Zakat

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.

  1. All possessions can be classified into either Zakatable or Non-zakatable wealth. For the purpose of Zakât calculation, Muslim scholars have established five categories of zakatable wealth:
    1. 1. Personal Zakatable Wealth: This includes money on hand and in bank accounts, stocks, and money held in retirement and pension accounts.
    2. 2. Business Zakatable Wealth: This is further classified in two categories:
      a. Trading goods that include business lists of goods in stock. 
      b. Exploited assets such as rented properties and factories.
    3. 3. Agricultural Produce: This, too, is further classified in two categories: a. Crops from irrigated land, wherein the irrigation system entails costs and labor. b. Crops from non-irrigated land watered by rain or natural springs.
    4. 4. Livestock: Animals raised for commercial purposes— primarily sheep, goats, cows, and buffaloes.
    5. 5. Treasure Troves (rikâz): This includes valuables that people have buried and left, natural resources, such as oil, precious metals, and gemstones. It can be classified more specifically as:         a. Hidden windfalls and discovered fortunes 
              b. Oil and mining
  1. In general, Zakât is calculated on personal net worth, excluding properties and items for personal, family, and commercial use. Public properties are also non-zakatable. Below is a partial list of wealth that is Zakât-exempt: 
    1. Property for Personal, Family, and Commercial Use This category contains seven primary kinds of wealth: 
      1. Food: As stored for consumption by an individual or family.
      2. Clothing: All personal and family apparel. 
      3. Residence: The domicile owned and occupied by the owner, including furnishings, utensils, and apparatus used for basic needs and necessity. 
      4. Transportation: The means of personal and family transport, such as vehicles used by an owner and family members. 
      5. Domestic Animals and Poultry: If used for household food and needs, one may own kinds and quantities in this category as follows (Note: the following numbers of animals for personal use and consumption are based on one Zakât payer. If more than one Zakât payer domicile together, or keep their animals and land collectively, the numbers would increase accordingly): 
        1. Cows (bovines): 1-29 
        2. Sheep, goats (ovine): 1-39 
        3. Poultry (chickens etc.): Unlimited (household needs only) 
        4. Personal Use (pets, horses, etc.): Unlimited  
      6. Tools: Devices, instruments, and equipment used in one’s personal business. 
      7. Agricultural Land: The land itself, animals, and equipment used in cultivation. 
        1. Property in Public Trust Properties used for mosques, schools, hospitals, orphanages, etc.; those designated for endowment (waqf) for the benefit of the needy; and the funds generated from such properties—all are non-zakatable (Fiqh az-Zakât, 338). 
        2. Unlawful Wealth Only lawful assets are worthy of the blessing of Zakât. Zakât cannot be calculated on prohibited or unlawful wealth, such as interest income, stolen property, or wealth acquired or earned through unlawful means, such as extortion, forgery, bribery, monopoly, and cheating. Such wealth must be returned in full to its lawful owners. If that is impossible, it is to be given away to the poor in its entirety (Fiqh az-Zakât, 72).
  1. Zakât falls due when three conditions converge in a person and his wealth: 
    1. One is a Muslim. Note, The wealth of non-Muslims, even if they are citizens of an Islamic polity, is not subject to the Zakât-Charity because Zakât is, first and foremost, an obligatory Pillar of worship, and Islam famously forbids any compulsion when it comes to acceptance of it as one’s religion. 
    2. One’s zakatable wealth rises to a minimum threshold (ni|âb). Ni|âb is calculated on a possession that remains with one on a zakatable category of wealth after one fulfills all basic living expenses for an entire lunar year. This excludes all existing necessities, such as one’s residence, vehicle, stored food, clothes, and furniture. So if someone makes a large sum of money and spends it all on basic needs—without unnecessary luxury—no Zakât is due at the end of the lunar year. If, however, he or she saved part of that money in that lunar year, then Zakât is payable on that remaining amount, provided it equals or exceeds ni|âb. 
    3. A lunar year (^awl) passes while one’s zakatable wealth sustains the minimum threshold.  A minimum of ni|âb must have amassed and stayed in one’s possession for one full lunar year (^awl) before Zakât is due. According to Abû ¤anîfah, ni|âb need only be available at the beginning and at the end of the Zakât year. The other three major schools require that ni|âb remains in ownership during the entire lunar year (^awl), not dipping below that threshold. This ruling is limited to livestock, money, and business assets. It does not include crops, fruits, honey, metals, and treasures. They are zakatable, and their Zakât comes due, when they are mined or harvested (Fiqh azZakât, 95-96, 98-99). Zakât becomes due after the passage of 12 full lunar months (^awl). This can be determined either from the beginning of ownership of the ni|âb in a category of wealth, or the past date of one’s Zakât payment on that category. Thus to say that the passage of a lunar year is required on all zakatable wealth is incorrect. It is required only on ni|âb. Any increase of wealth—after it reaches its ni|âb at any time during the year—must be included in the zakatable amount if that increase is maintained with one until the Zakât due dates fall. So, the relevant standard of measure for the ni|âb is what is present at the Zakât due date, not the fluctuations during the year.  This means the Zakât-year can differ for people (and, possibly, for one person’s various wealth forms). However, considering that almost everyone possess ni|âb for the entire year on the most common category of wealth (money), for most of us the only practical way to compute Zakât is to specify a certain lunar calendar date and calculate your zakatable wealth on that day, and then pay Zakât annually on the same lunar calendar date every year. The 1st of Ramadan, 27th of Ramadan, and 1st of Mu^arram are all popular Zakât due dates (ZDD). Many pay their Zakât during Ramadan for the blessing of it. Others favor Mu^arram because it is the first month of the Hijrî, lunar year.
  1. No. Zakât is due only on zakatable wealth that reaches an established minimum threshold for that particular kind of wealth. That threshold is called ni|âb, literally, ‘origin,’ or ‘beginning,’ for it is the amount wherein the poor’s right in one’s wealth commences. Different types of assets have different thresholds. For example, the ni|âb on money is 85 grams of gold (approx. 3 OZ US; 2.74 TROY OZ). The ni|âb on cows is 30 cows. The ni|âb on grain is 653 kilograms (Zakât Calculation, 46). If the quantity of the zakatable possession is less than its prescribed ni|âb, it is exempted from Zakât. 
  2. The table below illustrates the ni|âb and Zakât rates, for each category of zakatable wealth. 
    1. Table of Ni|âb and Zakât Rates

 

Type of WealthNisab (read as value of)Zakat Rates
  1. Personal Wealth
3 US OZ pure gold2.5%
  1. Business Wealth
3 US OZ pure gold 
  • Trade goods
 2.5% current wholesale value
  • Exploited assets
 2.5% net income
  1. Agricultural Produce
653 kg/1439 lbs 
  • Crops (irrigated)
 5% of harvest
  • Crops (non-irrigated)
 10% of harvest
  1. Livestock

Ovine: 40

Bovine: 30

See Special Zakat Rate Table in Source Information provided below
  1. Treasure Troves (Hidden Windfalls & Natural Resources)
3 US OZ pure gold20%
  1. The rules of Zakât assessment on various types of wealth are bound by underlying principles revealed by God in the Quran. These principles are themselves proof of the Quran’s divine revelation, for they point to the timeless wisdom of the Law Giver. The Prophet œ, as the one who knew the Quran best and embodied it, detailed the Zakât commandments by example and statement. Muslim jurists in nearly every generation have re-articulated these principles and prophetic model for the believers with great clarity.

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.

  1. Zakât is paid to deserving individuals who come under one or more of eight zakatable categories designated by God in the Quran. 
  2. The eight categories of eligible Zakât recipients follow: 
    1. The poor (al-fuqarâ’) 
    2. The needy (al-masâkîn) 
    3. Zakât-workers 
    4. Those whose hearts are to be reconciled  
    5. Those in bondage (slaves and captives)  
    6. The debt-ridden 
    7. In the cause of God 
    8. The wayfarer (the stranded, or one traveling who lacks resources)

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.

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