We have a responsibility to the society. But we forget or not bothered about the people living around us. Here is the importance of Islam religion with its beautifully framed Zakat law.Which made compulsory for every believer if his income exceed a threshold, distribute the excess income to the poor or needy.
The idea of this article is to give a depiction about Zakat and its calculation and remember this is not a guide for calculation of one’s Zakat liability.
The idea of this article is to give a depiction about Zakat and its calculation and remember this is not a guide for calculation of one’s Zakat liability.
Like tax system the Islamic Shari’ah made compulsory among the Muslim community to pay certain percentage of their income to specified people on every year which is called Zakat. The Zakat system have been made compulsory in 570 -632 CE (1400 years ago) during the period of Prophet Muhammad S.W.
Meaning
Zakat is the Arabic word which means grow (in goodness) or Increase, Purify or Making pure. So the act of giving Zakat means purifying one’s wealth to get Allah’s blessing.
Zakat is the third pillar among the five pillars of Islam. It is obligatory for every Muslim if his wealth reaches the Nizab (Threshold limit).
Allah said in his Holy Quran “Take, [O, Muhammad], from their wealth a charity by which you purify them and cause them increase, and invoke [Allah’s blessings] upon them.”
[At-Tawbah: 9:103]
Objective of Zakat
The basic and essential objective of Zakat is purification of the soul. It cures the lust for wealth. And the secondary objective of the poor-due is to provide basic necessities to poor Muslims. Zakat should be paid out of the money earned through fair and honest means. Whatever is paid should be respectable. If cheap and worthless stuff is given in Zakat it will go in vain.
Period
Zakat is calculated according to the lunar year. The period begins from when wealth attains the Nizab (threshold). In case of agriculture, fruits, mineral and metals from earth are based on harvest or acquisition of minerals.
It is more virtuous to donate in the month of Ramadan than at any other month because of this generally people prefer Ramadan month for distribution of their Zakat. Each Zakat year should be independent of others. Duality should be avoided.
NIZAB (Threshold)
The Nizab or threshold limit is fixed based on Gold and Silver. One person whose net wealth (Zakat Base) which reaches 20 Mithqaal of Gold ( equal to 85 grams of Gold) or 200 dirhams of Silver(equal to 600 grams of silver) he is liable to pay Zakat on whole value of money or wealth. The value will be on current market price Gold USD 5000 and the silver USD 870.
If a person possessing only gold the limit of gold should be taken. If a person wealth includes mixture of gold and other the silver to be taken. But generally people use gold limit for calculation.
Calculation of Zakat
Rate of Zakat = 2.5% to 20% on the Zakatable Base
Zakatable base = Zakatable Money (Assets) Less Zakatable Liabilities
Before calculation of Zakat all assets and liabilities are required to valued in current market price and good and bad to be identified and adjusted.
Particulars
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Rate of Zakat if the Zakatable
base Exceed Nizab
|
Personal assets except Gold, Silver and Cash
|
Fully Exempted
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Cash, Gold ,Silver, bank account
|
2.5%
|
Business asset except asset with no intention of sell
eg. Stock in trade. All debts owed to others to be deducted
|
2.5%
|
Agricultural Income after considering all expenses incurred for the production
|
5 to 10%
|
Camel, Cow and Sheep
|
Zakat only when exceed
camel 5, Sheep 40,
and Cow 30
|
Minerals and Marine
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2.5% to 20%
|
Income from Fixed assets
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2.5%
|
Salary Income
|
2.5%
|
Vacant land (Not for the construction of house for personal use)
|
2.5%
|
Agricultural land
|
Exempted
|
Who Pay Zakat
Category of people
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Who Pay Zakat
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Individual & Proprietary Concern
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Individual and Owner of Concern
|
Partnership
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Each partner according to their percentage of share.
|
Companies
|
Zakat will be divided among number shares and each shareholder based on their holding.
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Who is eligible to receive Zakat
Only seven category of people are eligible to receive Zakat. If anyone pays money to any persons other than mentioned below it will not reduce his Zakat liability it will consider as Sadaka (charity).
1. Poor – One who does not have enough even to fulfill one’s basic needs like food or clothing.
2. Needy or Miskeen– One who might have enough to fulfill theirs and their family’s basic needs; but a situation or desperation has be fallen them which they are unable to fulfill.
3. Those who are employed to administer the Zakat funds.
4. Those who recently come to Islam.
5. Those in Bondage- One who is serving a sentence because one is unable to pay the prescribed fine.
6. In the cause of Allah-Those who working for Islam.
7. The Wayfarers- Travelers whose money has been lost or finished.
Tax and Zakat
The Zakat law is the mixture of Income tax, Wealth Tax and Sales tax which is prevalent among us. The law says pay Zakat on income in excess of your expenditure if it reaches the limits called Nizab. Also Zakat law made compulsory to pay Zakat on wealth of person if it is unused and which represents excess money held in investments e.g. Gold, Land, Cattle(not using) etc.
But Zakat cannot be substituted by Tax because the Zakat should be paid the person who are eligible otherwise it is Sadaka (Charity) not Zakat.
I wish if every religion or community could do this kind practice poverty would have vanished from our planet.
