ZAKAT ON SAVINGS
Zakat on savings is obligatory to be fulfilled when your savings account has met the minimum amount (Nisab) and you have held this minimum amount for a period of 1 Hijri year or 355 days (Haul). With this, you have met the conditions, Nisab and Haul, and you are obligated to fulfil Zakat on your savings account(s).
There are two types of Zakat on Savings:
- Zakat on Savings (Single Account)
- Zakat on Savings (Multiple Accounts)
CONDITIONS FOR ZAKAT ON SAVINGS
NISAB
Zakat is only a matter of obligation if your savings is above the Nisab (minimum amount). If your savings do not meet the Nisab, Zakat is not an obligation to you.
HAUL
Zakat is only payable if you have completed the Haul, which is a period of 1 Hijri year (355 days). For first-timers, your Haul period begins when your savings account first meets the Nisab. For recurring Zakat payers, Haul period begins from the last Zakat payment date.
If at any point, your savings fall below the Nisab, your Haul is broken.
ZAKAT ON SAVINGS EXAMPLE (COMPLETED HAUL)
ZAKAT ON SAVINGS EXAMPLE (BROKEN HAUL)
IF YOU HAVE ONE SAVINGS ACCOUNT
Look at all the balances of your account and find the lowest balance within that Haul period.
If the amount is below the Nisab, there is NO Zakat for that account. You do not have to proceed further. If the amount is more than Nisab, proceed to next step.
Zakat amount is:
Lowest balance × 0.025
IF YOU HAVE MULTIPLE SAVINGS ACCOUNT
Write down the dates and the lowest balances of each of the accounts that you own within the Haul period.
Add up the lowest amounts from each accounts according to months. For example, add up the lowest balances for March 2013 - February 2014.
Zakat amount is:
Combined Lowest Amount × 0.025
EXAMPLE (MULTIPLE SAVINGS ACCOUNTS)
The above table records, in blue, the lowest account balance for each account during the haul period and tracks the balance in other accounts on the same date to find the lowest total account balance at a specific point in time within the Haul period.
The lowest total account balance within the Haul period was $24,500 (April 2023).
Assuming that the Nisab is $7,000, Zakat is obligatory for these accounts.
The Zakat payable will be: $24,500 × 2.5% = $612.50
Note: We do not calculate by totalling the lowest amount in each account for accuracy purposes. If we did, based on the above example, it will be $4,500 ($1,000 + $2,000 + $500 + $1,000). This is not accurate because in fact, there wasn’t a point in time within the Haul period when the total account balance was $4,500.
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