Please explain the detail of calculating Zakat: (1) Is there Zakat on salary as soon as it is received, or after a year passes? (2) How should Zakat be paid on company shares? (3) Is there also Zakat on cryptocurrency (Bitcoin etc.) assets? And what is the amount of the nisab?
It is narrated from 'Ali, may Allah be pleased with him, that the Prophet, peace and blessings be upon him, said: "When you have two hundred dirhams and a year passes over them, there are five dirhams (Zakat) in them; and there is nothing due from you in gold until there are twenty dinars, when there are twenty dinars and a year passes over them, there is half a dinar..
It is narrated from 'Ali, may Allah be pleased with him, that the Prophet, peace and blessings be upon him, said: "When you have two hundred dirhams and a year passes over them, there are five dirhams (Zakat) in them; and there is nothing due from you in gold until there are twenty dinars, when there are twenty dinars and a year passes over them, there is half a dinar... and there is no Zakat in any wealth until a year passes over it" (Sunan Abi Dawud: 1573). Three things are established from this hadith: the nisab for silver is two hundred dirhams (approximately 595 grams of silver by current weight) and for gold twenty mithqal (approximately 85 grams of gold); the rate of Zakat is a quarter of a tenth, i.e. two and a half percent (2.5%); and the passing of a lunar year (hawl) over the wealth is a condition.
Salary is in itself income; Zakat does not become obligatory on it as soon as it is received. The position of the majority of scholars and the Permanent Committee is that the amount from the salary that is saved and reaches the nisab and a hawl passes over it, Zakat of two and a half percent is due on it; there is no Zakat on the amount that was spent on necessities during the year. The easy and correct method of calculation is that a person fixes a lunar date for himself (for example, 1 Ramadan); on that day, if the total cash and savings present with him — even if it accumulated from salaries of different months — is equal to or more than the nisab, he should pay two and a half percent on that entire amount, because wealth that comes later joins the hawl of the earlier wealth. Some contemporary scholars, by analogy with crops, adopted the view of Zakat at the time of receipt, but the preponderant view and the view acted upon of the majority and the Permanent Committee is this hawl view.
In this there are two cases according to intention:
According to the predominant research of contemporary scholars, cryptocurrency is in the ruling of wealth and price, therefore the same principles of Zakat apply to it as apply to cash: if someone has crypto assets whose value — by itself or combined with his cash, gold and silver — reaches the nisab and a hawl passes over them, he will have to pay two and a half percent on the market price of the day of Zakat. Fluctuation in price is not separately considered; the calculation will be by the price of the day on which Zakat became obligatory, and the profit increased during this period will also be included with the principal. Zakat can also be given in the form of crypto itself, and its value can also be paid as cash. However, it should be clear that this statement is limited only to the calculation of Zakat; the impermissibility of leveraged and margin trading of crypto is a separate issue which has been stated earlier (in Question No. 6).
Maqasid-based caution: Zakat is a means of purification of wealth and blessing in it, and it is that "known right" of the poor that Allah has placed in the wealth of the wealthy: ﴿وَالَّذِينَ فِي أَمْوَالِهِمْ حَقٌّ مَعْلُومٌ * لِلسَّائِلِ وَالْمَحْرُومِ﴾ (And those in whose wealth is a known right, for the beggar and the deprived) (Surah al-Ma'arij: 24–25). The conditions of nisab and hawl are based on this wisdom that Zakat is on circulating, preserved wealth, not on livelihood income; therefore laziness or delay in paying this obligation wastes the right of those entitled.
Translated from the original Urdu fatwa.