The term Nisab is defined as the threshold amount that a Muslims wealth should total to make them eligible to pay Zakat. There are two values used to calculate the Nisab threshold - gold and silver at the value of 612.36 grams of silver and 87.48 grams of gold. The monetary value is calculated on the current price of gold and silver when working out your Zakat contribution.
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.
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.
And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.” (2:110, Qur’an)
As one of the pillars of Islam, zakat is a form of obligatory charity that has the potential to ease the suffering of millions.
With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying zakat purifies, increases and blesses the remainder of their wealth.
“Whoever pays the zakat on his wealth will have its evil removed from him” (Ibn Khuzaimah and at-Tabarani).
Zakat is also a spiritual connection to one’s maker – to purify your wealth for the will of Allah is to acknowledge that everything we own belongs to Him, and it is for Him that we strive to end poverty and help our brothers and sisters.
Zakat is a pillar of Islam, has a specific rate (2.5%) and amount and most importantly it is a an obligatory religious duty
Sadaqa is a voluntary charity activity. It is not a pillar of Islam but recommended and has no specific rate and amount.
Zakat Al-Mal is commonly referred to as “Zakat” by most Muslims. It is Zakat that Muslims are required to pay annually on wealth that includes: currency, gold, silver, and property. It considers your comprehensive net assets (total wealth). The amount of Zakat Al-Mal that each Muslim owes will vary because it is 2.5% of net wealth that a person holds for a year. Zakat al Mal is only required once a Muslim reaches a certain financial threshold known as Nisab. If a Muslim doesn’t reach this threshold, Zakat Al-Mal isn’t required on him or her.
Zakat on savings is on savings kept in the bank, cooperative, current account, fixed deposit account and cash in hand.
To fulfil your Zakat on savings, your savings must have a minimum balance amount or Nisab for a period of one Hijra year or 355 days which is the Haul.
There are two types of Zakat that Muslims are obligated to pay: Zakat Al-Mal, (Zakat on Wealth), and Zakat Al-Fitr, (Zakat of Fast-Breaking), for the completion of the fasting month of Ramadan.
Zakat al-Fitr, or the Zakat of Breaking the Fast of Ramadan, is the special required charity that is paid by all Muslims at the end of the holy month of Ramadan in the Islamic calendar. It is also called Sadaqat al-Fitr, “the Charity of Breaking the Fast” of Ramadan, and Zakat al-Fitrah, the charity of human nature because it is a mandatory charity due on every Muslim at the end of Ramadan, regardless of age or gender.
This obligatory payment is termed fitrah, derived from the Arabic term fitr, a word which signifies the “nature” upon which God created the human being, related also to the Arabic word for “fast-breaking” (iftar), eating after a period of abstention from this “natural” and defining human activity.
The amount of Zakat-Al-Fitr a Muslim pays is the cost of meal. Note that Zakat Al-Fitr must be transported to reach the poor, even in other countries, to reach its most desirable recipients on the day of Eid.
You must pay Zakat if, you are an adult Muslim of sound mind, and secondly, you have possessed minimum amount of wealth (Nisab) for one lunar year
Nisab must be maintained for one lunar year for Zakat to be required and must be paid as soon as possible. Your Zakat year therefore starts on the date your wealth first equaled or exceeded the Nisab and should be calculated on that date for each subsequent year.
Our Prophet Muhammad (saw) has set Nisab at the rate equivalent to 87.5 grams of gold or 612.4 grams of silver. Today, this is usually the equivalent value in your local currency. In the Hanafi school of thought, the value of silver is used to determine the Nisab eligibility to pay Zakat. In other school of thought, the value of gold is used. The value of gold and silver changes, so your Zakat payment will vary a little each year.
Zakat is not just paid on the savings in your bank account. You need to pay Zakat on other types of wealth, such as:
If it is easier, you can spread out your Zakat payments over the whole year. Calculate how much Zakat is due on you that year, and divide it into twelve amounts. At the end of the year, check your estimated calculation- if you underestimated the amount of Zakat you need to pay, make sure you pay it off before the new year begins.
If you are on government Payroll, by filling the subscription form that takes less than five minutes to complete with your staff and mandate number.
If you are with the security agency, there are specific mandate forms you need to fill
If you are in private sector, you can join the Fund by filling a bank standing order form of your bank.
Please call the office line for us to assist you.