Zakat on Silver: How the Silver Nisab Affects Your Eligibility | Musaffa Academy

So generally speaking people think about zakat in terms of gold or savings, and if their assets pass the mean average threshold then they consider themselves obligated to pay Zakat. The lesser-known threshold of zakat which affects a larger number of people is the silver nisab, and because the price of silver is much lower than gold per gram, it results in a significantly lower cash threshold, meaning people can have a relatively smaller amount of cash before being obligated to pay zakat. Therefore the silver nisab is one of the reasons people who do not consider themselves rich pay Zakat.

What Is Nisab, and Why Are There Two Thresholds?

nisab is the amount of wealth a Muslim must possess in order to have an obligatory zakat. It is the minimum amount of wealth above necessary living expenses and debts, and when this amount is not reached, there is no zakat to be given. When the minimum amount is exceeded, the Muslim must give 2.5% of this excess wealth each ḥawl (lunar year).

Islamic law distinguishes between two nisab standards in terms of commodity and the basis for the standards are rooted in several hadith related to the Prophet (s). In one, the Prophet is described as confiscating gold that was equivalent to ninety aṭlāq or 85 grams, while in another he confiscates silver that is equivalent to five hundred and ninety-five aṭlāq or 595 grams. In the early days of Islam these standards appear to have approximated one another in terms of purchasing power. However, over time gold values have greatly surpassed that of silver so that the two standards have radically different monetary implications. It is the magnitude of this disparity between gold and silver values that is at the core of one of the most pivotal, and contentious, zakat debates.

The Silver Nisab in Today’s Money

For this to sink in, you need to see the numbers next to each other. Gold is trading in the market at approximately $85-$95 per gram, with the figure changing from day to day, so please check the spot price on your zakat day here. As such, the gold nisab works out to be in the region of $7,200-$8,000. And the silver nisab works out to be in the region of $0.90-$1.10 per gram, or $535-$655.

The contrast could hardly be more dramatic. A Muslim with $1,500 in the bank will fall short of the gold nisab and thus would not pay any zakat at all on that savings according to this metric. Yet the same $1,500 would surely exceed the silver nisab and so the Muslim would have zakat to pay on the savings according to this standard. It is not a matter of pedantic technical argument, the difference appears to represent one of the more overt disagreements in the ranks of Islamic scholars over zakat payable on ‘mixed’ savings accounts or other cash assets.

The Hanafi Position: Silver nisab Governs Cash and Mixed Wealth

This is where Hanafi Zakat calculation differs from all other schools of thought and has far reaching implications for millions of Muslims.

In the Hanafi school of jurisprudence, where a person’s wealth consists of money, merchandise or a combination of the two and is not made of gold, the nisab for zakat is silver. The basis of this law is based on a more general ruling in the Islamic law of zakat that in the days of the Prophet Muhammad, the currency of exchange in the Islamic state was silver and thus its nisab was used as the standard for evaluating all other types of wealth. The lower value of the silver nisab leads to a wider range of people having to pay zakat on their riches. That is to say that more people who have somewhat larger amounts of riches have to pay zakat on these riches.

In practice this means that under Hanafi law anybody with say $600 in the bank and stocks/trade inventory and or rental income amounting to a total of more than the silver nisab value has to pay zakat on this wealth – even though the total value of the whole wealth and income may be far less than the gold nisab value. This is the more strict ruling and is followed in South Asia, Turkey, and throughout the rest of the Hanafi following Muslims.

The Majority Position: Gold Nisab as the Benchmark

Many of the Maliki, Shafi’i and Hanbali schools follow the gold nisab in the case of mixed currency and savings. This is for protection of debt and the liability of giving zakat from that which will not cause hardship. In these schools, cash and general wealth will not be subject to zakat except that which is equal to or more than the value of 85 grams of gold.

This is the more lenient of the two schools of thought regarding qualification and is practiced by Muslims who follow the Maliki, Shafi’i or Hanbali schools of jurisprudence with modest amount of savings, below the nisab level and therefore would owe no zakat, in contrast to one who is governed by the Hanafi fiqh school.

Both accounts are based on hadith and scholarly consensus. The difference is the result of a genuine Ijtihād by Islamic jurists about how to deal with two co-exiting conditions that the early schools derived from a much more detailed range of circumstances with great care.

Zakat on Silver Itself

According to some schools of thought, nisab refers only to gold; thus, there would be no minimum amount for silver to be considered zakable. However, regardless of what one believes about the nisab debate, silver is itself zakable, whether you own it in the form of jewelry, or coins, or bullion or any other shape. Whether or not you believe one needs to have more than 595 grams of silver for it to be considered zakable, the fiqh of gold applied to silver in this respect holds good.

Zakat on Silver Hanafi – Zakatable whether worn or in reserve Maliki, Shafi’i and Hanbali – Exempt if worn as jewellery in normal amounts, but Zakatable if stored or invested regardless of amount The rate is 2.5% on the value of the silver on your Zakat anniversary date.

A few more grams of silver I can announce that 595 grams of silver can be purchased for about $100 which works out to be about $0.168 per ounce. A few notes and observations: The reason I chose silver is that it is so cheap. One ounce of silver is equal to 31.1 grams. So 595 grams is not that much silver. It is equivalent to a large tea set of silver or a few silver collector items. So if you have a house full of old and new silverware or a bunch of heirloom silver pieces you might be surprised by how little silver there is. Weigh your pieces and find out.

Gold Nisab vs Silver Nisab: Side by Side

*Based on approximate spot prices at time of writing. Please note that the live price on your zakat anniversary date should be used.

A Worked Example: When Silver Nisab Changes Everything

Fatima’s assets on her zakat anniversary date consist of $1,800 in a savings account, $400 cash at home and $300 in a brokerage account. Total $2,500. She has no gold and no significant liabilities due.

At the gold nisab, or rate of approximately $7,500, Fatima’s $2,500 is clearly below that level. Under Maliki, Shafi’i or Hanbali law, she would not be liable for zakat.

Under the silver nisab of approximately $600, at $2,500 she is far above the minimum required for zakat under the Hanafi madh’hab. Fatima pays $62.50 as zakat on $2,500.

The same financial situation. The same woman being taken care of. But a different zakat obligation due to differing levels in various schools of thought of the nisab. And hence the knowledge of which standard is used in one’s school of thought is not an esoteric piece of knowledge. Rather very pertinent. In that it determines that zakat is or isn’t due.

What This Means for You

Zakat Threshold Calculation – A Hidden Trap for Many Muslims Many Muslims following the Hanafi Madhhab calculate their zakat on the basis of cash, savings and mixed wealth (such as commodity, share and currency accounts and bonds) using the silver nisab or the minimal amount of silver required to pay for zakat. Due to the low value of silver relative to its prices, this amount is easily attained. Many Muslims are unaware that their cash, savings etc actually amount to much more than the silver nisab. So, check the value of the silver nisab on your zakat date, be honest with the amount of net zakatable assets you hold and do the zakat calculation accordingly.

If you follow one of the majority schools, the gold nisab would apply to your overall wealth. You would still owe zakat on physical silver over 595 grams (provided you have enough overall wealth to reach the gold nisab) and other zakatable assets above the value of the gold nisab.

Whether we intend to pay or not, the nisab is not a simple test to determine whether or not one is eligible to give zakat. Rather, it comes from the Islamic perspective that zakat should be given to those who have more than they need, while protecting those who do not have sufficient. So, use the nisab for your school, use the agreed amount for the nisab and apply it for an honest annual self-assessment.

And Allah knows best.

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