What is Nisab?
Nisab refers to a specific minimum threshold of wealth that a Muslim must possess before Zakat becomes obligatory. It ensures that only those who have financial stability contribute to the welfare of society. According to Islamic teachings, if a person’s total wealth reaches or exceeds the Nisab and remains in their possession for a full lunar year, then they are required to pay Zakat. This wealth must be surplus to their basic necessities, such as food, clothing, housing, education, and essential daily expenses. If a person's wealth falls below the Nisab, they are exempt from Zakat, ensuring that financial obligations do not burden those who are struggling to meet their own needs.
The Types of Wealth on Which Zakat Must Be Paid
Zakat is applicable to various categories of wealth, which primarily include:
- Gold and Silver – Whether in raw form, jewelry, or other assets.
- Cash Money and Bank Deposits – Including all forms of currency, savings, and financial investments.
- Business Assets – Goods and merchandise held for trade.
- Agricultural Produce – Crops and fruits harvested from cultivated land.
- Livestock – Animals reared for trade, breeding, or dairy production.
Each of these categories has specific Nisab thresholds and Zakat calculation rules.
Gold and Silver: The Precious Metals of Trade and Wealth
Gold and silver have historically been considered the standard measures of wealth, and they continue to play a significant role in determining Zakat obligations.
- Nisab for Gold: The prescribed Nisab for gold is 20 Dinar, which is approximately 7.29 tolas or 85 grams.
- Nisab for Silver: The Nisab for silver is 200 Dirhams, equivalent to 51.02 tolas or 595 grams.
If a person possesses gold or silver above these thresholds and retains them for a full lunar year, they must pay 2.5% of the total value as Zakat.
If someone owns both gold and silver, they should calculate their combined value to determine if it meets or exceeds the Nisab. If a person’s gold alone does not reach the required threshold, they may combine it with other wealth such as cash, business assets, or silver holdings to evaluate their Zakat obligation.
Jewelry made from gold or silver is also subject to Zakat, regardless of whether it is worn regularly or stored. This includes bangles, necklaces, rings, and other ornaments. However, jewelry made from other materials, such as diamonds, platinum, or gemstones, is not subject to Zakat unless it is kept as an investment or for trade purposes.
Bank Notes: Zakat on Cash and Financial Instruments
Modern financial systems have expanded the ways wealth is stored, and all forms of liquid assets are considered when calculating Zakat. This includes:
- Paper currency such as dollars, pounds, euros, riyals, rupees, and other official monetary units.
- Digital currency or bank balances, including savings accounts, fixed deposits, and investment funds.
- Financial instruments like bonds, shares, mutual funds, investment certificates, and promissory notes.
Any money or equivalent assets retained for a full year and meeting the Nisab (equivalent to the value of 85 grams of gold or 595 grams of silver) are subject to 2.5% Zakat.
Business Assets: Zakat on Trade and Commercial Wealth
Zakat is obligatory on goods and properties held for business purposes. This applies to:
- Retail merchandise, wholesale stock, and goods for sale.
- Business properties, land, and vehicles used for trade.
- Machinery, raw materials, and manufactured goods awaiting sale.
The Nisab for business assets is calculated based on their current market value. At the end of the lunar year, the business owner should evaluate all trade goods, cash reserves, and outstanding receivables. After deducting business liabilities, 2.5% of the total value must be paid as Zakat.
Livestock: Zakat on Grazing and Trade Animals
Zakat is applicable to certain livestock if they are reared for commercial or agricultural purposes. The key conditions include:
- The animals must graze freely on natural pastures for the majority of the year.
- They must be raised for dairy, breeding, or trade rather than personal use.
The Nisab for livestock is as follows:
- 30 cows – One cow must be given in Zakat.
- 40 goats or sheep – One goat or sheep must be given as Zakat.
Poultry, domesticated animals, and pets are generally exempt from Zakat unless they are raised for business purposes, in which case they are treated as trade assets.
Agricultural Produce and Fruits: Zakat on Harvested Crops
Zakat is obligatory on all crops, fruits, and grains harvested from cultivated land. Unlike other wealth categories, agricultural produce has no Nisab threshold. However, the rate of Zakat depends on the irrigation method:
- 10% Zakat is due if the crops are watered by rain, rivers, or natural sources.
- 5% Zakat is due if the land is irrigated artificially through wells, canals, or purchased water.
Zakat is applicable to staple crops such as wheat, rice, barley, maize, lentils, dates, and grapes. The minimum threshold for Zakat on agricultural produce is 612 kilograms (Wasq). If a person’s harvest meets this amount, Zakat must be paid accordingly.
Zakat is not just a financial duty; it is a means of purification, social welfare, and economic justice. It redistributes wealth to those in need, supports the less fortunate, and helps bridge the gap between the rich and the poor. By ensuring that surplus wealth is shared, Islam promotes a balanced economic system that benefits society as a whole.
As a fundamental pillar of Islam, Zakat serves as a reminder that wealth is a trust from Allah, and fulfilling this obligation strengthens faith, fosters compassion, and contributes to the well-being of the community. Every eligible Muslim must carefully calculate and pay their Zakat on time to fulfill this essential act of worship.