Zakat on Gold: Coins, Bars, Ingots & Valuation Rules

Introduction

Gold is historically the primary standard of Zakatable wealth. In Islamic Shariah, gold in all its physical forms is subject to Zakat if its weight reaches or exceeds the Gold Nisab threshold.

In Fatawa Razawiyyah (Volume 10) and Bahar-e-Shariat (Part 5), Aala Hazrat Imam Ahmad Raza Khan (رحمه الله عليه) provided comprehensive rulings on calculating Zakat on gold bullion, coins, bars, ingots, and gold items of varying purities.

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Section 1: Gold Nisab & Obligation Rate

1. Gold Nisab Threshold

• Traditional Weight: 7.5 Tolas (7 تولہ 6 ماشہ)
• Shar'i Weight: 20 Shar'i Mithqals
• Metric Weight: 87.48 Grams (pure gold content)

2. Zakat Rate

• 2.5% (1/40th) of the total pure gold weight OR its current monetary market value.

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Section 2: Forms of Gold Subject to Zakat

Zakat is obligatory on gold regardless of its form or purpose:

1. Gold Bullion Bars & Ingots: Investment grade 24K bars.
2. Gold Coins: Sovereign coins, Krugerrands, gold dinars, commemorative coins.
3. Raw Gold: Unrefined gold, nuggets, gold dust.
4. Gold Ornaments & Jewelry: Personal, inherited, or stored gold jewelry.
5. Gold Scrap & Fragments: Broken or unformed gold pieces.

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Section 3: Understanding Gold Purities (Karats)

Gold items are rarely 100% pure; they are alloyed with metals like copper or silver to add strength. Shariah evaluates Zakat based on pure gold weight.

Karat Purity Percentage Breakdown:

• 24 Karat (24K): 99.9% Pure Gold (Factor: 1.000)
• 22 Karat (22K): 91.67% Pure Gold (Factor: 0.9167)
• 21 Karat (21K): 87.50% Pure Gold (Factor: 0.8750)
• 18 Karat (18K): 75.00% Pure Gold (Factor: 0.7500)

How to Calculate Pure Gold Weight:

$$ ext{Pure Gold Weight} = ext{Total Item Weight} imes \left(rac{ ext{Karat}}{24} ight)$$

#### Example Calculation: If a person owns 100 grams of 18K gold: $$ ext{Pure Gold Weight} = 100 imes \left(rac{18}{24} ight) = 100 imes 0.75 = 75 ext{ grams of pure gold}$$

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Section 4: Valuation Method according to Aala Hazrat

In Fatawa Razawiyyah (Volume 10), Aala Hazrat (رحمه الله عليه) outlines two valid methods for discharging Zakat on gold:

1. Discharging in Physical Gold (Weight Basis):

Give 2.5% of the actual gold weight in pure gold (e.g. for 100 grams of pure gold, pay 2.5 grams of pure gold).

1. Discharging in Cash (Market Value Basis):

Calculate the cash value of the pure gold weight using the prevailing retail bullion market price on the day of Zakat calculation, and pay 2.5% of that cash value.

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Practical Example: Gold Asset Calculation

• Asset Owned: 10 Tolas (116.64 grams) of 22K gold coins.
• Step 1 (Calculate Pure Gold Weight):

$$116.64 imes 0.9167 = 106.92 ext{ grams pure gold}$$

• Step 2 (Check Nisab):

106.92 grams exceeds Gold Nisab (87.48g). Zakat is Obligatory.

• Step 3 (Calculate Zakat Payable):

$$ ext{Zakat Weight} = 106.92 imes 2.5\% = 2.673 ext{ grams pure gold}$$ If gold rate is $75 USD per gram: $2.673 imes \$75 = \mathbf{\$200.48 ext{ USD}}$.

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Aala Hazrat & Hanafi Scholarly References

• Fatawa Razawiyyah (فتاویٰ رضویہ): Imam Ahmad Raza Khan (رحمه الله عليه), Volume 10, Pages 85–120.
• Bahar-e-Shariat (بہارِ شریعت): Sadr-ush-Shari'ah Allama Mufti Amjad Ali Aazmi (رحمه الله عليه), Part 5, Zakat on Gold.