Zakat: The Obligation in Plain Terms
Zakat is 2.5 percent of your net zakatable wealth held above the nisab threshold for one full lunar year. It is the fourth pillar of Islam and a duty on every adult Muslim whose qualifying assets exceed the threshold, not a tax on income.
The key distinction is wealth versus earnings. Zakat is charged on what you hold — savings, gold, investments, business goods — not on what you earn each month. A high earner who spends everything owes little; a modest earner who accumulates savings owes more.
The one-year condition, called Hawl, means your wealth must sit above nisab for a full Islamic (lunar) year before Zakat is due. You pick a fixed date in the Islamic calendar and assess your wealth on that date each year.
Your next action: choose a fixed Islamic-calendar date as your annual Zakat day, then read the next section to find whether your wealth crosses the nisab threshold. Our Zakat calculator does the maths once you know your assets.
The Nisab Threshold — 2026 Values
Nisab is the minimum wealth at which Zakat becomes due, and there are two standards: gold and silver. The gold nisab is 87.48 grams of gold; the silver nisab is 612.36 grams of silver. You multiply the weight by the current metal price to get the threshold in dirhams.
As of July 2026, the gold nisab is roughly AED 41,500 (87.48g at about AED 474 per gram) and the silver nisab is roughly AED 4,226 (612.36g at about AED 6.90 per gram). Because metal prices move, these figures change through the year — always use a live price.
Which standard should you use? The silver nisab is lower, so it captures more people and results in more Zakat paid, which many scholars consider the safer, more charitable choice; the Hanafi school uses silver. Many modern institutions use the gold standard as more reflective of today's wealth. Both are valid — pick one and be consistent.
Your next action: our Zakat calculator fetches live gold and silver prices automatically, so you do not have to track them yourself. Confirm which nisab standard you follow, then check whether your total net wealth sits above it.
What Assets Are Zakatable
Zakat applies to wealth that grows or can grow: cash, gold and silver, business inventory, receivables, and investments. It does not apply to assets you use for living — your home, your car, and your everyday tools of trade.
Cash in every form counts: bank balances, cash on hand, and money in digital wallets. Gold and silver are zakatable whether coins, bars, or (per most scholars) jewellery. Business inventory is valued at cost, and receivables — money genuinely owed to you and likely to be recovered — are included. Shares and investments are zakatable on their market value.
Excluded assets are those held for personal use. Your primary residence, your personal vehicle, furniture, and the tools you work with are not zakatable. Personal jewellery is debated, and the Hanafi school does apply Zakat to it, which we cover below.
Your next action: use the table below to sort every asset you own into zakatable or not, then total the zakatable side. That total, minus short-term debts, is the figure you check against nisab.
| Asset type | Zakatable? | How calculated | Notes |
|---|---|---|---|
| Cash (bank + hand) | Yes | Full balance | Includes digital wallets |
| Gold & silver | Yes | Weight × current price | Investment gold always; jewellery debated |
| Business inventory | Yes | At cost price | Stock held for sale |
| Receivables | Yes | Amount likely recoverable | Money genuinely owed to you |
| Shares & investments | Yes | Market value | Long-term holdings included |
| Primary residence | No | — | Home you live in |
| Personal vehicle | No | — | Not held for trade |
| Personal jewellery | Depends | Weight × price (if applied) | Hanafi: yes; other schools: no if for use |
How to Calculate Your Zakat — Step by Step
Calculating Zakat is five steps: list zakatable assets, subtract short-term debts, confirm you exceed nisab, confirm the one-year Hawl, then multiply by 2.5 percent. Follow them in order and the number is straightforward.
First, add up all zakatable assets — cash, gold, investments, business goods, receivables. Second, subtract zakatable liabilities: debts due within the year, such as this year's short-term loan repayments. Long-term debt like a full home mortgage is not deducted, only the portion due this year at most.
Third, check the net figure is above nisab. Fourth, confirm the wealth has been held for one lunar year. Fifth, multiply the net zakatable wealth by 2.5 percent. Worked example: AED 300,000 in savings, AED 50,000 in gold, AED 30,000 in short-term debt, and a long-term home mortgage that is not deducted. Zakat = (300,000 + 50,000 − 30,000) × 2.5% = AED 8,000.
Your next action: enter your own figures into our Zakat calculator, which applies these five steps and the live nisab automatically. Keep a simple record each year so your Hawl date and asset list stay consistent.
Business Zakat
Business owners pay Zakat on the business, not just their personal wealth. Sole traders and company owners assess their trading assets each year, and there are three main methods scholars accept.
The working-capital method takes current assets minus current liabilities and applies 2.5 percent — this is what most UAE scholars recommend for small and medium businesses. The net-invested-capital method works from adjusted equity. The zakatable-assets approach charges Zakat only on receivables and inventory. Choose one method and apply it consistently.
Company structure does not create an exemption. A free-zone company follows the same Zakat rules as a mainland one — Zakat is a personal-religious duty of the Muslim owners on their share of the business, regardless of licence type or corporate tax status.
Your next action: for an SME, use the working-capital method — current assets minus current liabilities, times 2.5 percent — and run the total through our Zakat calculator. Keep it separate from your corporate tax filing, which is a different obligation.
Gold and Jewelry — The Contentious Topic
All four Sunni schools agree that pure investment gold is zakatable; they disagree only on jewellery worn regularly. This is the single most-asked Zakat question in the UAE and South Asian community, so it is worth understanding clearly.
For jewellery in personal use, the Hanafi school — the tradition most common among UAE and South Asian Muslims — treats it as zakatable. The Shafi'i, Maliki, and Hanbali schools generally do not charge Zakat on jewellery kept for personal wear. Investment gold, held to store value, is zakatable in every school.
The calculation is on the actual gold weight, not the retail price you paid, which includes making charges. A 22-karat piece is valued on its pure-gold content, so a hallmark 24k gram is worth more zakatable value than a 22k gram of the same weight.
Your next action: if you are unsure which ruling applies to you, follow the Hanafi standard and include your jewellery — the safer, more cautious side — or consult a local scholar. Value it by weight and karat, not by shop price.
Where to Pay Zakat in UAE
The UAE Zakat Fund (zakatfund.gov.ae) is the official government channel and the simplest way to pay Zakat correctly in the Emirates. It collects and distributes Zakat to eligible recipients and issues receipts, and corporate Zakat paid through it can carry tax-deduction benefits for UAE companies.
Other trusted routes exist. Established initiatives such as the Mohammed Bin Rashid Al Maktoum Global Initiatives channel funds transparently. Local mosques distribute to deserving people in your community, and registered international humanitarian organisations reach the global poor.
On payment, Zakat must be paid in full — it is not a subscription you split into partial instalments and call complete. You may prepay Zakat before your Hawl date, and you may spread distribution across recipients, but the full 2.5 percent obligation for the year must be discharged.
Your next action: pay through the UAE Zakat Fund for a clean, documented channel, or split your Zakat between a local mosque and an international charity if you want both community and global impact. Keep the receipt for your records.
Fidya, Kaffarah, and Sadaqah — What's Different
Zakat is one of several Islamic financial duties, and confusing it with the others is common. Fidya, Kaffarah, Sadaqah, and Zakat al-Fitr each answer a different situation and are not interchangeable.
Fidya compensates for fasts you could not make up due to lasting illness or age, at roughly AED 15 to 30 per missed day in 2026. Kaffarah is a heavier expiation for deliberately breaking a fast or an oath — traditionally 60 consecutive days of fasting or feeding 60 poor people.
Sadaqah is voluntary charity with no fixed amount, given any time for reward. Zakat al-Fitr is obligatory on every Muslim before the Eid al-Fitr prayer, set as the value of a staple food for one person — around AED 20 to 30 per head in the UAE for 2026 per local scholars.
Your next action: pay your Zakat al-Fitr before the Eid prayer for your whole household, handle any Fidya or Kaffarah separately as those situations arise, and treat Sadaqah as extra giving on top — none of these replaces your annual Zakat.