720,000 = 1,220,000
- Less debt: 1,220,000 − 150,000 = 1,070,000
- Zakat: 1,070,000 × 0.025 = 26,750
Difference between the two treatments: 28,750 − 26,750 = 2,000. That is the price of the judgement, and it is small enough that the choice should be made on principle, not on the money.
The nisab standard is the sharper issue. Against the silver nisab (61,236) the wealth is far above the threshold either way. Against the gold nisab (1,049,760) the figure of 1,070,000 clears it by only 20,240 - under 2% of the wealth. If one further debt of 25,000 came to light, the gold-standard calculation would drop below nisab and no zakat would be due, while the silver-standard calculation would still show a liability.
Judgement. Because the silver nisab is lower it captures more people, and many scholars prefer it for that reason. But it is a real choice, not an arithmetic detail, and on these numbers it flips the answer. The airman must be told which standard was used and why.
3. He held the savings for fourteen months and the gold for two years, and asks whether he may pay early. What do you tell him?
Read the worked answer
On the holding period. Zakat falls due when a full lunar year (hawl) passes over wealth that is above nisab at both the start and the end of that year. The savings at fourteen months and the gold at two years both clearly satisfy this - the extra months change nothing; there is no "extra" zakat for the surplus months. What matters is that the year has completed.
On paying early. Paying zakat in advance of the due date is permitted in the widely followed position, and is common practice where a person wants to discharge it in Ramadan. So the answer to his direct question is yes, he may pay early - but he must be clear whether he is paying this year's zakat early or settling last year's, which is a different and still outstanding obligation.
What to flag rather than answer. Two points exceed what can be settled from arithmetic alone and should be referred to a qualified scholar: (1) whether his 60 g of gold is investment bullion or jewellery in regular use, since the schools differ on jewellery; (2) which nisab standard his community follows. Present the calculation, name the two open points, and let him take the figures to that scholar. Giving a confident number on a disputed point is the failure mode here.