Deen Digest | What You Should Know About Zakat and Zakat-al-Fitr

by Abu Hanifa
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“Zakat expenditures are only for the poor and for the needy and for those employed to collect [Zakat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller – an obligation [imposed] by Allah; And Allah is Knowing and Wise.” (Quran 9:60)

Zakat, the third pillar of Islam, is a form of alms-giving ordained by Allah, which is obligatory for all Muslims who meet the necessary criteria of wealth, health condition and level of maturity. It is incumbent on those who fulfil minimum criteria of wealth called as Nisaab. It requires donation of 2.5% from one’s assets and annual savings to the needy. It is intended to purify our wealth both physically and spiritually. It guides and nurtures us towards being selfless and compassionate to the destitute and the needy in our societies. The best form of Zakat supports the poor with essential aids or gets them out of poverty. However, your paid Zakat will not purify your wealth and won’t grant you any reward from Allah (SWT) if it was earned through haram means.

Abu Dharr reported: “I went to the Apostle of Allah (may peace be upon him) and he was sitting under the shade of the Ka’ba. As he saw me he said: By the Lord of the Ka’ba, they are the losers. I came there till I sat and I could not stay (longer) and (then) stood up. I said: Messenger of Allah, let my father, be ransom for you, who are they (the losers)? He said: They are those having a huge amount of wealth except so and so and (those who spend their wealth generously on them whom they find in front of them, behind them and on their right side and on their left side) and they are a few. And no owner of camels, or cattle or goat and sheep, who does not pay Zakat (would be spared punishment) but these (camels, cattle, goats and sheep) would come on the Day of Resurrection wearing more flesh and would gore him with their horns and trample them with their hooves. And when the last one would pass away, the first one would return (to trample him) till judgment would be pronounced among people.”

Essentially, note that Zakat is not a form of conventional tax; it is rather a spiritual obligation in which every Muslim will be accountable to Allah directly.

According to Prophet Muhammad (PBUH), Nisab is set at the rate equivalent to 87.5 grams of gold or 612.4 grams of silver. Hence, you can easily work out its equivalent value in US dollar, Saudi Riyal, UAE Dirham, Euro, CFA, Naira or any other currency being used in your local area or country. Note that apart from Hanafi Islamic school of thought that recommends using the value of silver to determine the Nisab eligibility to pay Zakat, the other schools of thought recommend the value of gold. And since the value of gold and silver constantly changes, one’s Zakat payment will definitely vary accordingly every year. If you have issues with how to calculate your Zakat annually, use Zakat calculator on halalfinder.com .

Zakat is completely different from tax because it is paid ONLY from annual savings, not from monthly/annually income, as in the case of conventional. For example, if your annual income is 85,000USD but you managed to only save $500 from it, you’re expected to use only 2.5% of the savings as Zakat, and that happens ONLY IF the $500 annual savings is equivalent to 87.5 grams of gold or 612.4 grams of silver in that lunar year.

Please note that savings here doesn’t only refer to the savings in your bank account; it also includes gold or silver, cash held at home, stocks and shares owned either directly or through investment funds, money lent to others, business stock in trade and merchandise, agricultural produce, livestock, pensions/gratuities, and, of course, property owned for investment purposes.

More importantly, as for women with gold and silver jewellery or any jewellery containing 50% or more of gold or silver, the purpose of having the jewellery will determine whether Zakat must be paid or not. For example, a significant number of Islamic scholars believe that a woman is expected to pay zakat on her silver or gold jewellery if it’s acquired not for personal ornament, but for wealth or asset accumulation; as long as it is above nisab level.

Likewise, if you find it easier to calculate Zakat monthly, you are permitted to spread out your Zakat payments over the lunar 12 months in a year. even if you’re able to estimate how much Zakat is due on you the end of the year, and you decide to pay it monthly, please ensure you finally confirm your initial estimated calculation at the end of the year. So if you underestimated it, make sure you pay it off before the new year begins, but if you overestimated it, know that the extra paid that year would serve as sadaqah for you.

The one million dollar question now is: What if I’ve missed payment of zakat in previous years due to my ignorance about the concept of zakat or forgetfulness; would I need to pay the missed Zakat too?

It can be easy to forget to pay or to miscalculate our Zakat or we may even be new to recognising this pillar of Islam. However, it’s never too late to pay off our Zakat from previous years. Missed Zakat would be calculated in the same way you calculate your current Zakat – however, you would use the Nisab from the missed Zakat year, as opposed to the current Nisab value.

Is Zakat the same as Zakat al fitr?

No, it isn’t. Zakat is paid annually from the time your assets or savings reach nisaab level, while Zakat al fitr is given at the end of Ramadan fasting. This means that you do not have to be Sahib-un-Nisab, i.e. owner of the minimum amount of wealth that makes Zakat payable), before you’re qualified to give zakat-al-fitr. Zakat-al-Fitr, on the other hand, is generally paid at the end of Ramadan before Eid payer, for each member of the family, in form of food for the poor and the needy. In other words, whoever paid Zakat is not relieved of paying Zakat-al-Fitr and vice-versa.

Abd Sa’id al-Khudri reported: “We, on behalf of every young or old, free man or slave (amongst us), used to take out during the lifetime of the Messenger of Allah (may peace be upon him) as the Zakat of Fitr one sa’ of grain, or one sa’ of cheese or one sa’ of raisins. And we continued taking out these till Mu’awiya b. Abu Sufyan came to us for pilgrimage or ‘Umra, and addressed the people on the pulpit and said to them: I see that two mudds of zakat out of the wheat (red) of Syria is equal to one sa’ of dates. So the people accepted it. But Abu Sa’id said: I would continue to take out as I used to take out (before, i e. one sa’) as long as I live.

Finally, note that properties like cars, house, et cetera that are not intended to be sold or leased are exempted from Zakat. Please don’t hesitate to contact a Zakat expert or use Zakat Calculator on halalfinder.com or muslimparrot.com if you need any help on how to calculate how much zakat you need to pay. Also, liaise with your local imam or an Islamic scholar in your locality to learn the simplest way to give Zakat-al-Fitr. It’s not as difficult to calculate as the annual Zakat. You can as well contact info@halalfinder.com or info@muslimcommunityreport.com for help on issues related to Zakat or Zakat-al-ftr.

When giving with MMC Compassion on halalfinder.com, you can be sure your Zakat will be used to support disadvantaged communities in the fight against poverty among the Ummah. It can be used towards improving education, social amenities, health, food security, endowment, economic empowerment and many more.

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