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Fatwa CenterAssessing the Nisaab of Bank Notes
Question
Assalaamu 'alaikum wa Rahmatullaah wa Barakaatuh, How do we calculate the Nisaab on paper money? What I found out is that you have to pay Zakaah on paper money equal to 606 grams of chandi (silver). Now, I am confused regarding Nisaab. I am getting a monthly salary of 80,000 rupees. Suppose now I have 150,000 in the bank (without the interest) and I spend my money for my daily needs, and during the year sometimes it has been more than 150,000 and sometimes less than that, and after one lunar year I have only 45,000 (at the start of the year it was 150,00 rupees). How do I assess my Nisaab to give Zakaah? Thank you.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
We have already issued many Fatwas clarifying that the Nisaab (i.e. the minimum amount liable for Zakah (obligatory charity)) for banknotes is the equivalent of 85 grams of gold or 595 grams of silver. Determining the Nisaab based on gold is preferred over determining it based on silver because the scholars 
though they agreed that the Nisaab for silver is 200 Dirhams, differed in determining the weight of a Dirham and this difference subsequently affects determining the final value of Nisaab for silver by grams. As regards the Nisaab for gold, the scholars agreed that it is 20 Mithqaal (a measure which is of pure gold), and they agreed about the weight of 1 Mithqaal (1 Mithqaal = 4.25 grams).
Therefore, it is more appropriate for you to assess the Nisaab for your bank notes based on gold rather than on silver.
Furthermore, the best way of paying the Zakah on money is to determine an annual time on which one pays the Zakah on wealth, and which starts when a whole lunar year passes from the time of owning the Nisaab. Every year thereafter, on the same date, one pays his Zakah for all types of wealth which are liable for Zakah and meet the Nisaab requirements. One should pay Zakah on the whole amount whether it increased during that year or decreased from the initial amount. What really matters is fulfilling the prerequisite of Nisaab even if one gets more money after the beginning of the lunar year. This method of calculation is to the benefit of the poor and easier in calculation.
Allaah Knows best.
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