ZAKAT AND USHR

Zakat is one of the fundamental institutions in Islam. In importance, it is placed next to prayer. The commandment of Zakah is often coupled with the commandment of Salah in the Holy Quran. For example:

وَأَقِيمُواْ الصَّلاَةَ وَآتُواْ الزَّكَاةَ وَارْكَعُواْ مَعَ الرَّاكِعِين-O

 

“And be steadfast in prayer; Practice regular charity; and bow down your heads with those who bow down (in worship).” Surah II Verse 43

وَإِذْ أَخَذْنَا مِيثَاقَ بَنِي إِسْرَائِيلَ لاَ تَعْبُدُونَ إِلاَّ اللّهَ وَبِالْوَالِدَيْنِ إِحْسَاناً وَذِي الْقُرْبَى وَالْيَتَامَى وَالْمَسَاكِينِ وَقُولُواْ لِلنَّاسِ حُسْناً وَأَقِيمُواْ الصَّلاَةَ وَآتُواْ الزَّكَاةَ ثُمَّ تَوَلَّيْتُمْ إِلاَّ قَلِيلاً مِّنكُمْ وَأَنتُم مِّعْرِضُون-َ

 

“Treat with kindness; your parents and kindred, and orphans and those in need; speak fair to the people; be steadfast in prayer;” Surah II Verse 83

وَأَقِيمُواْ الصَّلاَةَ وَآتُواْ الزَّكَاةَ وَمَا تُقَدِّمُواْ لأَنفُسِكُم مِّنْ خَيْرٍ تَجِدُوهُ عِندَ اللّهِ إِنَّ اللّهَ بِمَا تَعْمَلُونَ بَصِير-ٌ

“And be steadfast in prayer and regular in charity: And whatever good ye send forth for your souls before you, ye shall find it With God: for God sees Well all that ye do.” Surah II Verse 110.

Literally, Zakah means purification, growth, righteousness and blessing. It is defined in Shariah as a specific amount due in the property of Muslims to be distributed to the deserving. The obligatory character of Zakah is spelled out in Surah Taubah (9) 103

خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِم بِهَا وَصَلِّ عَلَيْهِمْ إِنَّ صَلاَتَكَ سَكَنٌ لَّهُمْ وَاللّهُ سَمِيعٌ عَلِيمٌٌ

"Of their properties, take alms, so that you might purify and sanctify them.”

In the same Surah Allah makes clear the punishment awaiting those unmindful of this earthly duty and responsibility:

يَا أَيُّهَا الَّذِينَ آمَنُواْ إِنَّ كَثِيرًا مِّنَ الأَحْبَارِ وَالرُّهْبَانِ لَيَأْكُلُونَ أَمْوَالَ النَّاسِ بِالْبَاطِلِ وَيَصُدُّونَ عَن سَبِيلِ اللّهِ وَالَّذِينَ يَكْنِزُونَ الذَّهَبَ وَالْفِضَّةَ وَلاَ يُنفِقُونَهَا فِي سَبِيلِ اللّهِ فَبَشِّرْهُم بِعَذَابٍ أَلِيمٍ

And there are those who hoard gold and silver (money) and spend it not in the Way of Allah: Announce unto them a most grievous penalty: On the day when heat will be produced out of that (wealth) in the fire of Hell, and with it will be Branded t heir foreheads, their flanks, and their backs. This is the (treasure) which ye hoarded for yourselves: Taste ye, then the (treasures) ye hoarded! Surah Taubah verse 34

1. DEFINITION OF ZAKAH

 

It is one of the essential features of any country's constitution to make provision to tax the rich for the benefit of the poor. Likewise, in the religion of Islam, the rich Muslims are required to make contributions as an obligatory religious duty, for the benefit of the poor Muslims. This is called Zakah.

Zakat is the third of the Five Pillars of Islam. The root meaning of the Arabic term Zakat is a means of purification and development. Zakat refers to spending a fixed portion of one's wealth for the poor, needy, Zakat collectors, people whose he arts need to be reconciled, slaves, those in debt, in the way of Allah, and the travelers in the society. Its literal meaning is 'to grow (in goodness)' or 'increase', 'purifying', or 'making pure'. It is prescribed in the Quran:

خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِم بِهَا وَصَلِّ عَلَيْهِمْ إِنَّ صَلاَتَكَ سَكَنٌ لَّهُمْ وَاللّهُ سَمِيعٌ عَلِيمٌ

"Of their properties, take alms, so that you might purify and sanctify them. "(9:103)

2. ON WHOM ZAKAH IS OBLIGATORY

 

Zakah is not obligatory upon all Muslims, but only upon them who are recognized as rich by the laws of Islam, that is, those who possess enough wealth which is considered by the Shariah - Islamic religious law - as bringing them within the category of the wealthy.

Similarly all possessions are not liable for taxation of Zakah, but only the definitely specified possessions in similarly specified quantities. The de tails of these are mentioned' hereunder.

3. WHEN ZAKAH BECOMES OBLIGATORY

 

There are eight conditions, which make Zakah obligatory, some of which relate to the possessor and others to the possessions. The possessor must be:

a) A free man, not a slave.

b) A Muslim, not a Non-Muslim.

c) Of sound mind.

d) An adult.

e) In complete ownership of his or her wealth.

f) In possession of such wealth, which is ove r and above the requirements to satisfy the essential, needs of the possessor and of those legitimately de pendent upon him or her.

g) Free from debts.

h) In possession of a defined quantity of wealth for one complete year.

We will now deal with each of the conditions in detail:

3.1 That the possessor of wealth must be a free man, not a slave

Zakah is not obligatory upon a slave, because the slave and his possessions both belong to his master.

3.2 That the possessor of wealth must be a Muslim

To discharge the obligation of Zakah is like discharging the obligation of the five daily Salah. The discharging of the duties of the Salah and Zakah earn merit and their neglect constitutes sin; therefore it is evident that these religious obligatory duties can only be applicable to those who believe in Islam, and who submit to the laws of the Shariah. Non -Muslims cannot obviously be taxed to pay the Zakah.

3.3 That the person on whom Zakah becomes obligatory must be of a sound mind i n full possession of his mental faculties

Zakah does not become obligatory upon a person of unsound mind.

3.4 That Zakah is obligatory upon possessors of wealth who are adults

Zakah is not obligatory upon those who have not reached the age of puberty. A child is not required to pay Zakah even if he or she is the owner of enough wealth, which makes Zakah obligatory upon adults. The moment a minor reaches the age of puberty, the regulations relating to Zakah will become applicable. Some Ulema of course hold that the guardian of such a child should discharge the Zakah on behalf of the child.

3.5 That the possessor enjoys full ownership and possession of his wealth

Different regulations apply to a person who is not in complete ownership and possession of wealth. What is meant by complete possession and full ownership is that the person must own, possess as well as be free to spend or dispose of the wealth in any manner he likes. But if a person owns the wealth, but he has lent it to someone and the debtor ha s not repaid it, then he certainly is not in a position to spend or dispose of it as he and when he likes. Or if a person has buried his wealth somewhere and has now forgotten the place, then he too is the owner of wealth that he cannot spend; these and ot her such eventualities are governed by different regulations.

4. NISAB: MINIMUM WEALTH

 

All taxes are imposed upon financial strength of a person and calculated accordingly. Similarly in the religious law of Islam, Zakah is calculated on the wealth possessed by a person. Unless and until you reach the minimum quantity of specified wealth, the person is not liable for the payment of Zakah. This minimum limit is known in the Shariah law as Nisab.

The person who reaches the specified minimum and over is considered wealthy enough to pay the Zakah and in this manner, share his wealth with the poor and the indigent.

Zakah is applicable only to the following categories of wealth:

Gold, Silver, Livestock and all types of Traded Goods.

 We will discuss the regulations governing the ownership of livestock later. Regulations governing Gold and Silver are as follows:

4.1 Gold

 

The possession of three ounces minimum gold or its equivalent in cash for one year makes one liable to pay Zakah at the rate of 21%.

4.2 Silver

 

The possession of twenty-one ounces minimum silver o r its equivalent in cash for one year makes one liable to pay Zakah at the rate of 21%. Gold and silver in any shape or form - jewelry, utensils, etc. - all are considered as wealth and Zakah becomes payable on them, if the weight reaches the minimum limit and their possession completes twelve lunar months.

4.3 Mixed metals

 

 If someone possesses less than twenty-one ounces of silver, and does not have any gold or cash to reach the minimum requirement, then he is not liable for the payment of Zakah. If however, he has some gold and some silver, but the quantity of each of the metals do not reach the minimum limit by itself, but they reach the minimum in value, if totaled together, then Zakah will become payable on the total. For example: If a person has twelve ounces of silver and two ounces of gold, each of these by itself does not reach the minimum quantity for the purpose of Zakah. So the calculation will take this course: (keeping in mind that the Nisab for silver is twenty one ounces) the possession of twelve ounces of silver is therefore short by the nine ounce to reach the Nisab of silver. Is the value in cash of the two ounces of gold enough for the purchase of nine ounces of silver? If it is then, the possession for one year of twelve ounces of silver and two ounces of gold will be considered as having reached the minimum requirement of Nisab.

 The calculation could be made from another angle as well, that is: the Nisab for gold being three ounces, the possessor of two ounces of the metal is therefore short by one ounce to reach the minimum required. Calculate whether it is possible to buy the one-ounce of gold with the value of the twelve ounces of silver to bring the gold to the requisite minimum. If it is possible then the possession for one year of the gold and the silver, will be considered as having reached the mini mum requirement of Nisab.

5. LOANS

 

 The person who lends money to another still retains the ownership of the amount loaned, but he does not enjoy the ability to spend the amount until the debtor repays the loan to him. The Islamic law divides the loans and credits in three categories which could roughly be termed as:

(1) Qawi: Secured;

(2) Mutawassit: Not well secured and

(3) Daeef: Insecure.

The details of these are as follows:

5.1 Qawi or secured loans or credits

 

 Money lent or goods sold for which the borrower or the purchaser accepts full liability, or if he does not, there are proofs or witnesses available to support the claim. In such cases the sum total of both the loan and goods supplied stands to the credit of the lender or the seller, but he cannot consider these as money on hand to spend as he pleases until the loan is repaid or the goods are paid for. The owner of money involved in such cases will be liable to pay Zakah even for the full period the money remains unpaid and beyond his control in possession of his debtor. There is however, a stipulation that he need not pay the Zakah until he has recovered at least one -fifth portion or more of the amount. If he could not pay the Zakah for sometime because he did not receive the one-fifth portions necessary for payment, then he will have to pay the full amount of Zakah for the whole period as soon as he is able to do so.

 Pension/Provident Fund:

Some people have certain amounts deducted from their salaries in a Pension or Provident Fund and repaid to the contributor on retirement in one form or another, then Zakah will become payable only on the amount actually received by the contributor and remaining with him for twelve months. No Zakah need be paid on the amount accumulated in the Pension or Provident Fund through contributions over the years. If a person has given a loan to someone of say, Rs. 2000 and has arranged for its repayment at the rate of say, Rs 100 per year, t hen he will only be liable to pay Zakah on the amounts of repayments as received by him, but for the whole period from the time the amount was loaned. Zakah will not become due until he receives repayment however.

5.2 Mutawassit or not well secured loans or credits

 

The moneys involved in this type of transactions are not from trading in goods or making cash loans. Zakah will only become payable when the full Nisab amount is recovered, and Zakah for all the years it remained away from its owner should als o be paid on receipt of the amount in full.

For example: If a person sells a property without security and did not receive the amount for some years. He will not be liable to pay Zakah until he reaches at least a full Nisab amount of the sale price. But when the debt is fully recovered, then the full amount of Zakah for all the years involved will have to be paid. Similarly, if someone sold some of his own clothes and received money only after some years, then he will become liable for payment of Zakah only after recovering the full Nisab amount of the debt.

5.3 Daeef or insecure loans or credits

 

In the first two types of loans or credits, some kind of transaction in cash, merchandise or property is involved, but in the Daeeftype, a person becomes a creditor or a debtor without any of the above conditions being present.

For example: If a person makes provision in his Will to give some money, gold or silver, to someone from his estate, and the administrators of the estate take some years to pay over the bequest, then the receiver will only be liable to pay Zakah after he has actually received the inheritance by Will and it has remained in his possession for twelve months. No Zakah is required to be paid for the period it remained out of his possession. Similarly, the amount of Mahr (dowry) a man has to pay to his wife is a debt, which does not involve any transaction. Therefore Zakah will become liable upon the wife after she has actually received the Mahr from her husband and it remains in her possession for twelve months, provided of course, that the value of Mahr reaches the minimum Nisab limit or over. No Zakah is required to be paid for the period the Mahr remained out of her possession.

5.4 That the wealth must be over and above the necessities of the possessor and of his legitimate dependants, i.e. wife, sons, daughters, father, mother.

 

 For example: A person may possess wealth exceeding the minimum laid down for Nisab, but he has to purchase food for them or such similar necessities; and if in purchasing these, his wealth becomes less than the Nisab, then he does not qualify for the payment of Zakah.

If a person is saving money to purchase tools and implements of his trade, and saves enough to reach the Nisab limit, but he does purchase them and the money saved remains with him for twelve months, then he will have to pay Zakah on the money saved. If he purchases the tools and implements before twelve months have elapsed, then he has, of course, no Zakah to pay.

Zakah on Hajj money:

 

Money saved for purposes of Pilgrimage is liable for Zakah if it is kept for a year or more and is a Nisab.

5.5 That the wealth be unencumbered with debt

 

 For example: If a person possesses wealth over and above the laid down Nisab, but he owes sums of money to others, the discharge of which debts will reduce his wealth to below the prescribed Nisab then he will not be liable to Zakah.

If a person possesses say R1 000, but owes his creditors a total amount of R1 000 then, in actual fact, he possesses nothing, and he does not qualify to pay Zakah - which becomes obligatory upon the net accumulated capital of a person if and when it reaches or exceeds the prescribed Nisab limit.

Two types of debts



Islamic law recognizes two types of debts: First, that which involves a transaction, such as getting cash loans from somebody or purchasing goods for business or personal use, and second, that which does not have any form of such transaction as its basis.

Example of the first type: A person borrows money, which he has to repay, or he purchases goods for his business, the dues of which he has to meet in the future. These items will have to be deducted from his gross wealth in order to arrive at the net capital figure on which Zakah will have to be calculated and paid if the wealth remains in his possession for one whole year.

Example of the second type debt, which does not involve transaction of money or goods: A person has, for instance, two thousand rupees, but he has also agreed to pay Rs 2000 Mahr to his wife. This is also a debt upon him, but he cannot deduct this amount from his capital wealth on that pretext. He will have to pay Zakah due on the whole amount of capital including the sum he owes as Mahr to his wife. Another example of such debt is the payment one had to make to the poor as Kaffarah for errors and omissions in the discharge of religious duties. One is not permitted to deduct such amount from capital for the purpose of calculating Zakah.

5.6

That the wealth must remain in the possession of its owner for twelve months Wealth spent, lost or disposed of in any manner before twelve months had passed cannot obviously be taken into consideration when calculating Zakah. Gold, silver, money or other possessions reaching and/or exceeding the mini mum quantity of Nisab must remain intact in the possession of its owner for twelve months before it becomes obligatory upon him to pay Zakah.

(i) When the year begins

Whenever a person's wealth reaches the minimum Nisab, from that date calculation of the year will begin for the purpose of Zakah and Zakah will have to be paid on the completion of twelve months in possession of the Nisab amount.

(ii) Lunar year

The Islamic calendar is based on the movements of the moon, therefore twelve lunar months will be considered as one year for the purpose of Zakah. If the Christian year is used then appropriate addition to the amount of Zakah will have to be made to make up for the extra number of days involved as difference between the Christian and the Islamic year.

(iii) Wealthy minors

Every one of the eight conditions must be present before a person is obliged to pay Zakah. If a person owns enough wealth, which makes it obligatory upon him to pay Zakah, but he is a minor, then the obligation of Zakah does not fulfill the fourth condition. Twelve months must pass after a wealthy minor reaches the age of puberty, to make it obligatory upon him to pay the Zakah. A child will be considered as having reached adulthood if he or she completes the age of fifteen.

(iv) Paying Zakah in advance

If a person possesses wealth reaching the minimum Nisab or over, he can if he so desires, pay the Zakah on it in advance, that is before the completion of one year's ownership. He is however, not permitted to do this, if he does not possess wealth reaching the minimum Nisab

Example: A man possesses only ten ounces of silver but he expects at a future date to earn eleven more ounces, which will eventually make his wealth reach the minimum of twenty-one ounces of silver; if he gives Zakah in advance on the expectation of it, then payment of Zakah will be invalid. After having actually reached the minimum Nisab and twelve months having passed with the wealth in his possession, he will have to pay Zakah on it again, because the first payment made before the actual earning of the full Nisab minimum - when it was not (obligatory) Ford upon him to do so - was invalid.

(v) Fluctuating wealth

If a person's wealth reaches the minimum Nisab or over, say on the 1st of Ramadan which will make it obligatory upon him to pay Zakah after twelve months, but during the course of the year, a portion of the wealth was spent to bring it down to below the Nisab minimum, then he earned more to again reach the Nisab, thus he ultimately became the possessor of the minimum Nisab limit or over on the 1st of the next Ramadan, then he will have to pay Zakah on the total wealth as if he possessed the whole amount for the entire twelve months.

This rule will also apply to merchandise and trade goods, the stocks of which are normally subject to fluctuations during the course of the year.

(vi) Earnings in between the year - this is known as Mustefad

For example: If a person has twenty one ounces of silver on the 1st of Moharram in his possession and he earns another ten ounces of silver or some ounces in gold in, say Rabi -UI-Awwal, then on the next Moharram month, he will be liable to pay Zakah on the whole capital wealth in possession on that day, regardless of the fact that a whole twelve months have not been completed on the portion earned during the course of the year.

It is evident from the above that Shariah law has considered the difficulties involved in keeping separate account of each earning during the course of the year, and in calculating the period of twelve months on each of them would create a further difficulty in payment of Zakah from month to month during the course of the year. But, if a person possessed wealth on the 1st of Moharram which reached the minimum Nisab limit or over, and he spends the whole lot by the month of Rajab, then in Sha'baan he again earned enough wealth to reach the Nisab limit, then he will be required to begin calculations as from the Sha'baan and pay Zakah on the amount in the next Sha'baan month.

6. ZAKAH ON GOLD AND SILVER

 

6.1 Jewelry


The quality of any piece of jewlary, which has to be evaluated for Zakah, is deter mined by the metal, which exceeds all other metals in quantity in that particular piece of jewlary.


For example: If a piece of jewlary contains 55% gold and 45% copper then the jewlary will be regarded as gold and Zakah will have to be paid on it as such. On the other hand if a piece of jewlary contains 50% copper and less than 50% gold, then there will be no Zakah payable on it for the jewlary will be regarded as made of copper, not of gold. But Zakah will have to be paid on the value of all jewlary possessed as trading stock in the course of business regardless of their metal contents. More details of this will follow.

Jewlary: In addition to what has been written above, all jewlary made of gold or silver is subject to the payment of Zakah if the quantity reaches or exceeds the Nisab limit and remains in possession for twelve months, even if the jewlary is used every day by the owner, because gold and silver in any form is liable for payment of Zakah.

6.2 Utensils



If a person possesses silver or gold plates and utensils in daily use in his home, and their weight reach or exceed the minimum Nisab limit then Zakah will have to be paid on them at the end of every twelve months.

6.3 Clothes



Clothes irrespective of cost and quantity are exempted from payment of Zakah. But if they have gold or/and silver embroidered or thread work on them, and the weight of the gold and/or silver metal used therein reaches or exceeds the mini mum Nisab limit, then Zakah will have to be paid on that portion alone at the en d of every twelve months.

6.4 Cash



In the period when gold coins were freely used and silver coins really contained silver, the calculation of Zakah on them was easy, but now that gold and silver coins are hardly ever used in currency, the amount of money possessed which could purchase the minimum Nisab quantity of the metal will be regarded as possession of the Nisab for the purpose of paying Zakah. In this estimation, the interest of the poor who benefit from the Zakah should be safeguarded as follows:
Ascertain the amount of money required purchasing three ounces of gold and the amount required to purchase twenty-one ounces of silver. The least of the two amounts should be considered as the minimum Nisab limit.

6.5 Currency notes



Currency notes are papers signed by a treasury official promising the payment of face value to the holder. If a person possesses the amount of money in paper currency with which he can purchase the quantity of gold or silver required to reach the minimum Nisab limit then he becomes liable to pay Zakah at the end of each twelve months.

6.6 Cash plus silver and gold



If a person possesses ten ounces of silver, which is less in quantity than the required minimum Nisab, but the person also possesses cash money enough to purchase eleven ounces of silver, then he would be considered as having reached the Nisab limit and he will be liable to pay Zakah.

The same rule will apply to the case of possessing gold below the minimum Nisab limit, plus cash enough to purchase the remainder quantity of gold to reach the Nisab limit.

7. INCOME FROM FIXED PROPERTY

 

 If a person earns income from a fixed property but the whole amount of the income is spent in the course of the year, then he does not become liable to pay Zakah. But if he has a portion saved which he has put aside, and if this saving reaches or exceeds the minimum Nisab limit, then he will be liable to pay Zakah on it if the amount remains in his possession for twelve months.

8. POSSESSIONS TO WHICH ZAKAH IS APPLICABLE

 

 Just as the payment of Zakah is not obligatory - Farad - upon every person, so are the regulations of Zakah not applicable to every kind of possessions. Zakah is applicable only to possessions defined by the Shariah law as wealth, and such possession must reach a certain minimum limit - Nisab - and it must remain in the possession of the owner for one year before the payment of Zakah becomes obligatory. Thus gold, silver, livestock that graze and commercial merchandise - trade goods - come under the application of th e laws relating to Zakah. Except for these there is no Zakah on any other type of possessions such as building, harvest, utensils (except those made of gold or silver), furniture, clothes, etc. Zakah will have to be paid on anything bought in the course of trade or investment including buildings, livestock, utensils, clothing, etc.

9. PRECIOUS STONES

 

 There is no Zakah on pearls and precious stones, provided they are not for trade or investment. The owner of precious stones bought in the course of trade or investment will become liable for the payment of Zakah on them.

10. INCOME FROM RENT

 

 If a person owns buildings other than those used for his own or his dependants' occupation, and he has rented them to others then he will have to pay Zakah on the net income from the rent, provided the income is above the minimum limit - Nisab and remains in his possession for one year. There is no Zakah on the value of the buildings concerned, but only on the net income earned from them.

11. TRADE VEHICLES

 

 The value of any vehicle such as motor cars, vans, trucks, carts, wagons, boats, etc., used in the course of trade, to earn a living is exempt from the obligations of Zakah. But the net income earned from their use, which remains with the owner for a year, w ill be subject to the payment of Zakah.

12. RATE OF ZAKAH

 

 Zakah is payable at the rate of one fortieth or 2½% on the possession of wealth in the shape of gold, silver, merchandise and cash. Household effects such as furniture, crockery, personal clothing, etc., are generally exempted from the application of Zakah.

13. WHAT TO GIVE AS ZAKAH

 

 Zakah must be given on, and from, a commodity, that is, a portion of the wealth itself could be given in charity to discharge the obligation. But we are permitted also to determine the Zakah due and give its value in cash. For instance, if someone has forty ounces of gold then he will have to give one ounce of the gold in charity as Zakah but he can give instead the value of the gold concerned in cash, or in goods, if he likes

14. FARMLANDS

 

 There is no Zakah on farmlands owned by a person, irrespective of the amount of their value or size, provided they are not bought for speculation.

15. ZAKAH ON TRADE GOODS

 

 The capital involved in the goods owned for trade or commerce is subject to the payment of Zakah, that is: If a person began trading with a capital of Rs 1000, and earn ed profits thereon, then he will have to pay Zakah on the total capital, and not only on the profits earned. Therefore, a person having a capital of Rs 1000 and earning Rs 1000 profits in the course of the year will have to pay Zakah on Rs 2000 - (capital plus profit) – which will be the total amount reflected as his capital in the Balance Sheet.

16. THE KINDS OF TRADE GOODS

 

 Anything, goods, properties, precious stones, livestock’s, etc., bought and sold in the course of trade is liable to the payment of Zakah.

 For example: There is no Zakah on precious stones or copper goods if acquired for one's own use, but if these a re bought and kept in stock in the course of trade then Zakah will have to be paid on them.

17. NISAB ON TRADE GOODS

 

 The determination of the minimum Nisab on trade goods will be according to the value of goods in cash, which could purchase twenty one ounces of silver or three ounces of gold. As explained before under the: "Earnings in Between the Year", all increases by profits derived in the course of the year will have to be added to the capital standing at the beginning of the year and Zakah calculate d on the total increased capital standing at the end of the year.

18. ZAKAH ON PARTNERSHIP EARNINGS

 

 When trading in partnership or owning rent producing properties in partnership, each partner will be liable to pay Zakah on the proportion of the nett sha re of profit coming to him which is added to his capital.

19. ZAKAH ON SHARES

 

 Zakah on Shares owned shall be determined annually on the cash realizable market value of the Shares, which must be included in the Capital, and Zakah paid on the total as required by Islam.

20. DEBTS MUST BE DEDUCTED

 

 Persons who buy goods on credit for the purpose of trade must deduct the total amount of their debts and determine their net profits, and add these to their capital for the purpose of calculating the payment of Zakah.

21. DISCHARGING THE DUTY OF ZAKAH

 

 Payment of Zakah is an obligatory Fard duty upon Muslims, which must be made in accordance with the conditions imposed by the religion of Islam. Just as performing the namaaz without being in the condition of Wudu, etc. is null and void, so will the payment of Zakah become null and void if anything relating to it is not observed as prescribed by Islam. All the conditions attached to the determination and the dis charge of Zakah must be observed, such as:

(i) Nieyyat or Intention must be expressed.

(ii) The receiver of Zakah must become the owner of the Zakah given to him.

(iii) Zakah must be given to the type of persons specified by Islam.

(iii) Zakah cannot be given in return for services received.

21.1 The making of Nieyyat

 

 The person giving the Zakah must have a clean Nieyyat or Intention of giving the Zakah in order to discharge his duty.

21.2 Indirect payment of Zakah

 

 If a person gives money to someone with the request to distribute it among the poor and makes the Nieyyat of Zakah, then his obligation will be discharged, although the person to whom the Zakah money is given for distribution was not told that the money was in payment of Zakah. Similarly, if a person gives Zakah money to some good person and requests him to distribute the money among the poor, the duty of Zakah will be discharged when the person who has been given the money, gives it out to the deserving poor as requested to do so.

21.3 To set aside Zakah money

 

 If someone sets aside Zakah money he has to pay and from it continues to pay to deserving persons, then his duty to pay Zakah will be discharged, and it will not be required of him to make fresh Nieyyat every time he gives out an amount from the money set aside.

21.4 To give Zakah without Nieyyat

 

 If a person has wealth on which Zakah is obligatory, and he distributes among the poor more money than he is liable to pay as Zakah, but he did not make Nieyyat of paying Zakah, then the obligatory Fard of paying Zakah will remain undercharged, because he gave away money without the intention of paying Zakah. To express Nieyyat - intention - is therefore extremely necessary.

21.5 To give away everything

 

 If a person who is liable to pay Zakah does not discharge the duty, but gives away the whole or part of his wealth to charity in general, then, in doing so he will not get released from the obligation of paying Zakah, because he did not have the Nieyyat or the intention of giving Zakah. Although he will not become liable to pay Zakah thereafter if his wealth does not reach the minimum Nisab limit, but the non -payment of Zakah which became due when he possessed wealth will remain a religious debt upon him. He will of course, receive reward for the charitable act of giving his wealth to the poor.

21.6 To pay Zakah by cheque, money order or promissory note

 

 Payment of Zakah by any of these means will only become valid when the receiver has collected the actual cash and he becomes absolute owner of it and he is in a position to use it when and, as he likes.

22. TO WHOM ZAKAH CANNOT BE GIVEN

 

 Zakah cannot be given to a person who owns at least three ounces of gold or twenty ounces of silver or equivalent wealth in cash, kind or in trade goods. If Zakah money is given to such a person, then the obligation will not be discharged. For such a person to receive and accept Zakah is forbidden and to use it is haram.

 If a person owns household goods over and above that which are necessary for his normal use, such as carpets, utensils or other goods which are owned and kept in possession but are hardly in frequent use, then such goods do not come under essentials, but in accumulated wealth and Zakah cannot be given to the person possessing them.

22.1 To the Non-Muslims

 

 Zakah cannot be given to Non-Muslims, because it is in the nature of a special religious community tax, which requires the rich of the community to assist the poor of the community. All other charities, except Zakah, could be given to No Muslims.

22.2 To relatives

 

 Zakah cannot be given to mother, father, paternal and maternal grandparents, great grand parents, etc. Likewise Zakah cannot be given to one's offspring sons, daughters, grandchildren, great grand children, etc. The husband cannot give Zakah to the wife or by the wife to the husband. Except for these, Zakah can be given to other relatives such as brothers, sisters, uncles, aunts, cousins, nieces, nephews, etc.

22.3 To children

 

 The position of a minor child is linked with his or her father. If the father is wealthy, then the child will also be considered as rich and Zakah cannot be given to him. If the father is poor enough to receive Zakah, but the mother is rich, then Zakah could be given to the child, because the child's financial position is linked with that of the father, not the mother.

 Of course, when a minor child reaches the age of adulthood, then he or she be comes completely independent and the wealth, or otherwise, of the parents will have no influence upon his or her position.

22.4 To Sayyeds

 

 Sayyeds are the descendents of the Holy Prophet Muhammad (SAW.) through his daughter Hazrath Fatima (R.A.) and the descendants of his uncle s, Hazrat Abbas (R.A.) and his cousins Hazrat Aqeel (R.A.), Hazrat Haris (R.A.), etc. Zakah as well as Sadqa and Fitra cannot be given to them.

22.5 Zakah cannot be given for services rendered

 

 Zakah cannot be given to a person in payment of services r endered by him or in payment of wages to a teacher, caretaker, etc. It could however be given to such a person as a gift if desired.

22.6 Zakah cannot be given to a servant

 

 One cannot give Zakah to a domestic or other servant as wages. Zakah money could be given to them as a gift over and above the wages paid to them.

22.7 An important condition

 

 A condition of the discharge of Zakah is that the receiver must become the un fettered owner of the amount of Zakah paid to him.

22.8 Zakah cannot be given to a Musjid

 

 A Muslim cannot give Zakah money for building, repairing or maintaining a Musjid, because a Musjid is a place of worship, which does not belong to anyone.

22.9 To pay debts of a deceased

 

 If a poor man dies a debtor, and someone uses Zakah money to pay the debts of the deceased, then the action will be invalid and the obligation to pay Zakah will not be discharged; because the deceased did not become owner of the money paid for the discharge of his debt. The heirs of the deceased however, if they are poor, can receive Zakah and discharge the debt of the deceased, if they desire to do so.

22.10 To pay funeral expenses

 

 Zakah money cannot be used to pay the expenses relating to the funeral an d burial of a deceased person. If used for this purpose, the obligation of paying Zakah will not be discharged. But the heirs of the deceased, if they are poor, can receive and accept the Zakah and use the money for the burial expenses of their deceased relative.

23. ZAKAH PAID BY CURRENCY NOTES

 

 Currency notes or paper money are freely used in transactions, but in legal effect they are promissory notes, and therefore Zakah paid with them will only become effective after the receiver has cashed them.

24. ZAKAH GIVEN AS LOAN

 

 If a person deserving Zakah is feared to be embarrassed in accepting it, then Zakah money could be given to him as a gift or a present on a suitable occasion; but the intention of the giver must be of Zakah at the time of giving the money. Similarly, to give Zakah money as a gift to the children of the poor is also permissible.

26. DEBT CANNOT BE RECOVERED BY OWN ZAKAH

 

 If a person owes you money, which he is unable to repay on account of poverty, you cannot pay to yourself his debt with your own Zakah money and consider that the obligation of paying Zakah has been discharged. Zakah money must be handed to the debtor and payment demanded and received thereafter.

27. TO WHOM ZAKAH MUST BE GIVEN

 

 The Holy Quran makes specific reference to the headings under which Zakah money must be spent:

27.1 Fuqara:

 

 The poor

27.2 Masakeen:

 

  The needy

 1. Those whose possessions do not reach the minimum Nisab limit.
2. Those whose earnings are not enough to satisfy the essential needs of them selves and their dependants.

 Under the definition of the Poor and the Needy could be included, for instance, a woman who only has some expensive clothes which are in constant use, and therefore could not be considered as accumulated wealth beyond her nee ds. In like manner, a person possesses a large number of books or some expensive books, which are in his use but possesses no other wealth reaching the Nisab limit, would also qualify to receive Zakah. Likewise, a person owning fixed property or properties on the income of which he maintains his family, or farm lands from which he receives no income, and if his total income hardly suffices for the maintenance of his family and he does not have any wealth left over to reach the minimum Nisab limit, then he is religiously defined as poor and deserving of receiving Zakah. A person in regular employment could also come under this definition if his in come is insufficient to maintain his family.

27.3 Ameleen:

 

 Those engaged in the collection and distribution of Zakah through a community organization or Bait -UI-Maal Where a Bait-UI-Maal is in existence on governmental level (Department of Zakah), or where a properly constituted Zakah Fund is in existence on community level, then the salaries and wages of those who are employed by the Department or the Fund in the collection and distribution of Zakah, could be paid from the Zakah money.

27.4 Mu-AI-Lafatul Quloob:

 

 Those whose hearts are made to incline towards truth – the converts who need help those whose hearts are inclined towards the truth means converts to the religion of Islam. If they are in need of assistance for their rehabilitation in the new religion, then Zakah money could be used to assist them.

27.5 Regaab: Ransoming of captives, wherever such necessity arise

 

 The ransoming of captives is not necessary in this age, but should occasion arise when Muslim lives are required to be ransomed, then Zakah money could be used for the purpose.

27.6 Gharemeen: The Debtors

 

 A person, whose total liabilities exceed his total assets, is a debtor, and Zakah could therefore be given to him.

27.7 Ibnus-Sabeel:

 

 The wayfarer (the traveler who is not poor, but finds himself stranded abroad without funds) Wayfarer means any traveler who finds himself in financial difficulties.

 Example:

(i) A person away from home whose money is lost or stolen, and who thus finds himself penniless in a country where he is unknown.

(ii) A person on whom Hajj was obligatory and he sets out on pilgrimage with sufficient money to cover all his expenses, but through unforeseen and un expected increases in the cost of commodities, fares, etc. or through any other reason, he finds his funds exhausted, and he does not now possess money even for his return fare. Zakah could be given to people who find themselves in such temporary plights.

27.8 Fee-Sabee-Lillah: Those engaged in the way of Allah

 

 Those engaged in the way of Allah, is a term which jurists generally apply to those who are actively engaged in fighting for the defense of Islam in the battlefields, but in this category could be included:

 (i) Those who are engaged in acquiring religious education and who cannot afford the requisite expenses, such as tuiti on fees, boarding, lodging, clothes, etc.

 (ii) Those who are engaged in missionary work for the propagation of Islam without receiving any payment for there services, and/or they are able to maintain their families with great difficulty.

 (iii) Those who are engaged in the work of imparting knowledge of Islam - teachers, through educational centers such as Maddressas or schools, but who do not receive adequate salaries to maintain themselves and their families. Those could be assisted from Zakah funds and sums given to them - not as salaries but as gifts or bonuses - without the need to tell them that the money comes from Zakah.

 (iv) Those who are poor students in secular schools and colleges. Money from Zakah funds could be given to them for fees, textbooks, boarding and lodging expenses, for clothes, etc.

28. ZAKAH ON LIVESTOCK

 

 Zakah is payable only on the ownership of animals grazing on the farms. Animals that do not graze but are fed in close stables, cowsheds or pens and such enclosures, are exempt from the payment of Zakah. Animals that are underage are totally exempt from the payments of Zakah. Nor is there Zakah on the ownership of such animals that are used for riding, for farming and/or for any other purpose connected with the earning of a living or recreation.

 Motorcars, vans, lorries, carriages, etc. kept for personal use or for use in the course of business or profession is exempt from the payment of Zakah.

29. MISCELLANEOUS INFORMATION

 

1. The amount of Zakah given to anyone person should not be less than that which could satisfy his needs for at least a day./p>

2. If Zakah money is given to a person whom you thought deserving, but later found out that he was not entitled to receive the Zakah because he was wealthy, a Sayyed or he was related to the giver that he could not receive Zakah, then the obligation of paying Zakah by the person who gave the money will be discharged and he will not be required to pay his Zakah again.

3. If a person who is not entitled to receive Zakah, is given Zakah money, then he should refuse to accept it; or if given he should return it to the giver immediately, because it is forbidden for him to accept Zakah.

4. The first claim on Zakah money is of deserving relatives, then the deserving poor of the village, town, city or country in which you live. If the needs of people of another area are more deserving and urgent then Zakah could be sent to them too.

5. If the giver is not sure and is doubtful about the position of the person seeking Zakah from him, then he should not give his Zakah to him at all, because the giving of Zakah in such circumstances is not permitted.

30. The Effect of Zakah

 

 The payment of Zakah formulates healthy impact on the give r, recipients, and the society at large. It purifies the assets of the giver, restrains his lust for material goods and creates in him the virtue of sharing his wealth with others. It uplifts him from a life of material pursuits to a life endowed with moral purpose. Zakah satisfies the recipient’s needs and alleviates his suffering. Poverty is an invitation to disbelief; it denies virtues. That's why Islam, instead of abandoning poor to the caprice of the rich, makes a compelling demand for its payment. The payer pays Zakah as an act of worship while the destitute receives it as a right, without any obligation towards the payer. Zakah, thus, creates love and brotherhood between the rich and the poor; it minimizes social tension and bridges the gap between the haves and have-nots. It provides social and economic security to the Muslim community and brings its members closer together. Its rewards are boundless and incalculable:

 Zakah perform well on a number of criteria. The support provided in the form of subsistence allowance appears to be adequate. According to one estimate, this allowance is about three times the average income gape of people living in poverty. Being a recurring each transfer, Zakat runs the risk of creating a state of dependency among recipients and the incentive to search for productive work. However, most of the Mustahqin are widows and the disabled who are not in apposition to join the labor force.

 Zakah generate the economic activity that it is a threat for the wealth which is not used for transactions or mobilization i.e. it will reduces the wealth so the person have to do some useful work.

(MAS)

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