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Zakat On Savings
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Zakat on Savings
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Pay Zakat On Savings
Here is the amount of RM……. as I pay Zakat on Savings which is obligatory on myself /the party I represent for the year ………… in the name of Allah SWT
Zakat on Savings
Jumlah Minima: RM10
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Zakat On Savings Selangor
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Zakat On Savings Selangor
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Benefits of Paying Zakat
100% Individual Tax Rebate
Zakat payers will receive 100% tax rebates from the Inland Revenue Board of Malaysia (LHDN)
2.5% Business Tax Rebate
Zakat payers will receive a 2.5% tax rebate from the Inland Revenue Board (LHDN).
Directly To Selangor Zakat Board
Your zakat payment will go directly to the bank account of the Selangor Zakat Board, without passing through any other entity's account
Zakat Distributed To Asnaf
The collection of Zakat proceeds is directly channeled to the Asnaf groups in Selangor through the Selangor Zakat Board
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Benefits of Paying Zakat on Savings
100% Individual Tax Rebate
Zakat payers will receive 100% tax rebates from the Inland Revenue Board of Malaysia (LHDN)
2.5% Business Tax Rebate
Company will receive a 2.5% tax rebate from the Inland Revenue Board (LHDN).
Directly To Selangor Zakat Board
Your zakat payment will go directly to the bank account of the Selangor Zakat Board, without passing through any other entity's account
Zakat Distributed
To Asnaf
The collection of Zakat proceeds is directly channeled to the Asnaf groups in Selangor through the Selangor Zakat Board
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Zakat on Savings
Zakat is a form of mandatory charitable giving in Islam that is required of all Muslims who are financially able to do so. It is typically calculated as a percentage of a person’s wealth and is distributed to those in need, such as the poor, orphans, and widows.
In terms of zakat on salary or savings, it is important to note that zakat is only required on accrued wealth, including cash, investments, and savings that are above a certain threshold known as the “nisab.” The nisab is the minimum amount of wealth that a person must have at the end of the period of “haul”, typically a period of one year, before zakat is required. This threshold is based on the value of 85 grams of gold, and is currently set at approximately RM21,432 in 2022 in Malaysia. This amount is also equivalent to 595 grams of silver, for those who want to pay zakat on savings on silver items.
What Is Zakat On Savings
If you have savings that are above the nisab and are not being used for necessary expenses, such as food, shelter, and medical care, then these savings may be subject to zakat on salary or savings. The specific zakat percentage on savings that is applicable will depend on your financial situation and the guidelines of your particular school of Islamic thought, as well as your location of residence. It is generally recommended to consult with a qualified Islamic financial advisor or scholar to determine the correct amount of zakat that is required in your specific situation.
Savings zakat is charged on an individual’s savings but can also be applied to other objects that can be adopted in general in the business of buying and selling. Examples of these objects are gold or silver that can be used as currency. In fact, zakat on savings can also be charged on investments, shares held, savings bonds, and other types of savings. All these factors need to be included when calculating zakat on savings every year. If it meets the requirements of a form of savings, including savings in a bank or any financial institution, then it is required to be paid under zakat for savings.
Zakat on savings: Single vs Multiple accounts
Most savings that are over the nisab threshold are subject to zakat, including the following:
- Deposits in banks or financial institutions
- Monetary savings outside of financial institutions
- ASB savings
- Savings bonds
- Any shares in a company
- Long term investment
- Other types of savings such as gold and so on
All these types of savings need to be calculated for their total value to see if they reach the latest nisab value. If you have multiple accounts, the zakat percentage on savings is calculated based on the total value of all your wealth or savings combined, and not one by one according to each individual account. This means that the zakat on savings is taken as follows:
Savings balance in bank account + money saved at home + ASB savings + shares + long term investment + other savings, gold, wealth = More than RM24,007, then you are required to pay zakat on savings.
Meanwhile, there are also savings that do not need to be taken into account when making your savings zakat payment. Examples of this savings are savings in Tabung Haji and savings in Bank Islam accounts. This is because these institutions have already issued zakat on your behalf. Therefore, you need to know and make sure which accounts should be subject to zakat on savings every year and which do not have to be taken into account.
For zakat payers who calculate the haul according to the Gregorian calendar instead of the Islamic calendar, you need to know that the rate recommended by the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) is 2.577%. This is because the duration of one year in the Gregorian or conventional calendar is longer than the duration of a year according to the Islamic Hijri year calendar. However, the discrepancy isn’t a lot so it shouldn’t be a problem which calendar you choose to follow as your haul baseline.
Zakat On Savings Calculations
If your savings reaches the nisab rate, the amount of how much to pay zakat on savings is 2.5% of your savings amount. This is based on the hadith which states that Ali narrated that the Messenger of Allah (SAW) said:
“When you possess two hundred Dirhams at the end of the year (if you still have all of them), five Dirhams are levied on them as Zakat. There is nothing upon you (to be paid) in gold, until it reaches (the value of) twenty Dinars. When you possess twenty Dinars, at the end of the year, then there is half a Dinar levied on it (as Zakat). Any additional amount will be calculated in the same manner. No Zakat is to be paid on monetary holdings, until they have been owned for one year.” [Abu Dawud]
For example, if your total savings from all savings sources amount to RM25,000, the calculation of the compulsory zakat rate on savings is as follows:
2.5% x RM25,000 = RM550
Therefore, the amount of savings zakat that must be paid that year is as much as RM625.
If you’d like to calculate your zakat on saved money at the end of the haul, use our calculator here. You can also opt to pay online by filling out the form on the page as an easy way to fulfill your obligations of paying zakat on saved money.