Gold Zakat

Gold assets have long been recognized in Islam as valuable wealth that is obligated for zakat. In the Quran, there is a clear verse that refers to the obligation of paying zakat on gold, as follows:

"And (remember) those who hoard gold and silver and do not spend it in the way of Allah, so give them tidings of a painful punishment. On the Day when it (gold, silver, and wealth) will be heated in the Fire of Hell, then their foreheads, sides, and backs will be branded with it (and it will be said to them): This is what you hoarded for yourselves, so taste what you used to hoard."

(Surah At-Taubah; Ayat 34-35)

Meanwhile, the Prophet Muhammad (peace be upon him) said, as narrated by Abu Hurairah (may Allah be pleased with him), which means:

"Whoever owns gold and silver and does not pay zakat on it, then on the Day of Judgment, plates of fire heated in Hell will be prepared for him. With that fire, his sides and back will be branded." (Sahih Muslim)

With these evidences, it is clear that zakat on gold is obligatory for the gold we own.

However, there is leniency for the amount of gold savings that does not meet the nisab, which is 85 grams. This can be observed from the saying of the Prophet Muhammad (peace be upon him), which means:

"There is no obligation upon you in gold until it reaches 20 dinars (85 grams) and the haul is completed, at which point half a dinar is due. Anything beyond that is calculated in the same manner." (Hadith narrated by Abu Dawood)

There are several different calculation methods for various types of gold savings or investments. Firstly, for gold that is not worn—either because it is in an unusable form or jewelry made of gold that is never worn—if it meets the nisab weight of 85 grams and completes the haul (one-year holding period), then zakat must be paid on it. The zakat rate is 2.5% of the total value of the gold. This was approximately equivalent to RM20,361 in 2022. Therefore, if the value of the gold, whether worn or stored, is less than RM20,361, zakat is not obligatory on it.

Example calculation:
If the stored gold is valued at RM25,000 (according to the current market rate), then the amount of zakat to be paid is as follows:

RM25,000 x 2.5% = RM625

If the stored gold is valued at RM25,000 (according to the current market rate), then the amount of zakat to be paid is as follows:

• Johor: 850 grams
• Kedah: 170 grams
• Kelantan: No exemption limit (uruf)
• Kuala Lumpur and Putrajaya: 800 grams
• Melaka: 180 grams
• Negeri Sembilan: 200 grams
• Pahang: 500 grams
• Perak: 500 grams
• Perlis: 85 grams
• Pulau Pinang: 165 grams
• Sabah: 152 grams
• Sarawak: 90 grams
• Selangor: 800 grams
• Terengganu: 850 grams

For states where there is no exemption limit (uruf), this means that all gold jewelry must be subject to zakat, regardless of its weight.

Apart from stored jewelry, the types of gold that are obligatory for zakat include the following:

• Physical gold investments: Typically, this physical gold is in the form of coins (although it cannot be used as regular currency), wafers, bars, and sometimes comes in specific forms for particular events. If the total gold savings exceed the nisab of 85 grams, then this savings is subject to zakat.  
• Gold account investments: There are also gold savings or investments where the quantity and value are recorded in the form of a passbook, account statement, or passbook. Usually, this is through a Gold Savings Account. The account statement will record the amount of savings invested based on gold units. If this gold investment exceeds 85 grams or the nisab amount of RM20,361, then it is subject to zakat. However, this invested gold must actually exist and be physically accessible to the investor if necessary. Otherwise, it falls under the category of a virtual gold account or a non-physical gold account. 
• Non-physical gold account: A non-physical gold account is considered a non-shariah-compliant gold savings, so zakat is only imposed on the principal investment amount. Therefore, it is treated as zakat on cash savings.
• Virtual gold account: Similarly, a virtual gold account involves gold traded in a non-physical form, existing only “on paper” or on an electronic platform. This means investors can buy and sell gold based on current prices, but this gold cannot be physically claimed even though the investor is considered the “owner” of the gold. Therefore, zakat should be paid at the cash savings zakat rate, applied only to the principal investment amount. 

If you want to calculate the amount of gold zakat to be paid, use the calculator here. May you fulfill the act of paying zakat!