Zakaah (Detailed)
الزكاة - Zakaah
Zakaah is one of the five pillars of Islam.
“Islam has been built upon five(pillars): The testimony that none
has the right to be worshipped except Allah, and that Muhammad is the
Messenger of Allah; establishing Salaah, giving Zakaah, Fasting the
month of Ramadan, and performing Hajj.” [Hadith reported in Bukhari and Muslim]
Definition
Zakaah is
- an obligatory (fard) tax on the wealth of those who have accrued wealth beyond their basic needs
- aimed at promoting socio-economic welfare of the community
- conscientizing society about concern for social justice
Zakaah is a form of charity which has to be paid on certain amounts of wealth, and is a duty on all Muslims who fulfill the conditions necessary for its payment.
Benefits
- Zakaah strengthens the bonds between the haves and the have-nots, for it is from human nature that a person shows affinity to those who treat them well.
- It causes Muslims to grow accustomed to performing acts of generosity, hospitality and empathy towards those who are in need.
- It purifies and cleanses the soul and distances it from greed, as indicated in the Noble Qur`an when Allah says:
خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِمْ بِهَا
“Take Sadaqah (alms) from their wealth in order to purify them and sanctify them with it.” [Surah at-Tawbah (9):103] - It brings increase and blessings to one’s wealth, and Allah
replaces it (the wealth given as charity with something better), as
Allah said
﴿وَمَا أَنْفَقْتُمْ مِنْ شَيْءٍ فَهُوَ يُخْلِفُهُ وَهُوَ خَيْرُ الرَّازِقِينَ﴾
“And whatsoever you spend of anything (in Allah's Cause), He will replace it. And He is the Best of providers.” [Surah as-Saba´ (34):39]
- A severe warning has been issued to those who do not offer Zakaah
out of greed as well as those who fall short in doing so. Allah said:
﴿وَالَّذِينَ يَكْنِزُونَ الذَّهَبَ وَالْفِضَّةَ وَلا يُنْفِقُونَهَا فِي سَبِيلِ اللهِ فَبَشِّرْهُمْ بِعَذَابٍ أَلِيمٍ * يَوْمَ يُحْمَى عَلَيْهَا فِي نَارِ جَهَنَّمَ فَتُكْوَى بِهَا جِبَاهُهُمْ وَجُنُوبُهُمْ وَظُهُورُهُمْ هَذَا مَا كَنَزْتُمْ لأَِنْفُسِكُمْ فَذُوقُوا مَا كُنْتُمْ تَكْنِزُونَ﴾
“And those who hoard up gold and silver [al-kanz: the money, the Zakaah of which has not been paid], and spend it not in the Way of Allah, - announce unto them a painful torment. * On the Day when that (al-kanz: money, gold and silver, etc., the Zakaat of which has not been paid) will be heated in the Fire of Hell and with it will be branded their foreheads, their flanks, and their backs, (and it will be said unto them): ‘This is the treasure which you hoarded for yourselves. Now taste of what you used to hoard’.” [Surah at-Tawbah (9):34-35]
Conditions
There are two conditions for Zakaah to be obligatory, if you meet them, you must pay Zakaah. The two conditions are called
I. Nisab / Amount
This is the minimum amount of wealth that one needs to possess before zakaah becomes obligatory. It is calculated as being 85 grams of gold, 595 grams of silver or $ 1000 cash/savings
II. Hawl / Period of Time
A period of one year should have passed since having the nisaab in your possession. (This time period does not apply to zakat-ul-fitr, which is about $10 to be given to the poor on behalf of every member of your household if the head of the household has nisaab on the day of Eid-ul-Fitr)
So, if one has $ 1000 cash/savings, or silver over 595 grams, or gold over 85 grams, or over $ 1000 of inventory (stock with which does business), then one must pay 2.5 % of that in zakaah.
Recipients
Allah clarified the masaarif / categories of people who have a right to recieve zakaah. Allah says:
“The Sadaqaat (here it means Zakaah) are only for the Fuqaraa´ (poor), and the Masaakeen (the needy) and those employed to collect (the funds); and for to attract the hearts of those who have been inclined (towards Islam); and to free the captives/in bondage; and for those in debt; and for Allah’s Cause, and for the wayfarer (a traveler in need); this is an obligation from duty Allah. And Allah is All-Knowing, All-Wise.” [Surah at-Tawbah (9):60]
Note that among those who can not receive zakaah are non-human beings, the deceased (not for their funerals nor debts), (according to many scholars) unbelievers, those who are self-sufficient, father/mother// grandfathers/grandmothers// sons/daughters// grandchildren//spouses//as well as direct family of the Prophet.
General Considerations
COMPANIES
Manufacturing and commercial company, and manufacturing and commercial companies must pay zakaah on trade goods, but there is no zakaah on the tools, materials, vehicles, buildings and furnishings that are intended to be used and not to be sold for profit.
BONUS
No zakaah is due on bonus until you receive it, and one year has passed from the time of receiving it
MACHINES/TOOLS
Company buildings, heavy and light machinery and vehicles that are used to transport goods or company workers are not subject to zakaah.
LAND
It is not obligatory to pay zakaah on land unless it is for the purpose of trade.
RENT
Zakaah is due upon income from any property that accrues to the wealth of a person once the 2 conditions of zakaah are met by him/her.
VEHICLES
There is no zakaah on vehicles, but from the profit accrued from them (eg. taxi owner on the profit earned, not on the car itself)
DEBT
One can not offset one’s on-going debt against the gold/silver/cash one has with himself if the gold/silver/cash meets the two conditions of zakaah.
COMPANY SHARES
The share produces a part of the company profits and may increase or decrease based on the success of the company and its increase or decrease in profits. It is possible that shares may suffer loss, because the shareholder owns a part of the company, proportionate to his number of shares. There is nothing wrong with selling company shares so long as the company’s activities are not haraam.
The share has a number of values, as follows:
1. Nominal value: this is the value assigned to the share when the company was founded, and is mentioned in the share certificate.
2. Book value: this is the value of the share after the company’s obligations have been deducted and the remainder has been shared out according to the number of shares issued.
3. True value: This is the monetary value represented by the share, i.e., if the company were to be dissolved and its assets divided according to the number of shares.
4. Market value: This is the value for which the share is sold in the market, which changes according to supply and demand.
Shares can be traded among individuals, like other products, which makes people take them as a means of trade by buying and selling them with the aim of making a profit.
Zakaah should be paid according to the market value at the time of paying the zakaah.
Note that some shareholders buy shares …
- to trade them with the aim of making a profit,
- and some of them buy them and kept them so that they may have income from their profits, without trading in them.
Sholars differ about the second type (equating it to a second property not intended for sale) but the majority feel that if any profit is likely to accrue then it should be treated as trade goods and zakaah is due on the profits
SALARIES
Whatever is saved every month (after basic expenses, including paying off on-going debt), then what is saved by the end of the year, 2.5% of the total saved will be the due zakaah.
CONCLUDING REMINDER
﴿وَلا يَحْسَبَنَّ الَّذِينَ يَبْخَلُونَ بِمَا آتَاهُمُ اللهُ مِنْ فَضْلِهِ هُوَ خَيْرًا لَهُمْ بَلْ هُوَ شَرٌّ لَهُمْ
سَيُطَوَّقُونَ مَا بَخِلُوا بِهِ يَوْمَ الْقِيَامَةِ﴾
‘And let not those who covetously withhold of that which Allah has bestowed on them of His Bounty (Wealth) think that it is good for them (and so they do not pay the obligatory Zakaah). Nay, it will be worse for them; the things which they selfishly withheld shall be tied to their necks like a collar on the Day of Resurrection.’ [Surah Ale- ‘Imraan (3):180]”
“Surely, Allah has made Zakaah obligatory on their wealth, which should be taken from their rich and given to their poor.” [Hadith in Abu Dawud]
And only ALLAH Knows Best!