A Practical Guide to Calculating Gold Zakat: Everything You Need to Know

Zakat is one of the five pillars of Islam, and it is a financial obligation that purifies both wealth and soul. When it comes to gold in particular, understanding the correct rulings regarding its Zakat becomes essential for anyone who owns this precious metal, whether it is saved for future use or used for adornment. In this guide, we will focus on practical aspects of calculating gold Zakat in a straightforward and clear manner.

Minimum Nisab for Zakat: Understanding the Gold Threshold

The nisab of gold is the minimum amount upon reaching which Zakat becomes obligatory. Scholars have estimated it at 85 grams of pure gold (24 karat). This amount is not optional but is based on the directives of the Prophet ﷺ, which set clear standards for financial obligation.

If you own less than this amount, there is no Zakat due. But if your ownership reaches the nisab and a full lunar year (hilaal) passes over it, then Zakat becomes obligatory upon you.

This applies to all forms of gold: bars, coins, jewelry kept for savings, or even digital investments like gold ETFs (ETFs).

How to Calculate Zakat: The Basic Formula

The calculation is simple and easy to apply:

Gold Zakat = 2.5% × Market value of pure gold

This percentage is fixed and does not change, and the market value is calculated based on the price per gram on the day you intend to pay Zakat.

Practical application based on gold purity

Gold traded in markets varies in purity. Here’s how to handle each purity:

24K (Pure gold 100%): If you own 100 grams of 24K gold, and the market price per gram is 400 SAR, then:

• Pure weight = 100 × 1 = 100 grams
• Total value = 100 × 400 = 40,000 SAR
• Zakat = 40,000 × 2.5% = 1,000 SAR

21K (87.5% pure gold): Same amount (100 grams) of 21K:

• Pure weight = 100 × 0.875 = 87.5 grams
• Total value = 87.5 × 400 = 35,000 SAR
• Zakat = 35,000 × 2.5% = 875 SAR

18K (75% pure gold): 100 grams of 18K:

• Pure weight = 100 × 0.75 = 75 grams
• Total value = 75 × 400 = 30,000 SAR
• Zakat = 30,000 × 2.5% = 750 SAR

Note that in the last example, the amount does not reach the nisab (75 grams pure < 85 grams), so no Zakat is due.

Quick table for gold nisab based on purity

Who is Responsible for Paying and Who Deserves Zakat

Who must pay gold Zakat?

Zakat is obligatory on every Muslim or Muslimah who meets three conditions:

1. Puberty and sanity (No Zakat on minors or the insane)
2. Ownership of the legal nisab of gold
3. A full lunar year ###hilaal### passes over the ownership

( Who is eligible to receive gold Zakat?

Allah the Almighty has specified eight categories to whom Zakat may only be given:

1. The poor and the needy: Those who cannot meet their basic needs.

2. Zakat collectors: Officials responsible for collecting and distributing Zakat, who are entitled to their wages from Zakat even if they are wealthy.

3. Those whose hearts are to be reconciled: People given to strengthen their faith or to gain their favor for Islam.

4. Those in debt and slaves: Those seeking emancipation or burdened by debts they cannot pay.

5. Those in hardship (Gharimeen): Those overwhelmed by debts and unable to pay.

6. In the cause of Allah: To spread religion and defend the Muslim community.

7. The wayfarer: The traveler in need who has lost access to their wealth.

8. Non-Muslims in specific cases: Only those whose hearts are to be reconciled.

) Who does not deserve Zakat?

There are specific groups who should not be given Zakat:

• Ahl al-Bayt (the Prophet’s family) and Banu Hashim (They have their own wealth from the Bayt al-Mal)
• Those capable of working but lazy
• The wealthy and those able to earn
• Disbelievers (except those whose hearts are to be reconciled)
• Parents, spouses, and children ###Their expenses are paid from personal wealth, not Zakat(

Types of Gold and Different Zakat Rulings

) Gold for trade and investment

If the gold is intended for sale or investment, Zakat is obligatory by consensus. This includes:

• Stored bars for sale
• Gold purchased with profit in mind
• Gold ETFs ###ETFs(
• Shares of gold mining companies

Zakat is calculated on the full value at 2.5% when the lunar year completes.

) Gold jewelry for personal adornment

Scholars differ on this type:

Majority (Malikis, Shafi’is, Hanbalis): Jewelry used daily for adornment ###rings, bracelets, necklaces( does not have Zakat, as it is for use, not savings.

Hanafi: Zakat is obligatory on all gold jewelry even if used for decoration.

Another opinion among Malikis: Zakat is paid only once at the time of purchase.

) Gold for men

It is forbidden for men to wear gold jewelry, but this does not exempt them from Zakat. If a man owns gold in any form ###saved or kept without wearing###, and it reaches the nisab and a full lunar year passes, Zakat remains obligatory.

Conditions and Shariah Regulations

To ensure the validity of Zakat payment, several controls must be observed:

No delay: Once Zakat becomes due, it must be paid immediately upon completing the lunar year. Delaying without a valid excuse is sinful.

No deception: It is not permissible to reduce the weight or price of gold dishonestly to evade Zakat.

Not deducting from old debts: Zakat is not waived by old debts owed to the poor; it must be paid from new wealth.

Sincerity of intention: Zakat given for show or boasting is not accepted; it must be solely for Allah’s sake.

Not paying from forbidden wealth: Gold mixed with unlawful money or usury cannot have Zakat paid on it.

Not favoring non-eligible recipients: It is not permissible to give Zakat to relatives or friends as a favor if they are not among the eligible categories.

No coercion or barter: Zakat should not be linked to worldly favors or services from the recipient.

Common Practical Questions

What if I buy new gold?

If you purchase new gold, Zakat is not due until a full lunar year passes from the time of purchase. But if you already own old gold, the new gold is added to it, and the lunar year is counted from the date you acquired the old gold.

( Is it necessary to pay Zakat in cash or can I pay in gold?

Either option is permissible: you can pay in the form of the gold itself or pay its equivalent in cash at the market price on the day of payment.

) What about gold ETFs and stocks?

Yes, Zakat is obligatory on them:

• Gold-backed index funds: Treated as direct ownership of gold, and Zakat is 2.5% of the market value.
• Mining company shares: Zakat is calculated based on intent. If for quick sale ###trading###, Zakat is on the full value 2.5%. If for long-term investment, Zakat is only on the profits.

( How do I calculate Zakat on gold investment profits?

Combine the principal and profits, then pay 2.5% of the total when the lunar year completes. If you own mining shares that do not represent direct ownership of gold, pay 2.5% only on the realized cash profits.

) Are there any exceptions to paying Zakat?

There are no genuine Islamic exceptions. However, some scholars exclude jewelry used daily by women, which is a known difference among schools.

The True Benefits of Paying Zakat

Paying Zakat on gold is not just a financial obligation in theory but a real process with practical and spiritual effects:

Purification of wealth and soul: Zakat purifies wealth from doubts and removes greed from the heart.

Real Barakah: The wealth on which Zakat is paid remains blessed and continues to grow.

Social justice: Distributing wealth from the rich to the poor reduces disparities and social tensions.

Community bonding: Zakat fosters genuine solidarity among Muslims.

Hereafter reward: Giving Zakat sincerely brings the servant closer to Allah and multiplies their good deeds.

Practical Summary

The nisab of gold for Zakat starts at 85 grams of pure gold, and 2.5% of its market value is paid after a full lunar year. Zakat covers all types of gold bars, saved jewelry, investments, and is paid to eight specific categories mentioned in the Qur’an. Adhering to these rulings ensures the validity and acceptance of the worship, fulfilling its great goals of purifying wealth and soul together.