An Innovative Zakat Calculation System for Gold

Abstract

Zakat is one of the pillars of Islam and refers to the obligation of Muslims to donate a portion of their wealth to help other Muslims. Zakat contributions are voluntary in a majority of Muslim countries, however, in some countries including Malaysia, zakat is mandatory and under the purview of the State. Assets that are commonly subject to zakat include cash, agricultural products, minerals, and livestock. Gold falls under the minerals category and if the amount of gold owned exceeds the nisab rate, it is subject to zakat contribution. Zakat contribution is compulsory for gold in any form, whether worn, kept or invested. The nisab rate is dependent on the current market price of gold. There are currently two approaches for self-calculation of zakat in Malaysia for gold either using Apps downloaded and installed; or by accessing the Islamic Religious Council’s website. Although most Apps and websites offer the service of zakat calculation, two shortcomings noted are the determination of nisab rate and the weighing of gold, which could lead to inaccurate zakat calculation results. As such, Gold-Z, an innovative zakat calculation system for gold is developed to address these issues. Not only Gold-Z provides zakat calculation services in Malaysian context, but also a weighing mechanism to determine the weight of gold held. This provides a more accurate reading (of the value of gold), and a more accurate zakat calculation. Initial test results indicate that the system is working as expected producing the correct zakat total for gold held.