Is the Zakaah of gold and silver in the form of jewelry to be estimated based on its value or weight? What is the difference between the two cases?

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.

If the jewelry is of a type upon which Zakah is payable, such as jewelry for the purpose of saving and possession, its owner believes that the obligation of Zakah on jewelry for permissible usage is due on it or that it is a prohibited kind of jewelry, then is the Zakah due on its weight or value? In fact, the answer needs a detailed explanation:

If the jewelry is intended for trade purposes, then Zakah is due on its value. This means that, if it does not reach the Nisaab based on its weight but does reach it based on its value, then Zakah is due on it.

However, if the jewelry is not meant for trade, then determining its Nisaab and Zakah value are based on its weight according to Maalik . However, according to Ahmad and Ash-Shaaf‘i its Nisaab is to be determined according to its weight while its Zakah is determined according to its value. If the jewelry involves a prohibition, then its Nisaab and Zakah are to be determined according to its weight.

The prominent scholar, Ibn ‘Uthaymeen explained this issue in detail and cleared the difference between the two cases. He gave examples to each case and we will cite his speech regarding this matter here as it answers your question clearly as he says: “…thereby, we know that paying Zakah on jewelry is of three categories:

1- A category whose Nisaab and Zakah are estimated according to its weight.

2- A category whose Nisaab and Zakah are estimated according to its value.

3- A category whose Nisaab is estimated according to its weight and its Zakah is estimated according to its value.

The first category where the Nisaab and Zakah are estimated according to its weight is prohibited jewelry which also includes unlawful utensils made of gold or silver.

An example of this is a man who has a cup made of gold weighing 20 Mithqaals (i.e. units of measurement) but its value is 2000 riyals. However, when this gold was processed as a cup, its value was raised to 3000 riyals. So, should the value or weight be considered in such a case?

The answer is that we consider that the cup constitutes a Nisaab of unprocessed gold whose value is 2000 riyals. This is the chosen opinion. Scholars explained it saying that the excess value covers the fees of the unlawful processing of gold so it is overlooked because the owner is obliged to change it. So, if we include the processing fees while calculating the Zakah, this means that we approve of such unlawful processing. The correct opinion concerning this issue is that what counts in the Nisaab and Zakah of prohibited jewelry is its value just like what is permissible and the excess value that represents the fees of the prohibited processing should be put in Bayt Al-Maal (i.e. the treasury of the Islamic State).

The category where the value is the criterion according to which the Nisaab and Zakah are calculated is jewelry prepared as trade goods.

An example of this is a jewelry dealer who has 10 Mithqaals of it. This amount does not reach the Nisaab of gold but the value of it is 400 dirhams, so it has reached the Nisaab of silver. Hence, Zakah is due on it because it has reached the Nisaab based on its value.

The third category where the Nisaab is estimated according to its weight and the Zakah is estimated according to its value  is permissible jewelry.

An example of it is the case of a woman who has gold jewelry that weighs 20 Mithqaals, so Zakah is due on it. Its value as unprocessed gold equals 2000 riyals while its value as processed gold equals 3000 riyals. The Zakah of this jewelry should be given based on its value which is 3000 riyals because the excess value represents a permissible processing of the gold so it should be assessed.

Another example is the case of a woman who owns 15 Mithqaals whose value is 300 dirhams. No Zakah is due on this jewelry because its weight does not reach the Nisaab.”

Moreover, Ibn Qudaamah mentioned this issue clearing the difference between its various cases as he said, "The Nisaab of jewelry on which Zakah is payable is estimated upon its weight. This means that, if a person owns jewelry whose value is 200 dirhams and its weight is less than 200 dirhams (units of measurement), then no Zakah is due on it. If its weight reaches 200 dirhams (units of measurement), then Zakah is due on it even if its value has decreased. This is based upon the statement of the Prophet, sallallaahu ‘alayhi wa sallam, "There is no Zakah due on what is less than five Ooqiyahs of silver."

If the jewelry is meant for trade then it should be assessed. If its value as gold and silver reaches the Nisaab, then Zakah is due on it because Zakah is related to the value in the case of jewelry meant for trade. This is unlike that which is not meant for trade whose Zakah is related to the jewelry itself and its Nisaab should be estimated based on both the value and weight….this is the chosen opinion of Ash-Shaaf‘i whereas Maalik said: "What counts is the weight so if the jewelry weighs 20 and its value is 30, then half a Mithqaal is due on it without any excess based on its value. According to our view, as the Nisaab represents processed gold, then the processing value should be considered just like quality should be considered in other types of wealth on which Zakah is due. We adopt their proof and believe that Zakah is related to both its weight and processing costs."

Allaah Knows best.