Determination of Nisab and calculation of Zakat

Some readers have sought further clarification on determining Nisab. They have asked me to combine all the parameters at one place to enable them to easily ascertain whether they are Nisab holders or not.

Few other readers have asked to provide them with an example to calculate Zakat for the sake of clear understanding.

Nisab questionnaire

First, I provide below a simple questionnaire and by honestly answering it you will know whether you are liable to pay Zakat or not:

a) Did you carry hard cash (any currency) of the equivalent of $1,000 or more throughout the last lunar year?

b) Does your bank account(s) or any commercial paper had had a balance of $1,000 or above for over a lunar year?

c) Did your provident fund account held a balance of $1,000 or more for over a year?

d) Have you given an amount equivalent of $1,000 or more as loan to someone which has remained unpaid for over a lunar year?

e) Do you own pure gold or gold jewellery (net of making charges and stones) or pure silver/jewellry worth more than $1,000?

f) Have you held shares of a public joint stock company for over a lunar year and the average value of the portfolio remained a minimum of $1,000?

g) Do you solely own a business with a minimum inventory cost at $1,000?

h) Do you own milk producing or meat animals for an aggregate value of $1,000 or more?

i) Do you own any item, which you bought for the purpose of investment or resale, value of which is more than $1,000?

j) Do you own any investment property (e.g. shop, or share in a house, etc.) anywhere in the world with a value of $1,000 or more?

k) Have you recently harvested any crop, minimum value of which is equivalent of 653 kilograms of wheat at market price prevalent at the place of harvest?

l) Do you own (solely or partly) any mining operation?

If your answer to any one or more of the above questions is yes then proceed to reply to the last question below. If you have failed to score a single yes, you may not be liable to pay Zakat, however, please read on to know for sure.

m) Are you indebted for an amount more than what you totally own, excluding the mortgage on the house occupied by you or a personal loan against your salary, which is regularly being serviced?

If your answer to (m) is yes, you are not liable to pay any Zakat. However, if your reply is negative, you are a Nisab holder and hence liable to pay Zakat.

If the value of (m) is lower than the sum of the values from (a) to (j), you are still liable to pay Zakat but only on the residual amount if it is equal to or exceeds $1,000.

Other points

Please note that the current market value for 85 grams of 999 quality pure gold (i.e. Nisab) is about $1,000.

Please remember that Zakat will still be payable if the individual value of all items under (a) to (j) is less than $1,000 but collectively it exceeds $1,000. We will examine this aspect below while calculating Zakat.

To arrive at an average value of shares portfolio (f), you may simply combine the value a year earlier with the present value and average it out.

If the ownership of the business is in partnership (g), it is preferable to calculate Zakat jointly, i.e. on the business itself, rather than individually by each partner.

For investment property (j), please calculate it’s net value after deducting outstanding mortgage amount, if any, from the fair market value.

As regards (k), the Zakat rate on cultivated land is five per cent whereas it is 10 per cent on the non-cultivated land, such as on the produce from an orchard.

For minerals (l), the Zakat is 20 per cent on the commercial value of elements explored during last one lunar year, irrespective of the holding period and Nisab.

I hope with the help of the above explanation, it may have become easier for a reader to determine whether he or she is the Nisab holder or not. In other words, whether or not he or she is liable to pay Zakat.

Zakat calculation

Provided below is the asset holding of Khan, who represents a typical upper middle class household residing in the Gulf.

From the working below, we will be able to comprehend how he calculates his Zakat liability:


You will appreciate that the amount annually required to purify Khan’s wealth works out to a fraction of his overall material possession.

Khan can discharge his Zakat liability the day he calculates it. However, he can also settle it over a maximum period of one lunar year from the date of calculation. In that case, he will be paying only an amount of $112 per month.

The noble institution of Zakat is the best remedy available to the misery faced by a majority of people from the Muslim world. However, sadly, it is the most neglected of the five pillars of Islam.

By honestly fulfilling this obligation, the payer of Zakat not only purifies his wealth, he also purifies his heart from selfishness and greed. On the other hand, the heart of recipient of Zakat is also purified from jealousy and hatred towards the Nisab holder and creates an immediate bond between them based on mutual respect and trust.

A learned friend of mine has appropriately quipped that the true spirit of paying Zakat is to be able to convert a person receiving Zakat into a Nisab holder one day.

This quiet financial revolution in a poor man’s life has been observed occasionally whereby the Zakat money received by him was used to start a small trading activity which gradually grew and finally pulled him out of poverty. Such people are now active Zakat givers, thus starting a valuable chain reaction against poverty.


(a) on hand $630
(b) at bank (saving, current or fixed deposit, net of interest) $5,300
(c) in provident fund $10,800
(d) as loan $400-$17,130
Gold and jewellery
(a)Two ten tola bars $2,650
(b) Jewellry (total value $8,165, less stones $1,110
and making charges $1,970) $5,085

(a) Market value at last year’s Zakat calculation date $4,525
plus value as of now $6,845
divided by two $5,685
Ownership of business None
Ownership of animals None
(a) Antique coins (at purchase price) $350

(a) Share in family’s commercial property (last valued in 2001)
at home country from which proportionate
rental income is received $23,000
Harvested crop/produce from orchard None
Ownership of mine None
Any other asset not listed above None

Total personal wealth subject to Zakat $53,900
Zakat (at 2.5 per cent or 1/40th of the total personal wealth) $1,348

Sohail Zubairiis Head of risk management at DubaiIslamic Bank.

Curtsy:, By Sohail Zubairi

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