What is Nisab?
We use the Nisab for calculating Zakat each year, and to determine whether or not one is obligated to pay Zakat that year.
Nisab is the minimum amount that a Muslim must own before they are obliged to pay Zakat. This means that not everybody is obligated to pay Zakat, thus ensuring that only those for whom payment is easy, are given this responsibility.
Zakat is a small proportion of one’s wealth – just 2.5% – and is only payable by those who can afford to do so. This is determined by the value of the Nisab. We use the Nisab for calculating Zakat, as it tells us both whether or not our financial state makes us a payer of Zakat, and helps us determine exactly how much we should pay. As Zakat is a percentage of wealth, it is not the same for all individuals, and will naturally mean that those with more wealth will pay a higher amount of Zakat, but still just 2.5% of their wealth.
How much is the Nisab?
The Nisab was ordained by Prophet Muhammad (peace be upon him) at a rate equivalent to 87.48 grams of gold and 612.36 grams of silver.
At the time of our Prophet (saw), silver and gold were used as currency, but now we must convert this to figures we use and understand with our own currencies and markets. This is done by checking the market value for gold and silver. It is important to remember that the market value of gold and silver varies from country to country, thus meaning that the Nisab value is not the same for all households around the world. It is also important to remember that the value of silver and gold will change throughout the year, and so you will need to check the value before calculating your Zakat and seeing if your wealth exceeds that of the Nisab.
To use the Nisab for calculating Zakat, we must determine what the current values are.
Nisab Value (as of September 2022):
Using value of silver (612.36 grams) – approximately £336.80
Using value of gold (87.48 grams) – approximately £4,240.16
Should we use silver or gold when using the Nisab for calculating Zakat?
According to the Hanafi school of thought and many scholars, the value of silver should be used when determining the value of the Nisab and whether somebody is eligible to pay Zakat. Other schools of thought believe that the value of gold should be used.
The value of silver is significantly lower than the value of gold, and so this means that more people are eligible to pay Zakat using this value for the Nisab. When more people are eligible to pay Zakat, it means that more vulnerable people around the world can be supported, and we can do more as an ummah to tackle global poverty and suffering.
When do I pay my Zakat?
When understanding Zakat, you may come across the term ‘hawl’. This means a lunar year, which is 354 days long. Zakat payments are due one hawl (lunar year) after you become eligible to pay Zakat and have thus had in your possession wealth that is equivalent to the nisab.
It is important to note that you must have had wealth that is equivalent to, or exceeds, the nisab, for the entire hawl (lunar year) and on the date one year on. If not, your hawl begins again on the day that your wealth reaches the threshold of Nisab.
Why is it so important to use the Nisab for calculating Zakat?
While Zakat is a beautiful act of devotion to Allah (swt), it is an obligation for which there are a series of rules and conditions that must be fulfilled. The first of these is to determine whether somebody is required to pay Zakat, or not. If somebody does not have wealth that reaches the value of the Nisab, it is likely that their financial situation is strained. As Islam is a religion of ease and peace, Allah (swt) tells us that no soul will be burdened more than they can bear, and this is one of the ways that Allah demonstrates this to us.
If somebody is not required to pay Zakat, they are still free to give Sadaqah in any form, which will be rewarded by Allah (swt). Giving money to charity and to those in need is the main form of Sadaqah, but Prophet Muhammad (saw) told us that other things also count as Sadaqah. This includes smiling at your brother; removing something harmful from the road; visiting those who are unwell; giving and returning salaam; teaching somebody something, and making duaa for others.
Prophet Muhammad (saw) said:
“Every good deed is charity. Verily, it is a good deed to meet your brother with a cheerful face, and to pour what is left from your bucket into the vessel of your brother.” [Tirimidhi]