Zakat on Cash Guide – How to Calculate & Pay 2.5%
Calculate your Zakat obligation on cash, savings, and liquid assets according to Islamic principles
Your Zakatable Assets
What is Zakat?
Zakat is one of the Five Pillars of Islam - an obligatory charity on wealth that has been in possession for one lunar year and exceeds the Nisab threshold.
Zakat Rate:
2.5% (1/40) of total zakatable wealth
Nisab Threshold:
- Gold Nisab: Value of 87.48 grams of gold
- Silver Nisab: Value of 612.36 grams of silver (recommended as it benefits more poor)
Zakatable Assets Include:
- Cash on hand and in bank accounts
- Savings and investments
- Stocks, bonds, and shares
- Gold and silver (jewelry worn daily may be exempt)
- Business inventory and trade goods
- Money owed to you (receivables)
Conditions for Zakat:
- Wealth must exceed Nisab threshold
- Must be in possession for one lunar year (Hawl)
- Must be in excess of basic needs
- Must be productive/increasing wealth
Who Can Receive Zakat?
- The poor (Al-Fuqara)
- The needy (Al-Masakin)
- Zakat administrators
- New Muslims and those whose hearts are to be reconciled
- Those in bondage/slavery
- Those in debt
- In the cause of Allah
- Travelers in need
Note: This calculator provides an estimate. For precise calculations and rulings, please consult with a qualified Islamic scholar. Exchange rates are approximate and should be verified with current rates.
At Digital Calculator, we believe clarity and correctness are essential in fulfilling your religious obligations. Zakat on cash is one of the foundational acts of worship in Islam. This page guides you through the meaning, calculation, examples, and common questions about paying Zakat on your cash holdings.
What Is Zakat on Cash?
Zakat (alms-giving) is one of the Five Pillars of Islam and is a duty upon eligible Muslims to give a portion of their wealth to specified beneficiaries. Cash—and its equivalents—is among the categories of wealth upon which Zakat is due, provided certain conditions are met.
Key principles:
- Zakat is only obligatory if one’s net zakatable wealth meets or exceeds the nisab thresholdOne must possess the wealth for a full lunar year (known as ḥawl) for it to be subject to Zakat.
- The standard rate applied is 2.5% (i.e. one quarter of one tenth) of the total eligible cash.
When we speak of “cash,” this includes:
- Currency on hand (in your pocket, safe, etc.)
- Bank balances (savings, checking)
- Money owed to you (receivables)
- Liquid equivalents (some consider certain investments, retirement funds, etc., depending on access)
However, not all debts or liabilities are deducted. Only those due in the near term or obligations you must pay before or at the Zakat due date are typically deductible.
Formula & Breakdown
We express the calculation in simple, copy-safe formula form below:
Let:
- Total_Cash = sum of all your cash & liquid equivalents
- Deductible_Debts = debts/commitments you must pay by or at your Zakat date
- Net_Cash = Total_Cash − Deductible_Debts
If Net_Cash ≥ Nisab, then:
Zakat_on_Cash = Net_Cash × 0.025
That is, 2.5% of the net cash amount.
Step-by-Step Worked Example
Let’s walk through an example to see how this is applied in practice.
Example: Ahmad’s Zakat Year
- Total Cash & Receivables
- Money in his bank accounts: 300,000 PKR
- Cash at home: 25,000 PKR
- Sum total = 325,000 PKR
- Deductible Debts / Liabilities
- He must pay a utility bill of 10,000 PKR before the Zakat date
- A short-term loan repayment due: 15,000 PKR
- Total deductions = 25,000 PKR
Net Cash
Net_Cash = 325,000 − 25,000 = 300,000 PKR
Check Against Nisab
Suppose the Nisab (based on silver) in PKR is ~ 100,000 PKR (for illustration). Because 300,000 ≥ 100,000, Ahmad is obliged to pay Zakat.
Compute Zakat
Zakat_on_Cash = 300,000 × 0.025 = 7,500 PKR
So Ahmad’s Zakat due on his cash holdings is 7,500 PKR for that year.
Table: Zakat Calculation Comparison
Component | Value (PKR) |
Total Cash & Receivables | 325,000 |
Deductible Debts | 25,000 |
Net Cash | 300,000 |
Nisab Threshold | ~100,000 |
Zakat Rate | 2.5% |
Zakat Owed | 7,500 PKR |
Special Considerations & Variations
1. Which Nisab to Use: Gold or Silver?
There are two common standards for Nisab:
- Gold-based Nisab (≈ 85 grams of gold)
- Silver-based Nisab (≈ 595 grams of silver)
Many scholars advise using the silver-based nisab when giving more charity is preferred, because it is the lower threshold
2. Haul (One Full Lunar Year)
If your cash dipped below the Nisab during the year but was above at the Zakat date according to your school of thought, you may still be liable (depending on your madhhab).
3. Multiple Bank Accounts / Savings
You may have multiple accounts. Some schools ask you to track the lowest balance combined across accounts on a single date during the year and apply Zakat on that lowest aggregated point
4. Retirement Plans, Investments, Crypto
If funds are illiquid or locked (e.g., in retirement accounts), you may only include the portion you can access. Similarly, for stocks or crypto, some scholars treat them like cash equivalents and include their market value.
5. Debts That Are Not Deductible
Some debts are not deducted—those which are not due yet, or long-term obligations without a due date near the Zakat date.
Why Use Digital Calculator’s Zakat Tools?
- Accuracy & Ease — Automatically handle complex sums, currency conversions, and permittable deductions.
- Transparency & Trust — We follow Shariah-aligned methodology and provide audit trails.
- Time Saving — Instead of scribbling in spreadsheets, get your result in seconds.
- Peace of Mind — Fulfill your obligation confidently knowing your Zakat is correct.
Calculate your Zakat on cash now using the Digital Calculator Zakat Tool and fulfill your obligation with confidence.
Whether you’ve got bank balances, savings, or funds lent out—don’t leave uncertainty. Use our tool now and give with clarity.