I have a piece of land on which i have no plans to build a house.My question is that which value should be used for calculating zakat for this land: The current market value (which might be varying daily) or the value which was paid for buying the plot?
As you have correctly mentioned in your question, on a piece of land which is not in one’s personal or business use, 2.5% of the land is to be given away as Zaka’h. The same is the case for all other assets, which are a part of one’s wealth and are not under one’s personal or business use.
As for the method of the valuation of long-term, non-depreciable assets like land etc. is concerned, it is a matter of Ijtehad, as no specific method of valuation of such assets is prescribed by the Shari`ah. According to our understanding, for the purposes of Zaka’h, the actual current market value of the land should be determined and 2.5% of that value should be paid as Zaka’h.
As for the issue of frequent fluctuations in the current market value of land, one should try to determine the market value which is as current as possible, as of the day of the year on which one calculates Zaka’h on one’s wealth and assets. For instance, one may try to assess the actual current market value of his assets within ten, fifteen or twenty days of the date on which one plans to pay Zaka’h.
It should, however, be kept in mind that all such issues relating to Zaka’h should actually be settled by the legislature of the Muslim state, because Zaka’h is a collective, rather than a personal law of Islam. If the legislature of the Muslim state has prescribed any particular method of valuation of assets or any particular value for assets, then the prescribed method or value should be held as effective.
Hope hope this helps.