Types of Wealth upon which Zakaat Is Due
Zakaat is not due on the necessities of life, such as food, drink, clothing, the house one lives in, even if it is a high-priced house, and the car one drives, even if it is a luxurious car.
It is only due on types of wealth which are not kept for immediate use and which are bound to increase, such as the following:
- Gold and silver (with the exception of gold and silver ornaments used by women for their personal use)
Zakaat is due on gold and silver only if their value has reached or exceeded an established minimum threshold for this particular kind of wealth (nisaab) and after one has been in possession of this for a completelunar year (354 days).
The minimum prescribed limit on which zakaat becomes obligatory (nisaab)on this type of wealth is as follows:
Zakaat due on gold is approximately 85 grams and that due on silver is 595 grams.
Therefore, if a Muslim has held such an amount for a whole year, he must pay zakaatat the minimum rate of two and a half per cent (2.5%).
- All types of currency (banknotes and coins) held as cash in hand or bank balances
The nisaab liable to zakaat on cash, banknotes and coins is to be determined according to its corresponding value of gold (85 grams of pure gold) at the time zakaat falls due, based on the current rates of the country in which the payer of zakaat is resident. If such currency has been held in one’s possession for an entire lunar year, two and a half per cent (2.5%) of its value must be given out as zakaat.
To illustrate, if one gram of pure gold at the time zakaat falls due is worth, say $25, the nisaab of the currency will be as follows:
25 (price of one gram of gold, which is unstable) x85 (number of grams, which is stable)= $2125 is the minimum exemption limit (nisaab).
It is worth noting that estimating the nisaab liable to zakaat on banknotes, coins and commercial commodities is generally based on their corresponding minimum amount of gold, since the value of gold is more stable than any other kind of property.
- Commercial commodities
This term stands for all properties owned with the aim of investing them in trade. They generally include assets, such as real property, and commodities, such as consumer goods and foodstuffs.
The value of commercial assets, which have been held in one’s possession for an entire lunar year, must be estimated according to the current market value on the day zakaat falls due. If the commercial commodities reach the nisaab,two and a half per cent (2.5%) of their value must be given out as zakaat.
- Farm produce
The Qur’an states, “O you who believe, give away some of the good things you have earned and some of what We have produced for you from the earth.” (Soorat Al-Baqarah, 2:267)
Zakaat is due only on certain types of agricultural produce on condition zakaat ableproduce has reached the minimum amount on which zakaat is due (nisaab)
In consideration of people’s different circumstances, the amount of zakaat payable on farm produce varies according to costs spent and effort exerted in irrigation.
- Livestock: Zakaat is due on livestock, such as cows, camels and sheep, only if the animalsgraze on pasture and the owner does not take a lot of trouble to supply them with fodder.
If he supplies them with fodder all or most of the year, zakaat is not due on them.
Details as to the minimum amount upon which zakaat is due (nisaab)on livestock are available in books on Islamic jurisprudence (fiqh).