Source of Information: “The Zakat Handbook - A Practical Guide for Muslims in the West” published by The Zakat Foundation of America in 2007 read more
The literal, or denotative, definition of the word ‘zakât’ (sometimes spelled ‘zakâh’) is “increase,” as in growth (namâ). The word also connotes “blessings” (barakah), “purification” (tahârah), or “commendation” (mad^).
In America, for example, the government levies an (increasingly disputed) income tax on individual earnings even before the earner, or his or her family, is provided for out of those wages. The sums can be staggering, as much as 50 percent. Many observant Christians are required to pay a “tithe” (a word that means literally a “tenth”), thus not less than 10 percent of their overall annual income. The Zakât-Charity is, for the most part, a 2.5 percent payment only on one’s “disposable” income and property—after one fulfills all one’s other financial obligations in a single lunar year. (Zakât on some kinds of wealth can go up to 20 percent, but this is a limited exception). The point is that Zakât is paid on one’s “remaining wealth, not “total” income or holdings. The wealth one uses for daily living—for food, housing, transportation, etc.— is exempt. That is, while taxes in America are paid on your full income before you even fulfill your vital needs, Zakât is paid only on the wealth that is left to you after you have sufficed your own needs and those of your dependents, for a full lunar year. In sum, Zakât is a religious obligation of worship ordained by God to meet the needs of deserving recipients who fall into one or more of eight divinely designated categories. When one pays Zakât, one’s religious obligation to pay the Zakât-Charity is fulfilled, with no worldly return—not even thanks—due to him or her by Zakât recipients for the payment. Reward is sought from God alone. A tax, on the other hand, is generally paid to enable functions of the state. Hence, a taxpayer, at least in theory, renders mandatory payments to governments for direct and indirect services received. So, while taxes diminish one’s money in exchange for eligibility in certain systems, the Zakât-Charity increases, blesses, and purifies ones wealth as worship in this world, for which God alone offers divine commendation everlastingly to the believer in the Hereafter.
In Islam, every able-bodied man is ordered to work to fulfill his own needs and his family’s. In the event that one is not able to work, then one’s wealthier relatives—beginning from one’s nearest kin and moving outward—are responsible for one’s support. Charity is the substance that binds every Muslim to every other by way of their obligation to one another in God. Islam builds its community out of human obligation toward each other, making each Muslim accountable for the wellbeing of every other Muslim. This concept of reciprocal social obligation is called takâful, meaning “mutual responsibility,” and it is strongly bolstered by the fact that the ZakâtCharity is an act of mandatory worship. The tenet of mutual responsibility helps Muslims envision their society like an extended family. Again, the Zakât-Charity is obligatory not optional, worship not a tax.
The term ‘zakatable’ is a special word that Muslims who speak English have coined denoting “wealth and property that one must rightfully pay Zakât on.” Its negation is the term ‘non-zakatable,’ which indicates wealth and property that is not rightfully subject to the sacred alms of Zakât-Charity.
|Type of Wealth||Nisab (read as value of)||Zakat Rates|
|3 US OZ pure gold||2.5%|
|3 US OZ pure gold|
|2.5% current wholesale value|
|2.5% net income|
|653 kg/1439 lbs|
|5% of harvest|
|10% of harvest|
|See Special Zakat Rate Table in Source Information provided below|
|3 US OZ pure gold||20%|
The most common zakatable wealth is cash on hand and in banks, stocks, and retirement and savings funds. The amount of Zakât due on this wealth is 2.5 percent of its combined total value as of the annual Zakât due date.
Those who collect and distribute the Zakât-Charity are crucial to the integrity of the community and the fulfillment of its worship. Thus they can be paid out of Zakât, according to the verse cited above. This indicates that Zakât collection and administration is the function of an organized body of paid employees. These workers can receive compensation from Zakât, regardless of whether they are poor or not. Moreover, the compensation should be competitive with the market value of their labor (Fiqh az-Zakât, 366, 373). If Zakât administration is performed by non-governmental agencies, they must specify to Zakât payers the percentage deducted for administrative fees.