Zakaat

Currencies

Currencies refer to gold and silver, as well as any type of money that takes their place and similar things such as shares, bonds and checks.

In the past, paper currency was not known, and people used to barter using commodities. This is a completely impractical and ineffective method in large communities. People graduated in their types of transaction until they had settled on using gold and silver. When Allaah Almighty sent His Messenger people were dealing with Deenaar (gold) and Dirham (silver) as their main currencies, and thus, when addressing the issue of Zakaat the texts of the Quran and Sunnah referred to these two forms of currencies.

Thee are many verses on the obligation of Zakaat on cash moneys. Allaah Says (what means): "And those who hoard up gold and silver and spend it not in the Way of Allaah, announce unto them a painful torment. On the Day when that 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'." [Quran 9:34-35]

The Prophet said: "Any owner of gold or silver who does not pay the Zakaat due on it will, on the Day of resurrection, have his treasure heated in the Fire of Hell and then made into plates. His flanks, forehead and back will be branded with them. Every time they (the plates) get cold, they will be heated again, on a day that will last fifty thousand years. This will be done to him until Allaah pronounces judgment on His slaves. Then one will be shown his path, leading him either to Paradise or to Hell." [Al-Bukhaari and Muslim]

The Zakaah due on cash money is two and one-half precent (2.5 per cent).

'Ali reported that the Prophet said: "There is nothing (due) upon you in gold until it reaches twenty Deenaars (equal to 85grams). Thus, if you have twenty Deenaars at the end of year, then there is half a Deenaar levied on it [as Zakaah]. Any additional amount will be calculated in this manner. There is no Zakaah on wealth until it has been owned for one (lunar) year." [Al-Bukhaari, Ahmad, Abu Daawood, and Al-Bayhaqi]

In another narration, the Prophet said: "There is no Zakaah on less than five awaq of silver." [Muslim] Five awaq of silver are equivalent to 595 grams.

Trade and Merchandise:

Allaah permitted trade and earning from it if it is within lawful conditions and deals with lawful commodities. Islam also has prescribed Zakaat on the wealth that a merchant uses for trade as gratitude to Allaah. It is also a fulfillment of the right of the needy and as a contribution in the welfare of the Muslim community. Muslim jurists paid great attention to this type of wealth and wrote about it under the category of "trade goods." These included everything planned for sale and purchases with the purpose of attaining a profit, for Allaah Says (what means) "O you who believe! Spend of the good things which you have (legally) earned, and of that which We have produced from the earth for you... " [Quran, 2:267]

Jurists, in general, say that this verse is discussing Zakaah on trade goods. Regarding the interpretation of this verse, Imaam At-Tabari said: "Allaah means that you should pay Zakaat on good legal earnings and pay the Zakaat from the good gold and silver and not the ill-gotten ones."

In order for trade goods to be subject to Zakaah, jurists have established specific conditions that should be fulfilled. To fulfill these requirements, the owner should be in.

1. Complete possession of the goods.

2. The goods should constitute a Nisaab as determined by gold and silver. Nisaab is the minimum limit of wealth or property on which Zakaat becomes obligatory. One does not have to pay Zakaat on what he or she needs to make a living, such as tools or machines related to carpentry, farming, tailoring, or working as a doctor. All debts are subtracted from one's wealth. And if the resultant wealth reaches the Nissab, one must pay Zkaat.

3. A full lunar year of Islamic calendar should have passed on these goods, starting from the day of Nisaab's possession.

4. The Zakaah due on all types of trade goods is 2.5%.

Livestock Animals:

Livestock animals are camels, cattle and sheep. Paying Zakaat on this is obligatory based on the saying of Allaah the Almighty (which means): "O you who believe! Spend from the good thins that you have earned." [Quran 2:267]

Also, the Messenger of Allaah said to a man who asked him about migration: "Verily its matter is sever. Do you have any camels that you pay charity (Zakaat) for?" The man said, "Yes."

The Prophet said: "Then do so from behind the seas, for verily Allaah will never disregard (decrease) anything of your deeds." [Al-Bukhaari]

And he also said: "By the One Whom there is no (true) god besides Him, there is no man who has camels or cows or sheep, and he does not pay their Zakaat, except that they will be brought to him on the Day of Resurrection larger and fatter than they ever were. And they will trample him with their hooves and gore him with their horns. Every time the last of them passes, the first will be returned to him (to start over). This will continue until judgment is passed between all the people." [Al-Bukhaari]

Fruits and Grains:

Grain on which Zakaat is applicable, is everything that is stored to be eaten, such as wheat, barley, beans, chickpeas, chickling vetch, peas lentils, corn rye, rice and the like. Fruit includes dried dates, olives and raisins.

This ruling is based upon the Almighty's statement (which means): "O you who believe! Spend from the good things that you have earned and form what we have brought out for you from he earth." [Quran 2:267]

And also (what means): "And give its due on the day of its harvest." [Quran 6:141]

The Prophet said: "There is no charity in what is less that five Awsuq." [Al-Bukhaari and Muslim] Five Awsuq is equivalent to 618 kilograms.

The Prophet also said: "On that which is watered by the sky (i.e. rain), natural springs, or it receives water that comes down from the mountains, a tenth (of Zakaat) is due (i.e. 10%). On that which is watered by being sprinkled (by human efforts), a twentieth is due (i.e. 5 per cent)." [Al-Bukhaari]

(Precious) minerals and buried treasure:

Zakaat on such items is one-fifth. Scholars have ruled that there is no Nisaab for such items. However, some maintain that Zakaat must be paid only when these items reach the Nisaab of gold.

The Prophet said: "'There is no compensation for a wound caused by a domestic animal, a well (falling in it), a mine (working in it), and one-fifth is due on buried treasure." [Al-Bukhaari]

Zakaah is the most important pillar of Islam after Prayer. The word “Zakaah” means both ‘purification’ and ‘growth’; so, our possessions are purified by setting aside a proportion for those in need. The obligatory nature of Zakaah is firmly established in the Quran, the Sunnah, the consensus of the Prophet’s Companions and the Muslim scholars

One of the most important principles of Islam is that all things belong to Allaah, and that wealth is therefore held by human beings in trust. Allaah also has set limits and restrictions on how to dispose of our wealth in order to strike a balance in the Muslim society. Allaah Almighty promised those who fulfill this duty a great reward in this world and the Hereafter, and whosoever doesn’t fulfill it is sternly warned of the grave consequences.

Zakaah on plants, fruits and grains

Plants and fruits are included in the types subject to Zakaat. Allaah Says (what means): “O you who believed, spend from the good things which you have earned and from that which We have produced for you from the earth...” [Quran 2: 267] And (what means): “…and give its due [Zakaah] on the day of its harvest…" [Quran 6: 141]

Allaah also Says (what means): “And He it is who causes gardens to grow, [both] trellised and untrellised, and palm trees and crops of different [kinds of] food and olives and pomegranates, similar and dissimilar. Eat of [each of] its fruit when it yields and give its due [zakaah] on the day of its harvest. And be not excessive. Indeed, He does not like those who commit excess.” [Quran 6: 141]

The Prophet enjoined Zakaah on the agricultural yield as shown in a Hadeeth narrated by Muslim : "A tenth is payable on what is watered by rivers, or rains, and a twentieth on what is watered by camels."

Types subject to Zakaah:

The scholars agree that Zakaah is obligatory on wheat, barley, dates and raisins, almonds and pistachios. There is, however, disagreement over whether or not all other types of agricultural yield are exempted.

The majority of the scholars hold the view that all types of agricultural yield (except vegetables and fresh fruits) which can be stored, or used as regular food, or dried, and are planted by human beings, are subject to Zakaah.

As for fresh fruits and vegetables, nothing is confirmed from the Messenger of Allaah concerning their Zakaah. However, it is still recommended to give something from them to the poor and the neighbors due to the generality of Allaah's statement (which means): "And spend of the good things you have earned and from what we brought out for you from the earth." [Quran 2: 267]

Nisaab of the Zakaah:

Nisaab is an Arabic word which technically (i.e. in Islamic jurisprudential terminology) refers to the minimum amount of wealth on which Zakaah is legitimately levied.

Most scholars say that there is no Zakaah due on plants or fruits until they attain the amount of five Wasaqs. Five Wasaqs equal, according to the majority of scholars, 651.4 kg. The Prophet said: "No Zakaah is payable in less than five Wasaqs of dates or grain." [Muslim]

The time for paying Zakaah:

Zakaah of agricultural products is due as soon as they are harvested. So, it is not permissible to delay giving out the Zakaah after the harvest of the crops. Allaah Says (what means): “… and give its due [Zakaah] on the day of its harvest…” [Quran 6: 141]

Zakaah is due on plants when the grains mature and are ready to be rubbed off and on the fruit when it is ripened. In the case of dates, for example, the indication will be their brightness or red color, and with grapes their sweetness. Zakaah on the grains is only due after removing the dust, husk, straw and chaff. However, Zakaah on fruits is due at the time of harvesting. It is sinful for the owner to dispose of anything before paying Zakaah.

If the farmer sold his grain after it had matured, and the fruit after it had ripened, then its Zakaah should be paid by him and not the buyer. This is because the obligation to pay Zakaah became due when the produce was still in the owner's possession. On the other hand, if the owner sold his harvest before it ripens, Zakaat should be paid out by the buyer.

The passage of a year (i.e. possession of property for one complete lunar year) is not a condition for paying Zakaah on plants and fruits. It is to be paid once only even if the rest of this kind of property is kept, or not spent, in many years.

Combining different kinds of grains and fruits to complete the Nisaab:

The scholars agree that the different types of one product (e.g. different types of dates) may be added together to complete the Nisaab. But Zakaah is to be paid out from each type separately. Likewise, if there are different grades or qualities, Zakaat is to be paid out from each grade, or from the medium (i.e. not the best nor the worst). Thus, different kinds of raisins may also be combined together, and so can the various kinds of wheat and cereals.

Regarding combining various categories of grains, the scholars have different views. The predominant opinion is that no two things can be combined together to complete the Nisaab. The Nisaab must be considered on every category by itself. Therefore, barley cannot be added to wheat, and this is also applicable to dates, raisins, chickpeas and lentils. However, as we have mentioned above, different types of wheat can be combined together because all of them belong to the same category.

The Rate of Zakaah:

The rate of Zakaah differs according to the method of irrigation. If it is watered naturally without the use of artificial means, then the due Zakaah is 10 % of the harvest. However, if it is irrigated by machinery or with purchased water, then the Zakaah payable is 5 % of the harvest.

Ibn 'Umar reported that the Prophet said: "On that which is watered by the heavens (i.e. rain) or springs or its own roots, 10 % of the harvest is due, and on that which is watered by a well or a stream (i.e. purchased water), 5 % of the harvest." [Al-Bukhaari and others]

In case the land is watered equally by artificial as well as natural means, then Zakaah payable will be 7.5 % of the crop.

All of the costs involved in harvesting, transportation, threshing, cleaning, storing, and others should be deducted before Zakaah is paid.

Ibn 'Abbaas and Ibn 'Umar hold that whatever is borrowed for the purpose of tilling, planting, and harvesting should first be taken out. [Yahyaa Ibn Aadam related this in Al-Kharaaj]



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Allaah Almighty classifies the eligible recipients of Zakaah under eight categories. He, Almighty Says (what means): "Zakaah expenditures are only for the poor and for the needy and for those employed to collect [Zakaah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allaah and for the [stranded] traveler – an obligation [imposed] by Allaah. And Allaah is Knowing and Wise." [Quran 9: 60]

The following is the list of the eight categories of eligible people with a brief definition of each one:

1. The Poor:

The poor is a person who does not have sufficient wealth to fulfill his needs and the needs of his dependents, such as food, drink, clothing and housing. He may be considered poor (according to his situation) even though he may possess the minimum amount required for payment of Zakaah (i.e. Nisaab).

2. The Needy:

The needy (Miskeen) may be someone whose level of poverty is more than the poor or less than him. However, their ruling is the same in all matters. These poor and needy can have decent houses and clothes and yet be considered poor and needy if they do not possess their basic essential needs. The Messenger of Allaah defined the Miskeen in some narrations as: "The Miskeen is not the one who goes around among the people (begging) maybe receiving a morsel or two, and a date or two. Rather, the Miskeen is the one who does not have enough wealth to suffice him, however he does not let others know about it in order to be given charity and he does not stand and beg people." [Al-Bukhaari]

3. The Zakaah employees (or those who are involved with its work):

Those are the Muslims who are employed to collect Zakaah, either through persuasion or force – from those who are not willing to give it. They are given their salaries from the Zakaah collection.

4. Reconciliation of hearts (Al-Mu'allafati Quloobuhom):

They are those new Muslims whose faith is weak and may sometimes have a strong influence among their people. Thus, they are given from Zakaah in order to appease their hearts, strengthen their faith and make them attach wholeheartedly to Islam. This in hopes that comprehensive benefit may be gained from them or their evil be restrained.

Zakaah may also be given to non-Muslims in hopes that they may accept Islam or that their people may become Muslims. Thus, such people are given from Zakaah in order to encourage them to accept Islam and endear it to them.

5. The slaves:

The intent of this category is that the Muslim who is a slave be purchased from Zakaah (funds) and freed (solely for the sake of pleasing Allaah). It also applies to the Muslim who is an indentured servant (i.e. he has a contract with his owner to be freed upon paying a sum of money). Such a person may be given from Zakaah that which will help him fulfill the contract and thus become a freeman after that.

6. The indebted:

He is a person who owes a debt that he did not acquire through disobedience to Allaah and His Messenger, sallallaaahu alayhi wa sallam, and it has become impossible for him to pay it off. Such a person is given the amount which will allow him to pay off his debt from Zakaah. This is due to the statement of the Prophet : "Begging is not permissible, except for three: For the person who is extremely poor, or the person who has severe debt, or the person who owes a (debt of) blood (money)." [At-Tirmithi and Abu Daawood] If one decides to pay Zakaah due on him in the form of repaying debts for someone, he should inform him. Otherwise, it will not be considered as Zakaah. Rather will count as charity, and he would still have to pay out the Zakaah due on him.

7. In the way of Allaah:

This is paid for Jihaad (fighting) in order to elevate the Word of Allaah, the Most High, or anything that assists in it in any form. Hence, the one who goes out to fight in the way of Allaah is given (from Zakaah), even if he is wealthy. According to the opinion of Imaam Ahmad this also applies to assisting a person who is too poor to perform Hajj.

8. The wayfarer:

He is the traveler who spent all his money outside his hometown or city during his travel. Therefore, he is given from Zakaah that which will fulfill his needs as a stranger, even if he is a wealthy man in his homeland. This is due to the poverty he is experiencing in his journey and being cut off from his resources. This is the case when there is no one who can give him a loan that will be of assistance to him in fulfilling his needs. If there is someone who can give him a loan, then he is obligated to take the loan and he is not given Zakaah as long as he is considered a wealthy man in his own land (this is according to the Maaliki school of jurisprudence). This only applies if his travel is for a permissible cause (i.e. did not travel to commit a sin).

General guidelines:

1. If a Muslim pays Zakaah of his wealth to any one of the eight categories of (eligible) recipients, then that is sufficient. However, he should give precedence to those recipients who are most important and have a greater need.

2. Zakaah is not paid to those whom it is obligatory upon the Muslim to spend on, like the parents, the children, and the wife, because it is obligatory upon him to spend on them whenever they are in need.

3. Zakaah is not acceptable except with its intention. If a person pays it without having the intention of paying the obligatory Zakaah, it will not be considered Zakaah. This is due to the Prophet informing us that deeds are judged by their intentions, and that every person will get what he intended. [Al-Bukhaari]


Therefore, the one who pays it must do so with the intention of paying his due Zakaah that is obligatory upon him to pay. He should also make his intention to pay it solely for the sake of Allaah, as sincere intention is a condition for the acceptance of every act or worship.




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ISLAM regards all wealth as belonging to God and thus an “amanah” (a trust that is entrusted to the individual) from Allah. We will have to account for the wealth that Allah has entrusted to us in the hereafter.

One may accumulate as much wealth as one pleases, as long as such means do not violate the law of moral. Wealth-gathering is a legitimate activity as long as it does not entail theft, cheating, coercion, riba (usury), or harming of others.

Indeed, the pursuit of wealth is one of man’s primal concerns and demands for survival (consisting of food, shelter and clothing). Wealth-gathering is vital for living, but it must be subject to the law of moral. Without the law of moral, human life sinks to the level of being oriented around money and could lead to moral decadence.

Even if the law of moral has been strictly observed in every step of the process of acquiring wealth, our wealth requires justification on another level, that is, the institution of wealth-sharing or zakat. One of the tenets of Islam is that wealth, once acquired, ought to be shared with others in the same proportion. This is the requirement of charity and it is as old as humanity and always regarded as high moral value.

Thus, Islam seeks to preserve charity as a critical element of moral values, which must be highlighted. The purposes of zakat are:

* To purify the physical well-being and the soul of man by inhibiting selfishness and materialism from taking root in the heart of the rich, as well as spiritual training in one to create a noble, good and caring person, to others.

* To hinder jealousy and uneasiness among the poor and needy towards the rich as a hadith had mentioned: “Once you have settled the zakat upon your property, then you had put away the evil that might have risen from it.” (Narrated by Al-Hakim)

* To convince the wealthy that the title to their wealth is mitigated by the title of their fellow humans to life and subsistence.

* To assure the needy that their fellow brothers will not passively see them suffer misfortune.

* To take care of the unfortunate members of society and build their personality to become a useful contributor to society. This will cleanse unwanted feelings in them that lead to despair and an unproductive life. The Prophet said: “Men are like the organs of a body, when the organ suffers, the whole body responds to repel the cause of suffering.” (Narrated by Muslim).

Being a form of tax on wealth, zakat is incumbent on all liquid, existing, movable and immovable properties belonging to Muslims. It does not matter whether the owner is a child (for example, it is when he or she holds an inheritance wealth, zakat is obligatory on the wealth, and any of their close relatives could pay the zakat on their behalf) or adult, male or female. Three principles govern the Zakah tariff:

* No zakat is due on property intended for consumption, such as houses, gardens, clothing, or furniture. No zakat is due on jewellery of gold and silver. Taxable property is that which is intended for production, whether industrial, agricultural or commercial.

According to the Malaysian standard, even though jewellery, which is used by women, will not be imposed zakat, one must bear in mind that if a woman wears jewellery costing more than RM5,000, that is, a normal standard usage of jewelleries for a woman in Malaysia, she has to pay zakat (2.5 per cent) on the additional amount which is above the standard.

* Zakat is not an indiscriminate tax on all properties. Assessment of zakat must take into consideration the net income produced by the property in question. If in a year, the company suffers a loss, no zakat is levied on the property concerned.

* A reasonable amount necessary for the owner and his dependents’ subsistence must be deducted from the assessment.

Today, one may also ask: “Do we have to pay zakat on stocks that we keep as savings?”

Shares that Muslims are allowed to buy and own may be purchased to be held and for dividends, participate in the management of the company, or for use as tradable objects waiting for the opportunity to realise capital gains and sell. In this case, one is to pay zakat at the same rate and net asset value on the due date of the zakat.

Holding shares for their dividends are usually for the long term, during which capital gains may also be realised but the owner will usually keeps holding them for longer periods.

There are three views on the zakat in this case:

* The view of the majority, which came in a resolution of the OIC (Organisation of Islamic Countries) Fiqh Academy which maintains that one has to calculate the portion of zakat zakah based on the value of the stock, from the company’s balance sheet and pay zakat on it on the due date at the rate of 2.5 per cent. The zakah portion is: cash + receivables + inventories of goods in process and ready for sale minus short-term debts.

* The minority view which states that this investment is similar to trading in stocks from the Syariah perspective of the word. Accordingly, the owner has to pay zakat at the rate of 2.5 per cent on the market value on the due date.

* The third view is a sub-set of the first one. It actually adds on to the first one that if it is difficult to calculate zakat from the balance sheet, one may pay 10 per cent on the net income of the stock as in analogy with agriculture. Actually, there is no strong and logical support in Syariah for this opinion.

In conclusion, Muslim must bear in mind that their reluctance to pay zakat will only result in appalling consequences, either spiritually or physically such as:

* Losing Allah’s blessings over his/her property.

* Increasing the greediness in oneself to collect and accumulate as much wealth as one could without regard for the legitimacy of the sources of income in the eyes of Islam.

* Widening the gap between the rich and the poor. In this case, the rich becomes richer and the poor remains poor or becomes even poorer without any help to improve their situation. As a result, this leads to social illnesses and civil crimes, which will pose a risk to the harmony and tranquility of life in society.

* The existence of envy and hatred between the rich and the poor.

* The wealth, which has not been purified with zakat, will bring disasters to its owner in the hereafter.

Ramadhan al-Mubarak is, thus, a perfect time to be reminded of the duty to pay “Zakat al-Fitr", which is obligatory to all Muslim men, women, young and old.

Accordingly, cash value of one ‘saa’ (or one ‘gantang’ or 2.3 kg) can be paid as “Zakat al-Fitr” and it is equivalent to a very small amount of money (below RM5). It must be settled before the Idul Fitr sunnah prayer is performed. In the event it is settled later than the Idul Fitr sunnah prayer, it will not be regarded as Zakat Fitrah but will merely be regarded as an ordinary sadaqah. Therefore, Muslims should not hesitate in carrying out this duty before it is due as it will also help to enlighten the Hari Raya celebration of the unfortunate members
in society.


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