the Fatwa Department Research Committee - chaired by Sheikh `Abd al-Wahhâb al-Turayrî
You do not pay Zakâh from your income. Zakah is calculated upon the amount of money that you have retained in your possession as savings for one full year. You must calculate the amount of money that you have had in your possession for one full year. Then, if that amount retained for a year reaches the minimum amount of money for which Zakâh is required, you must take from it 1/40th (2.5%) and give it to the poor, the destitute and others like them.
This is done annually.
For instance, if a person has managed to keep $1000 in savings for one full year, then she will have to pay $25 which is 2.5% of one thousand. If she has $1200, then she will have to pay $30.
If a person has a very small amount of money in savings, then that person does not have to pay Zakâh. The minimum amount of savings for which Zakâh is due is known as the nisâb. If your savings that you have retained for a full year are less than this amount, you do not have to pay Zakâh.
The nisâb is fixed against gold and silver, since gold and silver were the currency of the past. The nisâb for gold is 85 grams of pure gold (24 carat). The nisâb for silver is 595 grams of pure silver.
The difficult question arises today when we are dealing with currency: should we base the nisâb on currency on the value of the nisâb of gold or the nisâb of silver?
Some scholars say it is best to base it on the nisâb of the lower monetary value – which in this case is silver – to be on the safe side. In this way, we can be sure that we are fulfilling our obligation to Allah.
Other scholars have taken a different view. They argue that the purpose for the nisâb is to establish that a person has sufficient wealth for himself before obligating him to pay Zakâh. In the present market, silver has become a commodity of trivial value. The nisâb for silver is equivalent to a very low sum of money. They argue that the nisâb of gold more accurately reflects the economic realities of the present day and its value should be used for determining Zakâh on currency.
The Muslim is not requested to give Zakât until the amount possessed reaches the amount assigned by Islamic Law.
The equivalent value in various currencies fluctuates with the gold and silver prices in the market. At the time of paying Zakâh, the market value of the metal in local currency needs to be taken locally. This information should be attainable from a commodities index in the newspaper, from a bank, or firm that trades in gold and silver.
And Allah knows best.
Source: Islam Today