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Zakat FAQ
Answers to common questions related to zakat.
(Please note that for any specific queries, it is advisable to contact your local imam)
(Please note that for any specific queries, it is advisable to contact your local imam)
To be liable for zakat, one’s wealth must be more than a threshold figure, termed the ‘nisab’. To determine the nisab there are two measures, either gold or silver.
Gold: The nisab by the gold standard is 3 ounces of gold (87.48 grammes) or its cash equivalent. This is approximately $3,560 on 16 April 2019, but will vary with the market value of gold.
Silver: The nisab by the silver standard is 21 ounces of silver (612.36 grammes) or its equivalent in cash. This is approximately $324 on 16 April 2019.
Gold: The nisab by the gold standard is 3 ounces of gold (87.48 grammes) or its cash equivalent. This is approximately $3,560 on 16 April 2019, but will vary with the market value of gold.
Silver: The nisab by the silver standard is 21 ounces of silver (612.36 grammes) or its equivalent in cash. This is approximately $324 on 16 April 2019.
The nisab calculated with the silver standard is significantly lower than its gold counterpart. This is because the value of silver has plummeted since the time of the Prophet (peace be upon him).
There are arguments for using either nisab value – many scholars say that it is better to use the silver nisab since it will increase the amount of charity distributed, others say that the gold nisab is closer to the nisab in use at the time of the blessed Prophet (peace be upon him).
However, if your assets consist entirely of gold, you must use the gold nisab, and similarly, if they consist entirely of silver then the silver nisab must be used.
There are arguments for using either nisab value – many scholars say that it is better to use the silver nisab since it will increase the amount of charity distributed, others say that the gold nisab is closer to the nisab in use at the time of the blessed Prophet (peace be upon him).
However, if your assets consist entirely of gold, you must use the gold nisab, and similarly, if they consist entirely of silver then the silver nisab must be used.
Gold and silver: Any gold or silver you possess is zakatable, including jewellery according to the Hanafi school, because these two metals have intrinsic monetary value.
Other precious metals and stones are not zakatable unless they were acquired for the purpose of trade.
Cash or its equivalent: Cash at home, in bank accounts, savings, money lent to others, saving certificates, bonds, shares, investment certificates and so on, are all taken into account when calculating zakat.
Stock purchased for trade: Any goods you have bought with the intention of selling are included in your zakatable wealth.
Other precious metals and stones are not zakatable unless they were acquired for the purpose of trade.
Cash or its equivalent: Cash at home, in bank accounts, savings, money lent to others, saving certificates, bonds, shares, investment certificates and so on, are all taken into account when calculating zakat.
Stock purchased for trade: Any goods you have bought with the intention of selling are included in your zakatable wealth.
Except for gold and silver, no zakat is payable on your personal belongings such as a house, car or any goods which were not purchased to trade.
If a person possesses wealth exceeding the nisab threshold, but has to pay rent, purchase food, clothing, etc., for themselves and their dependants, then these costs may be deducted from one’s wealth.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
The zakat year begins on the date you were first in possession of wealth above the nisab.
This will be your seed date, whenever it comes around you will have to calculate zakat, irrespective of any fluctuations in the amount of wealth in your possession.
The only situation in which your seed date will change is if you were to become totally bankrupt and lose all your assets and belongings. In this situation, your new seed date will begin when you are once again in possession of wealth above the nisab.
If you are not sure of your seed date, then estimate it to the best of your ability.
This will be your seed date, whenever it comes around you will have to calculate zakat, irrespective of any fluctuations in the amount of wealth in your possession.
The only situation in which your seed date will change is if you were to become totally bankrupt and lose all your assets and belongings. In this situation, your new seed date will begin when you are once again in possession of wealth above the nisab.
If you are not sure of your seed date, then estimate it to the best of your ability.
As long as you are in possession of wealth above the nisab threshold at the beginning and end of the zakat year, then zakat will be due, even if your wealth dipped below the nisab for some or most of the year.
You pay zakat when the zakat year has elapsed, irrespective of when particular portions of your wealth came into your possession. Even if the cash came into your possession a day before the zakat year had elapsed, you would have to pay zakat on it the following day.