The nisab for the zakat of monetary wealth
The nisab for monetary wealth in silver is two hundred dirhams and in gold it is twenty dinars. Records of the respective weights of the silver dirham and the gold dinar have been kept from the earliest times and it is known that a dirham weighed the equivalent of 2.965 grammes and a dinar the equivalent of 4.235 grammes on the basis of a ratio of seven dinars to ten dirhams. This means that the nisab in terms of silver is 593 grammes or 20.92 ounces and in terms of gold it is 84.7 grammes or 2.99 ounces.
Zakat on savings
In the light of the above it is, therefore, appropriate for zakat to be taken from wealth held in paper currencies, whether in the form of actual banknotes, bank accounts, or other kinds of savings accounts, provided they amount to at least the value of the nisab and have been continuously in the possession of their owner for at least a year. If that is the case then one fortieth or two and a half percent of their value must be paid in gold or silver as zakat. In view of the current extremely low price of silver it would seem better to take the gold nisab for zakat purposes, but which ever nisab is chosen zakat should be paid in the metal whose nisab is selected, so that if zakat is calculated using the silver nisab it must be paid in silver and if zakat is calculated using the gold nisab it must be paid in gold.
Zakat on trade goods
As we saw at the beginning of this section trade goods are also considered by the shari’a as monetary wealth on which zakat is due. Trade goods are all goods which have been purchased or acquired or manufactured with the primary intention of resale. There are basically two kinds of trade goods.
The first are the kind of goods which are bought with future resale in mind but which may stay in the possession of the purchaser for a considerable period before he sells them. If the value of such goods amounts to the nisab or more and they remain in your possession for at least a year then zakat should be paid in gold or silver on the price received when they are sold.
The second type of trade goods are those goods subject to constant turnover, such as the stock of a shop or a market stall or any other kind of trading or manufacturing business. When someone has such stock zakat is assessed on the basis of a regular annual valuation on a particular selected date of the stock and liquid capital in hand. The valuation is made on the current market price of the goods concerned. If the stock and accumulated capital combined amount to the nisab or more, then one fortieth of their value must be paid in gold or silver as zakat.
There are two kinds of debts, those you owe to other people and those other people owe to you, and both kinds of debts have a bearing on the zakat of monetary wealth.
If you owe money to others then the amount you owe is subtracted from the amount of monetary wealth you possess before your zakat is assessed so that, for instance, if you possess monetary wealth adding up to more than the nisab but when your outstanding debts are taken into account the amount is reduced to less than the nisab, then you dont have to pay zakat. If, however, you have disposable assets, which are not liable to zakat and which could be sold to pay off all or some of what you owe, then your debt is considered to have been reduced by the amount of the combined market value of those assets.
In the case of agricultural produce and livestock debt is not taken into account when assessing the amount of zakat owed.
If money amounting to the value of the nisab or more is owed to you and remains outstanding for a year or more, you owe zakat on it but do not have to pay that zakat until the loan is repaid to you.
Investments are basically of two kinds, those whose primary purpose is to produce profit through resale and those whose primary purpose is to produce income. They are treated for zakat purposes in a similar way to trade goods. So that if, for instance, you owe a property company whose principal activity is buying and selling houses then your whole property portfolio is viewed as turnover stock which should be valued annually and zakat paid on the total value. If, however, your main intention is to produce income through letting out the properties you own, then you will only pay zakat on the price you receive if and when you sell one of those properties. The basic principle applies that zakat is only due on goods or property acquired with the intention of resale in mind.
Going by this principle no zakat is owed on personal property such as house, furniture, household goods, transport, land which are regularly used by you and your family and not intended for trade. The same applies to gold and silver jewellery which are regularly worn and not intended for trading purposes. The same also applies to tools you own which you use to earn your living and, in the case of a business, buildings and plant used in the carrying on of the business. As mentioned earlier, however, the value of disposable personal assets which could be sold to pay debts is set against outstanding debts when zakat is being assessed.
This contains all the general principles pertaining to the zakat of monetary wealth and they seem fairly straightforward on the surface. What you find, however, when you go into the details of people’s individual circumstances, is that there are endless anomalies and exceptions and it would be impossible to cover all of them. This is a further reason why it is indispensable to have officially appointed zakat assessors and collectors with a thorough knowledge of all the laws of zakat and experience in dealing with zakat in the light of the many and varied financial circumstances which people face in the world today.