Nisab and Zakat Eligibility
Nisab is the minimum threshold of wealth a person must hold before zakat becomes obligatory on them at all — below nisab, no zakat is due, regardless of how the wealth is distributed across cash, gold, business assets, or anything else. Above it, 2.5% is generally owed on the qualifying wealth, once it has been held for a full lunar year (hawl) at or above the threshold.
There are two commonly cited nisab values, one based on gold (87.48 grams) and one based on silver (612.36 grams), and because gold and silver prices move independently, these two thresholds don't track each other — silver's nisab in currency terms is usually considerably lower than gold's. Which one to use for cash and mixed assets is a genuine point of difference among scholars: some hold that the lower of the two thresholds (almost always silver) should be used, reasoning that this benefits the poor by bringing more people into the zakat-paying category sooner; others hold that gold's nisab is the more appropriate standard for cash-based wealth specifically, since gold has historically been the more stable store of value. Both positions are defensible and this is genuinely one of the areas where following a specific school of thought's standard position removes the ambiguity.
Eligibility to pay also depends on the wealth being fully owned, not immediately needed for essential living costs, and — for cash and business assets specifically — held for the complete lunar year without dropping below nisab at any point, according to the majority view; some scholars allow for the year to be measured from when wealth first reached nisab even if it briefly dipped and recovered, so there is some variation here in how strictly the "held throughout the year" condition is applied.
On the receiving side, the Quran (9:60) names eight categories eligible for zakat distribution: the poor, the needy, those employed to administer zakat, those whose hearts are to be reconciled, freeing captives, those in debt, in the cause of Allah, and the stranded traveller. A zakat payment given outside these categories — to a mosque building fund, for instance, unless structured to reach one of the eight categories — does not fulfil the zakat obligation according to most scholars, even though it may still be a valid and rewarded charitable act (sadaqah) in its own right.