To be liable for zakat, one’s wealth must amount to more than a threshold figure, termed the “nisab.”
To determine the nisab, the 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 $4,780.06 for gold on 08 March 2021, 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 $503.10 on 08 March 2021.
Example: In 1423 AH, Suraya’s zakatable wealth came to only £200. She owes no zakat. The next year was better for her, and she now owns £2,500 in zakatable wealth. She will be liable for zakat after the money has been in her possession for a lunar year.
Should I use the gold or silver nisab?
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.
My wealth decreased below the nisab for a few months during the year, do I still pay zakat?
As long as you are in possession of wealth above the nisab threshold at the beginning and end of the zakat year, zakat will be payable, even if your wealth dipped below the nisab for most of the year.
I have more money than the nisab, but I need it for my living expenses.
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, his remaining wealth is less than the nisab then no zakat is payable.
When does the zakat year begin?
The zakat year begins on the date on which you were first in possessions 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.