Zakat is one of the five pillars of Islam, and in Pakistan it also has a legal side: banks deduct it automatically from certain accounts on the first day of Ramadan. Many people are unsure how the bank deduction fits with the zakat they owe on gold, cash at home or business stock. This guide explains zakat calculation step by step, what nisab means, what counts and what does not, and how the government deduction works.
Religious rulings differ between schools of thought on some details, such as which nisab to use and how to treat jewellery. Where it matters, this guide flags the difference, and you should confirm your own position with a scholar you trust.
Table of Contents
The basics of zakat
Zakat is due once a year on wealth that stays above the nisab for a full lunar year. The rate is 2.5% of your zakatable wealth. Most people choose a fixed date, often in Ramadan, to calculate and pay it each year.
What is nisab?
Nisab is the minimum amount of wealth you must hold before zakat becomes due. It is traditionally defined in gold and silver:
- Gold: 7.5 tolas, about 87.48 grams.
- Silver: 52.5 tolas, about 612.36 grams.
Because silver is much cheaper than gold, the silver nisab is far lower in rupees. Many scholars in Pakistan advise using the silver nisab when your wealth is a mix of cash, savings and other assets, because it is the more cautious choice for the poor. Others use the gold nisab. Check the current gold and silver rates on the day you calculate, since the rupee value of nisab changes with prices. Our guide to the gold price in Pakistan explains how the per tola rate is set.
What counts as zakatable wealth
- Cash at home and in bank accounts, including foreign currency.
- Savings and deposits, including term deposits and savings certificates.
- Gold and silver, including jewellery according to the Hanafi school, which most Pakistanis follow. Some other schools exempt jewellery worn regularly.
- Business stock held for sale, valued at its current sale value.
- Money owed to you that you expect to get back.
- Investments such as shares and mutual funds, at least the part that reflects zakatable assets. Many scholars accept paying on the full market value for simplicity.
What does not count
- The house you live in.
- A car, furniture and household items for personal use.
- Clothes and personal belongings.
- Tools and equipment used in your work or business.
Property bought to resell is different: if you hold land or a plot as trading stock, many scholars treat its value as zakatable. Rental property is generally not zakatable itself, but the rent you save becomes part of your cash.
Deduct what you owe
From the total, subtract debts that are due now, such as unpaid bills, short-term loans and instalments currently payable. Scholars differ on long-term debts like a home loan; a common approach is to deduct only the instalments due within the year.
Zakat calculation step by step
- Choose your zakat date and use values on that day.
- Add up cash, bank balances and savings.
- Add the value of gold and silver at the current rate.
- Add business stock at sale value and money you expect to recover.
- Add the value of zakatable investments.
- Subtract debts that are due now.
- If the result is at or above nisab, multiply it by 2.5%.
A worked example
The figures below are an illustration only, using assumed values. Say on your zakat date you have:
- Rs300,000 in cash at home;
- Rs600,000 in a savings account;
- gold jewellery worth Rs1,500,000 at the day’s rate;
- business stock worth Rs400,000;
- short-term debts of Rs200,000.
Zakatable wealth is Rs300,000 + Rs600,000 + Rs1,500,000 + Rs400,000 − Rs200,000 = Rs2,600,000. Zakat at 2.5% is Rs65,000.
If your bank already deducted 2.5% of the Rs600,000 in your savings account on the first of Ramadan, that is Rs15,000 already paid. You would pay the remaining Rs50,000 yourself.
Assets people often ask about
A few assets come up again and again in zakat calculation. The views below are common positions in Pakistan, but scholars differ, so confirm with a scholar you trust:
- Prize bonds and savings certificates are generally treated like cash and included at their face or current value.
- Provident and pension funds held by an employer are, according to many scholars, not zakatable until you actually receive the money, after which it becomes part of your cash.
- Gold in a bank locker is zakatable like any other gold; keeping it locked away does not change that.
- Shares bought to trade quickly are usually treated like business stock at full market value.
- Crypto assets divide opinion. Some scholars treat them like other tradable assets and include them at market value; others question their status altogether.
- Money lent to someone is included if you expect to get it back; a debt you do not expect to recover is usually left out until it is repaid.
When to pay
Zakat becomes due once your wealth has stayed above nisab for a lunar year, and it should be paid promptly rather than delayed. Many people calculate and pay in Ramadan, but this is a tradition, not a requirement. You can also pay in advance in instalments during the year, as long as the total covers what is due on your zakat date.
Keep a simple note of your calculation each year, including the values you used. It makes next year’s zakat calculation much quicker and helps you check that nothing was missed.
How bank zakat deduction works in Pakistan
Under the Zakat and Ushr Ordinance, banks deduct zakat at source on the first day of Ramadan from savings accounts, profit-and-loss sharing accounts and similar deposits. The deduction only applies if the balance on that day is equal to or above the nisab notified by the government for that year. Current accounts are not subject to the automatic zakat deduction.
For Ramadan 2026, the Ministry of Poverty Alleviation and Social Safety set the nisab for bank deduction at Rs503,529, in a notification dated 16 February 2026. That was a big increase on the previous year’s Rs179,689, which meant far fewer accounts were affected. Banks deposit the amounts collected into the Central Zakat Account at the State Bank of Pakistan.
The nisab for Ramadan 2027 will be announced shortly before Ramadan, which is expected to begin in early February 2027, subject to the moon sighting.
Exemption from bank deduction
If your faith or school of thought means the government deduction does not apply to you, you can submit a zakat exemption declaration to your bank before the deduction date, using the prescribed form known as CZ-50. Submit it well in advance, as banks need time to process it. An exemption from the automatic deduction does not mean zakat is not due: it simply lets you calculate and pay it yourself.
Who can receive zakat
The Quran lists the categories of people who may receive zakat, chief among them the poor and the needy. Many people prefer to give directly to deserving relatives, neighbours or reputable organisations rather than rely only on the bank deduction. Zakat should not be given to your own parents, grandparents, children or spouse, whom you are already responsible for supporting.
Common mistakes in zakat calculation
- Forgetting cash at home or foreign currency.
- Leaving out jewellery when following the Hanafi view that includes it.
- Paying twice on savings already deducted by the bank.
- Using an old gold or silver rate to work out nisab.
- Deducting long-term debts in full, which can wipe out zakat that is genuinely due.
Official source: the nisab for compulsory zakat deduction from bank accounts is announced each year before Ramadan and circulated to banks by the State Bank of Pakistan. Check the latest figure before the first day of Ramadan.
Frequently asked questions
What is the zakat rate?
2.5% of zakatable wealth that has been at or above nisab for a lunar year.
What was the nisab for bank deduction in 2026?
Rs503,529, as notified by the government on 16 February 2026.
Is zakat deducted from current accounts?
No. The automatic deduction applies to savings, profit-and-loss sharing and similar accounts, not current accounts.
Does bank deduction cover all my zakat?
Usually not. It only covers balances in eligible accounts. You still owe zakat on cash, gold, business stock and other assets.
Should I use the gold or silver nisab?
Scholars differ. Many advise the silver nisab for mixed wealth as the more cautious option. Ask a scholar you trust.
This guide is general information. For religious rulings, consult a qualified scholar. The 2026 nisab is based on the government notification reported by ProPakistani. If you invest your savings, our guides to mutual funds in Pakistan and National Savings profit rates may help.
