Everything You Need to Know About Gold Zakat: The Practical Guide

If you own gold, there is a religious and economic question that must come to your mind: Do I owe Zakat on this gold? The answer depends on several factors, but let us simplify it for you in a practical and clear way.

Why is Zakat on gold important?

Zakat is not just a religious obligation; it is a social and economic mechanism for wealth distribution. When you pay Zakat on your gold, you purify your wealth from doubts and increase its blessing, while also contributing to meeting the needs of the poor and needy. The Prophet ﷺ warned strongly against neglecting the rights of the poor in gold and silver, and his warning was clear and firm.

When do you become the owner of the Nisab?

The Islamic minimum threshold (Nisab) for gold starts from 85 grams of pure gold (24-karat). But if you own gold of other karats:

• 21-karat: Nisab is approximately 97 grams
• 18-karat: Nisab is approximately 113 grams

It is important to know that the Nisab is calculated based only on pure gold, so if you have jewelry mixed with different karats, you need to calculate the actual purity.

Conditions for Zakat obligation on gold

Not all gold you own requires Zakat. There are three conditions:

1. Reaching the Nisab: Owning 85 grams or more of pure gold

2. Passing a lunar year: One full Hijri year passes since you owned the Nisab. If you buy new gold today, Zakat is not due until a full year passes

3. Complete ownership: The gold must be solely yours, without debts or financial commitments

The difference between ornamental gold and savings/investment gold

Here is an important distinction that many get confused about:

Ornamental gold (daily jewelry): Most scholars exempt jewelry used for regular adornment from Zakat, whether rings, bracelets, or necklaces worn daily. However, there is a difference of opinion, and the Hanafi school considers Zakat obligatory even on jewelry used for adornment.

Savings and investment gold: Zakat is obligatory by consensus. Gold bars, gold coins, exchange-traded funds (ETFs), mining company shares—all of these are subject to Zakat at 2.5% of their market value.

How to easily calculate Zakat on gold?

The formula is very simple:

Zakat on gold = 2.5% × Market value of pure gold

Practical example: You own 100 grams of 24-karat gold, with a market price of 400 SAR per gram:

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

If you have 21-karat gold (purity 87.5%):

• Pure gold = 100 × 0.875 = 87.5 grams
• Value = 87.5 × 400 = 35,000 SAR
• Zakat = 35,000 × 2.5% = 875 SAR

What about modern gold investments?

Yes, gold funds and mining shares are also subject to Zakat:

• Gold funds backed by actual metals: Zakat is calculated on the full market value at 2.5%
• Mining company shares: If you hold them for trading (quick sale), Zakat is on the full value. If held for long-term investment, only the profits may be subject to Zakat

Who deserves Zakat on gold?

Zakat should not be given to anyone you wish, but to eight categories specified in the Quran:

The poor and needy, those collecting Zakat, those whose hearts are to be reconciled, freeing captives, those in debt, in the cause of Allah, and the traveler. The wealthy, disbelievers, your household members you spend on, and those capable of working but lazy—do not deserve Zakat.

Common mistakes in Zakat on gold

First mistake: Delaying paying Zakat after it becomes due. Once the lunar year completes, it must be paid immediately

Second mistake: Reducing weight or price to evade Zakat. This is forbidden deception

Third mistake: Giving Zakat to loved ones who do not deserve it. Zakat has specific eligible recipients only

Fourth mistake: Paying Zakat from unlawful or Riba-involved money. Zakat does not purify unlawful wealth

Summary

Zakat on gold is obligatory for those who own 85 grams or more of pure gold, and a full Hijri year has passed since ownership. The due rate is 2.5% of the market value. The rulings differ between ornamental gold and savings/investment gold, but gold savings and investments without doubt require Zakat. Pay your Zakat when it becomes due, and choose the rightful recipients carefully, as this is one of the pillars of your religion and a means to purify your wealth and increase its blessing.