Do you pay Zakat on all gold?
Yes, if it reaches the Zakat threshold (nisab) for currency, with the exception of a woman’s customary accumulation of conventional jewelry, according to the favored scholarly opinion. (Most Hanafi scholars dissent and require Zakat on jewelry).
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What is nisab on gold?
The best measure of nisab (Zakat threshold) for gold is 85 grams (g). You may also multiply the price of a troy ounce (t oz) of gold by 2.73295, the nisab amount in t oz. (Gold is measured by the troy ounce, not the United States ounce.)
Here are the equations for determining nisab for gold for each measure.
Gold price per gram US$ x 85 grams = Nisab (most precise)
Gold price per troy ounce US$ x 2.73295 troy oz = Nisab
At the time of this writing, March 7, 2022 (3:33 pm), the calculations would be:
$64.21 x 85 g = $5,457.85
$1,998.70 x 2.73295 t oz = $5,462.35
You can see the approximately $4.50 variation in gold’s nisab threshold between the two measures. Again, the 85 g unit is more precise.
This means that if you possess total gold quantities of 85 g or more, or currencies totaling $5,457.85 or more — for a Zakat year (called a hawl, which equals one complete Islamic Hijri lunar year, not a solar year) — you must pay Zakat on your holdings at their Zakat Due Date (ZDD).
The Zakat year (hawl) begins as soon as you accumulate the nisab for that wealth-type, in this case gold and/or any kind of currency. The Zakat Due Date (ZDD) comes on the last day that completes the lunar year started on that nisab accumulation date.
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What Is Nisab in Islam? (Important nisab/year graph and explanation here)
How much do you pay in Zakat on gold?
The Prophet, on him be peace, set both the rates and timelines of Zakat on all Zakatable, that is Zakat-eligible, types of wealth for Muslims. He established a 2.5% Zakat rate on gold, silver and all measures of currency, which means on all money. Muslim scholars have unanimous agreement (ijma‘) on this.
The Prophet, on him be peace, said:
On silver, 2.5% is due.”
Again, this applies to all currency and money.
Why must you pay Zakat on gold?
Zakat comes due on all the growing and producing wealth of every Muslim who solely owns it once it reaches its set threshold and date of maturation. Growth and production potential define gold as the very standard of Zakatable assets.
In fact, Muslim scholars have literally made gold the standard weight measure for the nisab threshold on currency because it has proven the most constant, stable unit of fungible wealth-forms, like precious metals, coinage, currency, or money.
The importance of gold (and the wealth-types for which it becomes the scale) in the economic life of the community means hoarding it can quickly turn into a mechanism for permanently enriching the few and impoverishing the many if its holders do not put it into circulation.
Obligatory Zakat deliberately creates an incentive to invest gold and its analogous wealth-forms in society, which then inures the people, through both its circulation and its distribution.
For this reason, the Prophet, on him be peace, exhorted Muslims to invest the wealth of the orphans in their care. He did not want annual Zakat payments to “consume” their wealth before they grew old enough to take control of their own fortunes and put them to use.
Is gold’s Zakat value today the same as in the Prophet’s time, on him be peace?
Yes. Many scholars, Muslims and others, have clearly established a precise measure between gold at the time of the Prophet, on him be peace, and current weights used for Zakat today.
Briefly, the Companion ‘Umar ibn Al-Khattab, Allah’s mercy upon him, standardized the legal weight of the dirham. Then ‘Abdul-Malik minted all ‘Umayyad-era coins at the same weight, 10 silver dirhams equaling that specific measure, known as a mithqal. These still exist today.
Said the celebrated Muslim historian Ibn Khaldun:
“It is unanimously agreed upon since the early ages of Islam, the era of the Companions and the Successors, that … the weight of a silver dirham is equal to seven-tenths the weight of a gold dinar” (Ibn Khaldun, Al-Muqaddimah).
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Some say nisab should be based on silver?
The Prophet, on him be peace, indexed Zakat payment to the value of both the silver dirham and gold dinar of Mecca, the currencies of his time. What the Prophet, on him be peace, does is Revelation. Our Zakat payments must equal those same gold, silver, and extrapolated currency measures.
Muslim scholars long ago converted the standard Zakat nisab measure for currency to those same gold weights because of gold’s incomparable value stability relative to “current wealth” (from which the word “currency” derives).
Silver as a direct nisab measure overwhelmingly encumbers the poor themselves to pay Zakat, increasing their financial burden and further impoverishing them because it creates such a low threshold for paying Zakat. Silver has not held anywhere near as stable a measure of value as gold.
As of 6:00 p.m. on March 7, 2022, nisab calculated on silver (595 gm) comes in at only $493.85. This means a person with that amount of money in his or her possession, in all currency forms combined, at the Zakat Due Date (ZDD) must pay 2.5% of it, or $12.35, in obligatory Zakat.
That nisab would be the equivalent of about 100 gallons of gas, as we speak, or three or four days’ worth for most of us in the U.S. In reality, a person in our times with this restricted holding may well be an eligible Zakat recipient rather than a Zakat payer.
What if you have gold decorations or figurines?
Zakat comes due on all forms of gold and silver (jewelry exemptions noted). If by figurines you mean statues and the like, Islam forbids these forms, as well as dinnerware made from gold or silver. Yet you still owe Zakat on them, by their weight, if you own these items, plus Zakat on their market value, as well, at 2.5%. That’s 2.5% of their gold weight worth plus their added market value.
Related Detailed Answers
Is There Zakat on Jewelry? (Discusses Zakat on forbidden gold and silver items)
Is there a penalty for not paying Zakat on gold?
Yes, both in this life and in the Hereafter. Technically, due Zakat and half one’s wealth can be confiscated by a Muslim polity from one who refuses its payment, be it for gold or for any other Zakatable wealth-type. But in practice in our times, the individual Muslim holds responsibility before Allah to pay all due Zakat.
As to consequences for not paying Zakat in this life, the Prophet, on him be peace, warned:
No people do not pay their due Zakat but that Allah causes them to suffer disaster, famine, or drought.” (Al-Tabarani). Another report uses the wording, “God withholds rain from them.”
The Prophet, on him be peace, also served notice to Muslims individually:
One’s Zakat does not remain mixed with one’s other wealth without obliterating it” (Bukhari, Tarikh Al-Kabir, The Large History of Hadith Narrators).
Regarding the Afterlife, Allah states:
Nor let those who are miserly with what God has given them of His bounty think that it is good for them. Rather, it is evil for them. What they stingily withhold shall be hung about their necks on the Day of Resurrection” (Surat Al ‘Imran, 3:180).
Allah has also revealed in the Quran:
Yet as for those who hoard up gold and silver and do not spend it in the path of Allah — give them tidings of a most painful torment — on a Day Hereafter when [their gold and silver] shall be heated in the Fire of Hell. Then their foreheads and their sides and their backs will be branded with it [and it shall be said to them]: ‘This is what you have hoarded up for yourselves! So taste now what you used to hoard up!’ ” (Surat Al-Tawbah, 9:34-35).
The Prophet, on him be peace, specified the implications of these verses:
No owner of hoarded wealth who does not pay its Zakat will be spared. One’s hoard shall be heated in the Fires of Hell and fashioned into plates. Then one’s flanks and forehead will be branded with them on a Day lasting 50,000 years, until Allah pronounces judgment on His servants” (Bukhari and Muslim).
He said also:
As for one whom Allah enriches but does not pay Zakat on his wealth, on the Day of Judgment it will be turned into a bald-headed, poisonous, male serpent with two black spots over its eyes. It will coil itself around his neck, bite his cheeks and say: 'I am your treasure. I am your wealth.’ ” Then he recited the verse ‘Nor let those …’” [Surat Al ‘Imran, 3:180, cited above] (Bukhari and Muslim).
