How zakat on salary savings works
Nisab (silver) = 612.36 g × silver rate per gram
Nisab (gold) = 87.48 g × gold rate per gram
If wealth ≥ nisab for a lunar year: Zakat = Wealth × 2.5%
Zakat is not charged on salary as it is paid. It applies to the savings you hold once they have stayed at or above the nisab for a full lunar (Hijri) year. Most people pick a fixed date each year, often in Ramadan, and calculate on what they hold that day.
Gold or silver nisab?
The two classical thresholds are 87.48 grams of gold and 612.36 grams of silver. Silver is far cheaper per gram, so the silver nisab is a much lower bar and brings more people into giving. Many scholars recommend it for that reason, while others prefer gold for those whose wealth is held mainly as cash. Enter today's rate per gram, since gold and silver prices move daily.
What to include
- Include: cash, bank balances, fixed deposits, gold and silver (jewellery as per your school of thought), shares and mutual funds held for investment, and money others owe you that you expect to get back.
- Exclude: your home, personal car, household items and tools of your trade.
- Retirement funds: scholars differ on EPF and NPS, which you cannot freely withdraw. Many treat them as zakatable only once accessible.
Frequently asked questions
Is zakat paid on salary or on savings?
On savings: the part of your income that you have held at or above the nisab for a full lunar year.
What is the zakat rate?
2.5%, or one-fortieth, of zakatable wealth.
Which nisab should I use?
Both are valid; the silver nisab is lower and widely recommended so that more people give. Follow the guidance of a scholar you trust.
Is zakat deductible for income tax?
Zakat itself is not a tax deduction, but donations to eligible institutions registered under Section 80G can be deducted in the old regime.