Allah SWT commands in the Quran, “Take alms out of their property, you would cleanse them and purify them thereby, and pray for them; surely your prayer is a relief to them; and Allah is Hearing, Knowing.” [Al-Quran 9:103]
Zakat means ‘to purify’. It is through this Yearly charitable act where one’s wealth is purified for the sake of Allah SWT and it is also a means of improving the conditions for the destitute within the Muslim Ummah.
Zakat is an obligatory duty that goes towards the needy in the Ummah. This duty is set upon every Muslim where a calculated portion of their exceeded wealth (Nisab) is taken to be given to the poor and destitute. It is also the third pillar of Islam and a Muslim cannot be complete in his faith without abiding to this commandment of Allah.
The five pillars of Islam:
- Shahada: To declare that “There is no God but Allah and Muhammad is his messenger.”
- Salah: Five daily prayers.
- Zakat: paying a calculated portion of your wealth towards charitable causes.
- Sawm Ramadan: fasting through the month of Ramadan.
- Hajj: Pilgrimage to Mecca.
Who pays Zakat and how much?
To be liable to pay Zakat, one’s wealth must amount to more than a threshold figure (after living costs, expenses etc). This is called Nisab and is the point at which Zakat becomes payable. This amount is then distributed to the poor and needy. Zakat is to be paid by any Muslim adults who are mentally stable and in possession of wealth (net asset) above the Nisab. The amount taken out of a person’s total cumulative wealth for the year is 2.5%.
What types of things require Zakat to be paid on them?
Gold, Silver, Cash, Stocks, Mutual Funds, Business Merchandise Inventory, Private Companies, Corporations and Partnerships, Retirement Plans (401K, etc.), Real Estate Investments in Property Owning Companies, Accounts Receivable, Profits from Investments, Trusts, Long-Term Insurance (Life Insurance), Lump Sum Payments in Terms of Compulsory Pension and Provident Fund, Severance Package, Income Tax, Liabilities which may be deducted, Buried Precious Metals or Minerals (Rikaz), Livestock, Animals, Cows, Sheep, Camels and Agricultural Produce etc.
What about the Zakat that I did not pay over the previous years?
Ibn ‘Abbas reported: A woman came to the Messenger of Allah (peace and blessings be upon him) and said: My mother has died and fasts of a month are due from her. Thereupon he said: Don’t you see that if debt was due from her, would you not pay it? She said: Yes (I would pay on her behalf). Thereupon he said: The debt of Allah deserves its payment more than (the payment of anyone else) (Muslim, Book 6, No. 2554).
The scholars mentioned that from the above hadith, any missed Zakat is to be paid instantly to the deserving.
Why do we give Zakat?
It is a way of understanding that we do not own our wealth, and everything belongs to Allah SWT. Therefore, we must eliminate excessive greed which is lured to us by our desires and discipline ourselves by giving and supporting the Ummah out of the wealth blessed to us by Allah SWT. Many Muslims decide to pay their Zakat during Ramadan to multiply their rewards as good deeds are multiplied during Ramadan.
There are many benefits of Zakat especially towards the spiritual disciplining of one’s self.
First, we are obeying Allah’s Command and in essence, this lesson teaches us that life is short and we should not cling onto anything that we are not going to be taking with us to the next life. Therefore, we spend so that we can benefit ourselves in the next life. We follow orders no matter what status we are in, whether rich or poor. Other, benefits include;
- Helping the needy
- Cleansing ourselves from the love of greed and possessions
- Freeing ourselves from the love of money and materialism.
- Freeing ourselves from ego
- Ensuring we are god fearing and honest in what we do
so, their obedience to Allah SWT brings them prosperity in the Dunyah (this world) and the akhirah (hereafter). Zakat also Muslim closer to Allah and increases their faith in him.
“True piety is this: to believe in God, and the Last Day, the Angels, the Book, and the Prophets, to give of one’s substance, however cherished, to kinsmen, and orphans, the needy, the traveller, beggars, and to ransom the slave, to perform the prayer, to pay the Zakat.” Surah Baqarah, Ayah 177 (Qur’an 2:177).
What if I don’t pay Zakat
Allah SWT has strongly warned those who do not carry out their fulfilment and duties. Allah said, “Those who hoard up treasures of gold and silver and spend them not in the way of Allah; give them the news of a painful punishment” [Al-Quran 9:34-35]
There is no excuse to not pay your Zakat unless you have a seriously big reason not to. Those who do not pay will not be in good standing with Allah SWT on the day of judgment and will be punished as hoarders of wealth and blessings, Allah also states in the Quran:
“And let not those who hoard up that which Allah hath bestowed upon them of His bounty think that it is better for them. Rather, it is worse for them. That which they hoard will be their collar on the Day of Resurrection. Allah’s is the heritage of the heavens and the earth, and Allah is Informed of what you do.” [Al-Quran 3:180]
When do we pay?
On the day your wealth equals or passes the Nisab, your Zakat should start; You then have one lunar year as a limit to pay your Zakat. If you are unaware of the date, you should estimate close to when you think it should start. If you are unable to guess a date, then you must select a random date from the Islamic calendar and stick to it annually. This is known as your Zakat ‘due date’ or ‘anniversary’.
Zakat can be pain in advance in a month of ones Zakat anniversary, then a calculation is made, and any outstanding balance should be paid off as quick as possible. Travelling abroad past the Zakat date with the Niyah (Intention) to deliver the Zakat personally yourself then the limit for distribution should be one year otherwise pay it immediately. Saving up for five years to pay it at once is not allowed.
Once a calculation has been made on one’s Zakat anniversary, it is not appropriate to make regular Zakat payments in arrears unless there is a very good reason to do so. Zakat should be discharged immediately or as soon as possible after the Zakat anniversary.
Zakat can be paid over the year. For example, if my Zakat anniversary is on the 10th of Ramadan. I can pay Zakat from then until the next years anniversary. Say I give £100 Then on 10th Ramadan next year my Zakat liability is calculated at £1600. As I have already paid £1200 over the course of the year through the monthly £100 payments, then all that will be remaining to pay is £400 before the 10th Ramadan next year to complete the full Zakat.
Where does it go?
“Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of God; and for the wayfarer: (thus is it) ordained by God, and God is full of knowledge and wisdom” [Surat at-Taubah 9:60; translation by Yusuf Ali]
In the Quran in Surat At-Tawbah 9:60, Allah precisely Mentions 8 groups of people who are eligible to receive Zakat. These groups guarantees that the right of the needful is accommodated and wealth is correctly distributed. Thus, making it simple for a Muslim to choose as long as the institute they pay provides the money to the needy mentioned in the verse above. Those entitled are:
- ‘Alfuqarah’; The poor.
- ‘Al-Masakeenl’; The needy.
- ‘Al-Aamileen Alaiha’; Those who collect Zakat Dues
- ‘Muallafatil Quloob’: Recent coverts of Islam that are poor and needy.
- ‘Ar-Riqab’; Purchase the freedom of the Slaves.
- ‘Ibnis-Sabeel’; A stranded traveller in need of financial Aid
- ‘Al-Ghaarimeen’; A debtor
- ‘Fi Sabeelillah’; the wayfarer away from home for Allah’s Cause,
It is only these groups that can receive these payments and these groups are specifically picked by Allah as the prophet SAWS mentioned: “Allah permitted not even a prophet to declare zakat rather, he himself ruled on it and permitted it in eight cases. Therefore, if you belong to any of these, I shall most surely give you your right.” [Sunan Abu Dawud]
How can we achieve?
- Provide support for those most in need, builds up community institutions and enables advocacy.
- Zakat is a portion of wealth taken from the wealthy and distributed to the needy. Although it is preferred that Zakat is to be taken locally, distributed and dispensed locally. In times of crisis Zakat can be used to help support the destitute affected by the crisis.
How is it calculated?
Assets that are calculated with Zakat are cash you have (whether in bank accounts, money lent or cash in hand), pensions, shares silver and gold. Personal Items are included such as clothes, vehicles, food, furniture, Home etc.
Nisab Can be measured through two methods, gold or silver. For gold we use 30 ounces or 87.48 grams or its cash equivalent. For silver we use 21 ounces or 612.36 grams or its cash equivalent.
Today the price for gold per gram is £31.40 which means the Nisab based on gold is £2746.872 (£31.40 x 87.57). Therefore, anyone who has equivalent to or more than £2746.872 of savings will have to pay 2.5% of it towards Zakat. The minimum Zakat in this case is £68.6718
Today the price for silver per gram is £0.31 which means the Nisab based on silver is £189.8316 (£0.31 x 612.36). Therefore, anyone who has equivalent to or more than £189.8316 of savings will have to pay 2.5% of it towards Zakat. The minimum Zakat in this £4.74579
Use Gold or Silver?
The majority of scholars recommend using silver to ensure more people pay Zakat which will benefit more of the needy and destitute in the world. Prices constantly change and these prices are used as an example, you must obtain and ensure you have the correct information for the prices of gold and silver.
Difference between Zakat and Zakat Ul-Fitr?
Although Zakat and Zakat Ul-Fitr sound similar they are three main differences that we should know.
The first difference is based on eligibility. Zakat is required to be paid after you reach a certain amount in your assets. However, Zakat Ul-Fitr must be paid by all Muslims regardless of their financial status and age. Unless they genuinely do not have the means to do so.
The second difference is in the amount due. For example, Zakat Ul-Fitr rarely goes above £5 per person. Whereas Zakat can notably be higher since it is measured by your income.
The third difference is in the date in which one must pay. Zakat can be paid at any time in the year, whereas Zakat Ul-Fitr goes hand in hand with Ramadan and is to be paid before the Eid prayer.
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