The Zakat al-maal, or alms tax, is an annual tax on assets/goods and wealth (cash, precious metals, savings books, bank deposits, banking assets, crops and cattle, fees, bonuses, gratuities, inheritances and other revenues such as the lease of properties).
Land property, real-estate (if the properties aren’t being sold), home furniture, items of clothing, cars, mortgages and personal jewellery belonging to women are exempted from the Zakat al-maal.
The Zakat becomes due on the total value of assets if the aforementioned value stays above the Nisab (النصاب), or taxation threshold, for an entire lunar year. Therefore, the start date of the period is not fixed.
For the assets/goods to be subjected to the Zakat, two conditions must be met :
Let’s imagine that the threshold currently established by the Nisab (النصاب) is 2500 dollars.
- Threshold (Nisab النصاب): The value of one’s assets/goods must reach this threshold.
- Period: The value of one’s assets/goods must not go under the threshold during an entire lunar year (Hijri calendar).
On the first day, you possess 3,200 dollars. After a whole lunar year, you own 4,000 dollars. Over the entire time period, the value of your assets hasn’t gone under the threshold established by the Nisab.
After an entire lunar year, you must pay the following Zakat: 4,000 * 2.5 = 100 dollars
On the first day, you own 3,200 dollars. After a whole lunar year, you possess 4,000 dollars. During the eighth month of the year, the value of your assets falls to reach 2,200 dollars, while the Nisab is at 2,500 dollars. After ten months, the sum saved once again reaches the threshold.
At the end of the year, you must pay a Zakat of : 0 dollar
It is then necessary to start calculating again from the date (here, the tenth month) on which the value of your assets has reached the threshold established by the Nisab.