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Islamic laws and rules about Zakat

♣ What is Zakat?

Zakat is third of the five pillars of Islam. Zakah is the obligatory charity should be paid by every adult and able bodied Muslim every year on his or hers wealth. It is a contribution paid once a year on savings of two and a half percent.  

♣ What is the importance of Zakat?

• The direct meaning of the word Zakah is ‘purification’. Our possessions purified by paying Zakat.

• Zakaah does not only purify the property of the contributor, it also purifies his/her heart from selfishness and greed for wealth.

•  Zakat helps to demolish the poverty from Muslim society and helps to develop the society.

♣ In which year did Zakah become compulsory in Islam?

In Hijri 2, Zakat became compulsory in Islam.

♣ What is the Islamic verdict for those who deny or refuse to pay Zakaah?

Zakaat is one of the Islamic duties and if anyone denies it or refuses to pay it or says that no needs to pay every year, then she will be considered as non-believer (Kaafir). If she accepts Zakat being fard but neglects this duty, then she will be termed as a Faasiq (Transgressor)

♣ What are the benefits for giving Zakat?

1. Gaining of the pleasure of Allah

2. Increase in Wealth

3. Protection from losses

4. A cause is established for Allah’s forgiveness and blessings are obtained

5. Safety from calamities

6. Protection from the wrath of Allah and from a bad death

7. The Zakaah will provide a shelter on the Day of Judgement

8. Security from seventy misfortunes

9. It will serve as a shield from the fires of Jahannam

10. It contributes to Barakah in wealth

11. It saves from fear and grief

♣ What are the punishments for those who not pay Zakah?

• Allah says in Al Quran:

“And there are those who hoard gold and silver and do not spend it in the way of Allah , announce to them a most grievous penalty (when) on the Day of Qiyaamah heat will be produced out of that wealth in the fire of Jahannam, then with it they will be branded on their foreheads and their flanks and backs. (It will be said to them). This is the treasure which you hoarded for yourselves, taste then the treasure that you had been hoarding”.

Surah At Tawbah 9:34

• Beloved Prophet ﷺ has said:

1. “The nation that does not give Zakaah, Allah will bring about a drought on them (i.e. necessities of life will become scarce)”.

Book – Sahih al Bukhari

2. “The person whom Allah has bestowed with wealth, who does not give Zakaah, on the Day of Qiyaamah, his wealth will be turned into a venomous bald serpent which will wind around his neck and bite his jaws and say: “I am your wealth, I am your treasure”.

Book – Sahih al Bukhari

♣ On whom Zakah is compulsory (Fard)?

1. She is a Muslim

2. She is an adult

3. She is a sane person

4. She is a free person, not a slave

5. She owns wealth intended for trading to the value of Nisaab

6. The wealth should be fully owned

7. The wealth should reach the nisab (certain amount of wealth)

8. The wealth should be possessed by her for a complete lunar year except grains and fruits.

♣ What are the types of wealth on which zakat is fard?

1. Zakaah is Fardh on gold and silver.

2. Zakaah is Fardh on the cash, equal to the value of nisaab of silver.

3. Zakaah is Fardh on merchandise for business, equal to the value of Nisaab.

6. Zakaah is Fardh on livestock.

7. Zakaah is Fardh on the income properties, if it is equal to the value of Nisaab.

8. Zakaah is Fardh on the income derived from a hiring business, such as crockery, motor cars, vans, trucks etc.

♣  What are the types of wealth on which Zakat is not Fard?

1. Zakaah is not Fardh on any other metal besides gold and silver. There is no Zakaah on diamonds, pearls and other precious or semi precious stones which are of personal use. But if those are kept for business purposes, then Zakat has to be paid.

For example: buying and selling gems and diamonds (Gem business, diamond business)

Zakaah is payable on the gold or silver used in making jewelery with diamonds, pearls, etc. There is no Zakaah on imitation jewelery.

2. Zakaah is not Fardh on fixtures and fittings of a shop, motor car, truck or any delivery vehicle etc., which is used in running of a business.

3. There is no Zakaah on any number of houses, living quarters, household furniture, crockery, personal clothing, whether they are in use or not. However, if they are used as merchandise for business, then Zakat has to be paid for them.

For example: buying and selling furniture, buying and selling land or building (real estate business), then Zakat has to be paid.

♣ Do we need to pay Zakat on ladies wearing gold jewelries?

According to Hanafi Fiqh, zakat has to be paid on wearing gold jewellery. However, according to Shafie Fiqh, no need to pay zakat on simply wearing jewellery.  

♣ What is the Nisaab for Gold, Silver and Cash?

If a person having the following items at the following quantity and if it reaches one year, then only he or she is entitled to pay Zakat.

Gold – 87.48 Grams

Silver – 612.36 Grams

Cash – Cash equal to the value of Silver (i.e. Cash value of 612.36 Grams of Silver)

♣  How much Zakat has to be paid?

Zakat has to be paid at the rate of 2.5% of each wealth.

♣ What is the Niyyah (Intention) of Zakah?

It is Fardh to form a niyyat for the fulfilment of Zakaah. When giving Zakaah to a needy person, the niyyah should be that,

“I am giving this as Zakaah”. If the niyyah is not made the Zakaah will not be valid.

It is not necessary to reveal to the needy person to whom Zakaah is given that the cash or kind which is being given to him is Zakaah. When one has put aside an amount for Zakaah with the intention that he will give it to the needy, and at the time of giving Zakaah he forgets to make the niyyah, the Zakaah will still be valid.

♣ To whom Zakat can be given?

There are eight types of people only Zakat can be given.

1. FUQARAA: People who are poor and who possess more than their basic needs but do not possess wealth equal to Nisaab.

2. MASAAKEEN: People who are destitute and extremely needy to the extent that they are forced to beg for their daily food ration.

3. AL ‘AAMILEEN: Those persons who are appointed by an Islamic Head of State or Government to collect Zakaah. It is not necessary that this be a needy person (This is a wage).

4. MUALLAFATUL QULOOB: Those persons that have recently accepted Islam and are in need of basic necessities. Such person

would benefit from encouragement and assistance by the Muslims which would help strengthen their faith of Islam.

5. AR RIQAAB: Those slaves that are permitted to work for renumeration and have an agreement with their masters to purchase their freedom on payment of fixed amounts.

6. AL GHAARIMEEN: Those persons that have a debt and do not possess any other wealth or goods with which they could repay that which they owe. It is conditional that this debt was not created for any un Islamic or sinful purpose.

7. FISABILILLAH: Those persons that have to carry out a Fardh deed which has become obligatory on them and subsequently (due to loss of wealth) are unable to complete that Fardh.

8. IBNUS SABEEL: Those persons who are Musaafir (travelers in view of Shari’ah) and during the course of their journey do not possess basic necessities, though they are well to do at home. They could be given Zakaah in order to fulfill travel needs to return home.

♣ Can we give Zakah to non-Muslims?

No, zakah cannot be given to non-Muslims.

♣ Should Zakat be only given in the month of Ramadan?

No, Zakat will become compulsory when one’s wealth reaches one year and the nisab. If it passes one year, she should pay as soon as possible. She should not wait until Ramadan comes. Many tries to pay in Ramadan, since it is mentioned in hadith that it will be given 70 times rewards for one reward in Ramadan.

However, before Ramadan comes, the wealth can be stolen or lost due to any reasons. So she will not be able to fulfill her obligatory.

On the other hand, if before reaches one year of your wealth, Ramadan arrives. Then Zakat can be given in the Ramadan in advance even the wealth did not reach one year old.

♣ Can we pay Zakat to Mosques and Islamic Madarasa?

No, we cannot pay to mosque, since it is not a person, it is a building. Zakat cannot be paid for building or building construction. Zakat cannot be paid to Madarasa as it is paying to building or Madarasa construction. But it can be paid to madarasa staffs or students who are in needy.

♣ Do we need to pay Zakat for our money which was given to someone as Loan?

Zakat has to be paid for the loans that we gave to others, provided we are confident that it is recoverable. For the bad debts (loans expected to be irrecoverable) no need to pay Zakat.

♣  Do we need to pay Zakat for the advance money that we gave to house owner or landlord?

Yes, Zakat has to be paid for them.

♣ Should Zakat be paid every year?

Yes, Zakat should be paid every year.

Zak’at on items rented for profit.

Exploited assets are defined as forms of wealth used to produce exchangeable services or goods that are sold for profit without exhausting the exploited assets themselves. They include assets rented for profit, such as residential buildings, means of transportation, jewelry, and other material used for rental purposes. Also in this category are livestock raised for milk, wool, or meat, and factories, plants, or equipment used for producing goods.

The difference between assets used for exploitation and those used for trading is that the former remain as permanent capital, while the latter change hands.

We have two groups among the jurists, one which restricts the zakatability of these assets and the one which expands the zakatability to include those assets. This article is written chiefly to refute those who restrict the Zakatability of exploitable assets for profit.

Those who restrict the Zakatability of Rent-able Items:

Those who tend to limit the zakatability argue that:

  1. The Messenger of Allah صلى الله عليه وسلمdefined thezakatable assets, and did not mention among them these exploited ones such as buildings, rented animals, and productive machinery. The principle is that people must not be obligated to pay any charge without a clear text. There is no such text.
  2. Jurists throughout the history of Islam and in all its various countries did not obligatezakahon those assets.
  3. We have on hand scholarly opinions that negate thezakatabilityof exploited assets. Jurists have stated that residential home, craftsman’s tools, transportation animals, home furnishings, etc., are all exempt from zakah. This means factories, buildings, cars, planes, and ships are not zakatable, regardless of their size, value, or income.

When the earnings of these assets are received, retained for one year, and exceed

nisab, they are then zakatable, like money.

Disproving the evidence of the restrictors

  1. The fact that the Prophet (p) does not mention a certain asset as zakatable is not in indication of non-zakatability, because the Prophets only mentions growing assets common in Arab society at his time, such as camels, cows, lambs, wheat, barley, dates, raisin, and silver money. Muslims throughout generations obligated zakah on many assets by analogy to these mentioned by the Prophet, because of the general terms used in the texts, and in consideration of the objectives of zakah. Some examples are:
  1. Al Shafi’i رضي الله عنهsays inal Risalah about the zakatability of gold, “The Messenger of Allah صلى الله عليه وسلم  imposed zakah on silver. Afterward, Muslims collected zakah on gold, either by virtue of a text from the Prophet that did not reach us, or by analogy, since gold is used by people as a determinant of value for their exchange, before and after Islam.”[1] [Scans Below pg 192-194].

The possibility that there is a saying that did not reach al Shafi’i is very remote. The only reason, then, is analogy, as stated by Abu Bakr bin al ‘Arabi in Sharh al Tirmidhi: “The Arabs’ trade at the time of the Prophet صلى الله عليه وسلم used silver currency, so the Prophet mentions it to mean all money used. His mentioning of silver was understood as inclusive of all kinds of money, but when people in later generations started asking for a specific text on everything, God shut in their faces the door of guidance and they deviated from the track of their predecessors.”[2]

Scan from Sharah Tirmidhi, Vol 3, Pg 194.
  1. There is no clear text about thezakatability of trade assets. In spite of that, Ibn al Mundhir reports that they are zakatable by ijma‘. Only the Zahiris disagree.
  1. Hazrat Umar رضي الله عنهorderedzakah on horses because he realized that they had become valuable wealth. Imam Abu Hanifah رضي الله عنه agrees with ‘Umar رضي الله عنه on this issue as long as the horses are retained for growth and pastured naturally.
  1. Imam Ahmad رضي الله عنهobligateszakah on Money on the basis of the report from the Companions and by analogy to grains and fruits. He further obligateszakah on all minerals by analogy to gold and silver, and by virtue of the general verse, “And out of that which We have produced for you from the earth. . .”
  1. Imam Al Zuhri, al Hasan, and Abu Yusuf (رضي الله عنه)obligate a one-fifth charge on pearls. amber, and other extracts from the sea, by analogy torikaz and minerals.
  1. All known schools of thought utilize analogy in the rules ofzakah. The Shafi’ites, for example, use analogy in thezakatability of food items although the sayings mention only a few of these items by name.
  1. The claim that no Muslim jurists impose zakah on exploited assets is refuted on the basis that the concept of retaining the asset and exploiting it for production or rental is a modern innovation that did not exist at the time of the great Muslim jurists. Yet we find their statements indicate that such assets would be zakatable
  1. The fact that jurists exempt residential houses and craftsmens tools fromzakahcannot be extended to include buildings exploited for rent and factories or plantsestablished by industrial growth. Riding animals of the past are by no means similar to modern cars, planes, and gigantic ships, while personal home furnishings of the past differ substantially from today’s furniture rental businesses. Our predecessors did not err when they decided that furniture and tools are not zakatable; they applied strictly and rationally the rules forzakatability to the circumstances of the age in which they lived. The author of al Hidayah rationalizes the exemptions of such items “because they are utilized for essential needs and also do not grow.”[3] The author of al ‘Inayah comments,”Each of these two traits is alone an obstacle to zakatability. Residential quarters are indispensable for people as is clothing. As for growth, it may either be a characteristic of the item itself, as in the case of gold and silver, or it may be merely by designation, as in the case of business inventory.”[4] Jurists unanimously agree that a house taken as a residence by its owner is notzakatable. This exemption is a expression of Islamic justice, especially when compared with most contemporary real estate taxes, which usually do not give such consideration.

It is essential to point out that the rationalization or the exemption of housing, clothing, tools etc., from zakah on the basis that they are non-growing and utilized for essential needs, is itself an indication that any of these items becomes subject to zakah if it is used for growth and for non-essential needs.

[1]. Al Risalah, Imam Shaf’ai, ed. Ahmad Shakir, pp. 193-194.

[2]. Sharh al Tirmidhi, Imam Abu Bakr Ibn Al Arabi, Vol. 3, p. 104.

[3]. Al Hidayah with Fath al Qadir, Vol. 1, p. 487.

[4]. Al ‘Inayah, p. 487

Note: The following paragraphs are taken from the book, “Fiqh Al Zakah by Dr. Yusuf Al Qaradawi.”