Banknotes

Q 2: What is the ruling regarding Zakah (obligatory charity) on money? We have an amount of paper money, i.e., banknotes, (Part No. 9; Page No. 259) should we pay Zakah from it as it is or should we exchange it for gold or silver and then pay the Zakah according to the market price of gold and silver, as stated in the Shari`ah (Islamic Law)?

A: If the reality is as you mentioned, you must pay 2.5% of the paper money you have as Zakah in paper money, whether the money is backed by silver or gold reserves or not, provided it reaches the Nisab (the minimum amount on which Zakah is due) which equals one hundred and forty Mithqals (1 Mithqal = 4.25 grams) of silver and twenty Mithqals of gold, and you have owned it for a lunar year.May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.