What is Zakat in Islam? | The Islamic Tax: Benefits, and Calculation | A comprehensive guide

Introduction

Although we may be familiar with the concept of Zakat, few of us can truly explain it to others. Why? Because until we reach a certain level of financial prosperity, usually when adulthood and earning for feeding a family becomes a reality, we take a backseat approach to understanding Zakat. Yet, the time for learning is now. 

Allow us to provide a concise yet comprehensive explanation of what Zakat really is, what’s the difference between Zakat, Nisab, and Sadaqah, when to give Zakat and to whom or how much zakat to give, and its importance! Keep reading with us and explore these Islamic treasures.

Zakat in Islam
Zakat in Islam

What is Zakat in Islam?

In the Arabic language, Zakat means ‘purification’ and ‘growth’ as it purifies one’s heart from all selfishness and greed by allowing one to become closer to Allah through charity or Sadaqah. Zakat has been known since early times in various forms with different names such as ritba, rizq, or khums.

Zakat is one of the 5 pillars of Islam and is described as a compulsory payment of a fixed proportion of one’s wealth and savings on which one lunar year has passed. This Islamic obligatory tax essentially aims at redistributing resources for the benefit of those who are less fortunate than others.

Zakat was made obligatory following the below mentioned verses in Quran from Surah at Tawbah Chapter 9 Verse 103:

“Take from their wealth ˹O Prophet˺ charity to purify and bless them and pray for them—surely your prayer is a source of comfort for them. And Allah is All-Hearing, All-Knowing.”

( Al Quran Surah at Tawbah 9:103 )

What is Nisab?

The Nisab is the demarcation line between wealth and obligation. It is the minimum amount of fortune that a Muslim must own before they become liable to perform Zakat, otherwise known as the Nisab threshold. This marker serves as a reminder of our responsibility to give back to those in need.

How much is the Nisab?

You might be wondering how much money or Nisab is mandatory before becoming liable for Zakat.

The measuring parameters for Nisab are the gold and silver, not your currency.

For becoming liable of paying Zakat, you must have 87.48 grams of gold or 612.36 grams of silver.

If you are not confused about whether you have fulfilled Nisab criteria or not, simply change 87.87 grams of gold or 612.36 grams of silver into your local currency with the current exchange value. If you earn as much or more than the converted value after paying off all your debts, and one year has passed on that amount, you must pay Zakat out of it.

If your financial fortune fails to reach the Nisab threshold during the course of one lunar year, then no Zakat is due.

When to Pay Zakat in Islam?

Not everyone is obliged to pay zakat at the same time; this is determined by an individual’s nisab, or threshold, which is calculated from their assets and possessions over the course of a full lunar year. Depending on when the nisab is reached, one person may have to pay zakat earlier than someone else. 

Even though there isn’t a specific date that has been designated for paying zakat, it’s usually done at the end of a lunar year after considering any leftover wealth that has accumulated during that time. For those who believe in it, they say that paying zakat during Ramadan brings good luck and fortune. 

To ensure proper calculation of nisab, individuals need to take regular inventory of their assets and possessions, which can be done either weekly or monthly. Doing so will enable them to assess when they become eligible for zakat payment and determine how much should be paid.

How Much Zakat to give?

A common questions that comes to mind is, ‘Do we have to give all our yearly saved money in Zakat?’ Well, the answer is NO!

The concept of Zakat entails giving 2.5% or 1/40 of one’s savings or wealth as charity every year if it reaches a certain threshold (known as nisab). This amount is equivalent to around 566 grams of silver or 84 grams of gold per annum. Every Muslim who has surplus wealth and meets the criteria must pay this payment each year after deducting any outstanding debts.

Who is eligible for Zakat in Islam?

Just as Quran has laid guidance for giving Zakat and its Nisab; it has also been clearly mentioned about those entitled to receive Zakat according to the Quran.

8 Categories of Zakat recipients in the Quran

  1. Poor people, those who have not been able to meet their basic needs. 
  2. The destitute; Those whose income barely provides adequate sustenance. 
  3. Debtors: People known as fuqara’ – this includes people living on Zakah donations only due to poverty or unemployment. 
  4. Travellers stranded away from home with no resources nor means by which they can return home. 
  5. Slaves wishing for freedom so they can escape abuse and exploitation by their masters. 
  6. For purchase or freeing captives including prisoners of war held captive but cannot afford ransom fees or bail money demanded by captors.
  7. In Support of Charities such as mosques clinics hospices and schools etc.
  8. and others specified in Islamic teachings such as those supporting rightful law enforcement and defense forces against oppression, violence, tyranny, injustice, etc.

Who Is Not Eligible for Zakat in Islam?

According to Islamic law, Zakat, which is a mandatory form of charity given to those who are in need, cannot be given to the following people:

  1. Close relatives such as parents, grandparents, and children or grandchildren. 
  2. Additionally, spouses are not permitted to give Zakat to one another. 
  3. Furthermore, Zakat is not permissible to be given to non-Muslim individuals. In the same vein, Waajib Sadaqah (charity) such as Sadaqatul Fitr, Kaffarah, Ush’r, and Naz’r cannot be provided to non-Muslims either. However, Naf’l Sadaqah can be distributed among them.
  4. When considering whether a recipient is deserving of Zakat or not, it is important for the giver to make sure that the individual is truly in need of the funds before providing them with the charity. 
  • If it turns out that the recipient was actually wealthy and had received Zakat without inquiry beforehand, then the charitable donation will not be counted as Zakat and it has to be given again.
  1. It cannot be fulfilled by buying books for an educational institution or purchasing land for public benefit and then making it a Wak’f. 
  2. It cannot also be used to cover the Kaf’n (cost of burial) of a deceased person who has no legal heirs. 
  3. Similarly, any debts accumulated by the deceased prior to their passing cannot be paid from Zakat money either.

Importance of Zakat in Islam:

The importance of Zakah is also hidden in the fact that whenever the Quran talks about the offering of the Namaz (prayer), the giving of Zakat is also mentioned along with it. 

Some of the Aayats where Zakat and Namaz are stressed upon together in the Quran are as follows:

Surah Al-Muzammil (The Mantle-Wrapped One)- 73:20

Yet you shall duly establish the Prayer. And you shall give the Zakat-Charity, and therewith lend God a most goodly loan. For whatever good you advance for your souls, you shall find its reward with Allah in the Hereafter; yet it shall be far better and much greater in reward.

Surat Al-Mujadilah Chapter 58, Ayat 13:

Then steadfastly continue to duly establish the Prayer and give the Zakat-Charity.

Surat Fussilat, Chapter 41, Ayat 7:

Those who do not give the Zakat-Charity, those who are disbelievers in the Hereafter.

The importance of giving Zakat can also be realized from the Ridda wars which were fought under the Khilafat of the first Caliph Hazrat Abubakar (R.A) when people after the death of Prophet (PBUH) declined to give Zakat.

When the beloved Prophet (PBUH) sent Hazrat Mu’aaz toward Yemen, he (PBUH) said,

 “Tell them that Allah SWT has made Zakat obligatory in their wealth; it should be taken from the wealthy people and given to the Fuqara (the poor people)”

( Sahi al Bukhari 1395 )

Conclusion

Zakat in Islam, one of the five pillars of Islam, just does not ask Muslims to give out some amount from their earnings and assets every year but also is a means of purifying money, as it is said that Money does not decrease by giving Zakat, rather it increases. 

You must also purify your money as well as help the poor and the needy at the same time. This will help us to raise better as a community and diminish the evils from root that are born due to lack of  money or poverty.

Frequently Asked Questions On Zakat

Is Zakat payable on the amount that is saved for Hajj?

Yes! Zakat is obligatory on money saved for Hajj, provided that one lunar year has passed on it, and the holder meets the Nisab threshold.

On what part of my wealth, Zakat is not payable?

Except for gold and silver, no zakat is payable on personal belongings that you own such as a house, car, or any goods that were not purchased with the intention of trading them.
However, zakat is payable on rental property (a house or shop which you have given to someone else and take rent from them every month or year.)

When does the Zakat Year begin? Or how do I calculate that one lunar year has passed on my money?

The zakat year begins on the date when you first had wealth that was equal to or greater than the nisab threshold. This is known as your seed date and marks the beginning of a new zakat year. Every time this date comes around, you will need to calculate your zakat obligations, regardless of whether your wealth has increased or decreased since then.

The only exception to this rule is if you were to become completely bankrupt and lose all your possessions – in this case, your seed date will reset and begin anew when you become once again in possession of wealth at least equal to the nisab threshold. 

If you are unsure about when your seed date is, it’s important to make an educated guess and estimate it as accurately as possible.

(Visited 37 times, 1 visits today)

Leave a Comment