Nisab is the minimum amount that a Muslim must have before being obliged to zakat.
The Nisab was set by Prophet Muhammad (peace be upon him) at a rate equivalent to: 85 grams of gold and 609 grams of silver.
As we no longer use silver or gold as currency, you need to find out the equivalent monetary exchange value of the rates the Prophet Muhammad (SAW) set in your local currency. You can do this by checking the market rate of gold and silver.
The two values used to calculate the Nisab threshold are gold and silver.
Using value of silver (609 grams) – approximately $657.72 AUD
Using value of gold (85 grams) – approximately $6,204.00 AUD
In the Hanafi madhab, the value of silver is used to ascertain the nisab threshold and eligibility to pay Zakat. The other madhabs use the value of gold.
Islamic Relief advises its donors to use the silver value (which is almost always a lower threshold to gold) because this allows for a greater amount to be eligible for Zakat, which means more help for deserving Zakat recipients.
In explanations of Zakat, you may hear the term ‘hawl’ – which means a lunar year. Therefore, a hawl (lunar year) is 354 days long.
You should make your zakat payment one hawl (lunar year) after you become eligible to pay Zakat. However, this is only if your wealth on that date is still at – or above – the nisab threshold and has been so throughout the hawl.
Nisab is the minimum amount that a Muslim must have before being obliged to zakat. It is based on the valuation of 609 grams of silver.
The Nisab value is what an individual must have before they are required to pay zakat. An individual can calculate this based on the value of gold or silver that they have. However, by using the silver value, it means that more people are likely to be eligible for zakat, which means more money benefiting the poor and needy.
If this amount is more than the value of the current Nisab value (609 grams of silver), and you have also met all other requirements then you will need to pay zakat on this.
