Obligation, Recipients and Issues of Zakat
The Definition of Zakat:
The literal meaning of zakat is “purification” and “increment.” It is evident from this meaning that as a result of this worship, one’s wealth becomes halal and pure. It also results in purifying one’s self from the impurities of sins.
The Meaning of Zakat according to Islamic Shari’ah:
When specific wealth goes above a minimum amount known as “Nisab” and an entire year has passed while possessing that specific wealth, then a specific share is taken out of it and given to a specific group of needy and deserving individuals.
5 points are clarified from the above definition:
- Zakat will not be taken out from whole wealth. Rather, it is applicable on a specific portion of wealth, details of which will appear in the following lines.
- Zakat will be enforced on a certain quantity of wealth and this quantity will vary across the various forms of wealth. Islamic Sharia takes special care that this quantity doesn’t become a burden on the holder of the wealth. Rather, the payable quantity made incumbent is easily payable by the holder.
- The relaxation afforded by the Sharia in this matter is highlighted by the fact that zakat is not applicable when wealth reaches the point of nisab but only becomes obligatory when an entire year has passed while possessing that wealth; and if during the year that specific quantity of wealth drops below the ‘nisab’ level then zakat will no longer become obligatory.
- The amount of zakat that is made obligatory on the holders of wealth who are called sahib-e-nisab,” is such that it can be gladly paid with ease. Only 2.5% zakat has been made obligatory on an individual’s entire amount of wealth. This becomes an insignificant amount when compared to the other 97.5%. This is indeed a special favor and blessing from Allah (عَزَّوَجَلَّ) for this Ummah. Hypothetically speaking, if Allah (عَزَّوَجَلَّ) had made the obligatory payable zakat amount as 50% of the total wealth, then this would have proven to be a massive burden for the holders of wealth (sahib-e-Nisab).
- The recipient’s/beneficiaries of zakat are specific and Allah (عَزَّوَجَلَّ) has made this abundantly clear in the Holy Qur’an. These are eight categories where zakat can be spent and spending it in any other way will make this payment invalid. These eight categories will be discussed in the following few lines.
The Obligation and Importance of Zakat
After prayer, zakat is the next most important Pillar of Islam. In the Holy Qur’an the commandment for its obligatory payment has been mentioned eighty two times as a reminder. Zakat has not been made obligatory only on the Ummah of the Messenger ﷺ, rather it was also made obligatory on the nations that came before us.
Allah (عَزَّوَجَلَّ) says in the Holy Qur’an:
وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ وَارْكَعُوا مَعَ الرَّاكِعِينَ ﴿٤٣﴾۔
“And establish prayer and give zakah and bow with those who bow [in worship and obedience].”
[Al-Baqarah: 43]
In the Holy Qur’an, Allah (عَزَّوَجَلَّ) has declared those who pay zakat as the true believers.
الَّذِينَ يُقِيمُونَ الصَّلَاةَ وَمِمَّا رَزَقْنَاهُمْ يُنفِقُونَ ﴿٣﴾ أُولَـٰئِكَ هُمُ الْمُؤْمِنُونَ حَقًّا ۚ لَّهُمْ دَرَجَاتٌ عِندَ رَبِّهِمْ وَمَغْفِرَةٌ وَرِزْقٌ كَرِيمٌ ﴿٤﴾۔
“Who perform As-Salât (Iqâmat-as-Salât) and spend out of that We have provided them. (3) It is they who are the believers in truth. For them are grades of dignity with their Lord, and Forgiveness and a generous provision (Paradise)
[Surah Al Anfal: 3, 4]
The Prophet ﷺ, while sending Muaadh (رَضِيَ ٱللَّٰهُ عَنْهُ) to Yemen said that:
“You are going to people of a (Divine) Book. First of all invite them to worship Allah (Alone) and when they come to know Allah, inform them that Allah has enjoined on them, five prayers in every day and night; and if they start offering these prayers, inform them that Allah has enjoined on them, the Zakat. And it is to be taken from the rich amongst them and given to the poor amongst them; and if they obey you in that, take Zakat from them and avoid (don’t take) the best property of the people as Zakat.”
(Sahih Al Bukhari, Sahih Al Muslim)
The Wisdom and Benefit Behind the Obligation of Zakat
If every individual pays his/her zakat properly and it is subsequently spent in an organized manner for the welfare of the poor, then poverty could be eliminated within a few years’ time. Properly paying zakat has an amazing and beneficial impact on the self and the wealth of the payer as highlighted below:
Zakat is a source of increase in one’s wealth, Allah (عَزَّوَجَلَّ) says in the Holy Qur’an:
وَمَا آتَيْتُم مِّن رِّبًا لِّيَرْبُوَ فِي أَمْوَالِ النَّاسِ فَلَا يَرْبُو عِندَ اللَّـهِ ۖ وَمَا آتَيْتُم مِّن زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّـهِ فَأُولَـٰئِكَ هُمُ الْمُضْعِفُونَ ﴿٣٩﴾۔
“And that which you give in gift [ ] (to others), in order that it may increase (your wealth by expecting to get a better one in return) from other people’s property, has no increase with Allâh, but that which you give in Zakât seeking Allâh’s Countenance then those, they shall have manifold increase”.
[Ar-Rum : 39]
The source of purification of one’s self and wealth, Allah (عَزَّوَجَلَّ) says in the Holy Qur’an:
خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِم بِهَا وَصَلِّ عَلَيْهِمْ
“Take, [O, Muhammad], from their wealth a charity by which you purify them and cause them increase, and invoke [Allah ‘s blessings] upon them. Indeed, your invocations are reassurance for them. And Allah is Hearing and Knowing”.
[AT-Tawbah 103]
- It eliminates the feeling of envy and hatred from the hearts of underprivileged for those who are rich.
- It results in creating a more kind, cooperative and compassionate society.
Ruling on Those Who Refuse to Pay Zakat:
There is consensus amongst scholars that any person who rejects the obligatory status of zakat is a disbeliever. On the other hand any Muslim who accepts the obligatory status of zakat, yet does not pay it has committed a major sin. For such people Allah (عَزَّوَجَلَّ) has declared a severe punishment in His book:
وَالَّذِينَ يَكْنِزُونَ الذَّهَبَ وَالْفِضَّةَ وَلَا يُنفِقُونَهَا فِي سَبِيلِ اللَّـهِ فَبَشِّرْهُم بِعَذَابٍ أَلِيمٍ ﴿٣٤﴾ يَوْمَ يُحْمَىٰ عَلَيْهَا فِي نَارِ جَهَنَّمَ فَتُكْوَىٰ بِهَا جِبَاهُهُمْ وَجُنُوبُهُمْ وَظُهُورُهُمْ ۖ هَـٰذَا مَا كَنَزْتُمْ لِأَنفُسِكُمْ فَذُوقُوا مَا كُنتُمْ تَكْنِزُونَ ﴿٣٥﴾۔
“And those who hoard gold and silver and spend it not in the way of Allah – give them tidings of a painful punishment. The Day when it will be heated in the fire of Hell and seared therewith will be their foreheads, their flanks, and their backs, [it will be said], “This is what you hoarded for yourselves, so taste what you used to hoard.”
[At-Tawbah: 34]
The Prophet ﷺ said:
“Whoever is made wealthy by Allah and does not pay the Zakat of his wealth, then on the Day of Resurrection his wealth will be made like a bald-headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and say, ‘I am your wealth, I am your treasure.”
(Sahih Bukhari)
Upon Whom is Zakat Obligatory?
Zakat is obligatory upon every person who meets the fall under the following criterion:
- Islam: i.e he/she is a Muslim. Zakat is not obligatory upon a disbeliever; neither will the zakat of a disbeliever’s wealth be accepted.
- Freedom: Meaning that the individual must be free, zakat is not obligatory upon a slave.
- Ownership: The payer of zakat must be the owner of the wealth on which the zakat has been applied. No zakat will be paid on the wealth which he does not own such as mortgage and trusteeship.
- Nisab: possessing wealth that reaches the level nisab; nisab refers to that minimum level of wealth after which zakat does not remain applicable.
- Time Duration: One year has passed while possessing that particular wealth; however this condition is not applicable for agricultural output. As soon as the crop becomes ready zakat becomes obligatory on it, irrespective of whether there are two crops in a year or more or less.
- Earning: The zakat payer’s wealth must be pure; zakat will not be accepted from haram wealth.
Items on Which Zakat is Obligatory:
- Gold, silver or a substitute of the two, meaning currency
- Nisab of Gold:
Hazrat Ali (رَضِيَ ٱللَّٰهُ عَنْهُ) narrated that the Prophet ﷺ said, “Gold is not liable to Zakat unless you have 20 dinars. Once you have 20 dinars, then pay half a dinar as zakat from it.”
20 dinars equals to 85 grams which is approximately 7.5 tolas.
- Nisab of Silver
Abu said al Khudri (رَضِيَ ٱللَّٰهُ عَنْهُ) narrates that the Prophet (peace be upon him) said “No zakat is due on silver amounting to less than five uqiyas”.
One uqiya equals 40 dirhams; therefore five uqiyas will equate to 200 dirhams. 200 dirhams have weight of 595 grams which is approximately 50 tolas.
- Zakat on Jewelry:
There is a disagreement amongst scholars regarding zakat on jewelry; most contemporary scholars however are of an opinion that it is safer to pay zakat on it once it reaches ‘nisab’, which in this case would be 7.5 tolas of gold or 50 tolas of silver with one year of possession having passed. In case of zakat on jewelry being paid according to its price (value) then the current price (value) estimation will be taken into consideration and not the actual price (value).
- Nisab of Currency:
Currency is a substitute for gold and silver; in olden day’s gold and silver were used as a price (medium of exchange) and in the modern day and age currency is used as price (medium of exchange). Estimation of ‘nisab’ for currency will be done by firstly selecting the cheaper commodity between gold and silver and then using the cheaper commodity’s (in this case silver) ‘nisab’ as the ‘nisab’ for currency. Therefore, the nisab for currency will be equivalent to the value of nisab for silver (which is 50 tolas).
Explanation:
The price (value) of jewelry will not be compared with currency. In fact the nisab of gold is weight and the nisab of currency is its value (price). For instance, if a person has jewelry worth 4 tolas of gold and it’s price (value) is equivalent 2 lac Rupees then he will not be liable to pay zakat on it because nisab is not complete. Zakat becomes obligatory upon gold jewelry when its weight becomes equivalent to 7.5 tolas.
- Shares
Under Islamic Law, it is permissible to buy and sell shares of companies that conduct halal business operations. However, this buying and selling and transfer of shares must not include gambling.
Zakat is also obligatory on shares. To estimate zakat on shares one must add the current value (price) of those shares with the profit earned on them during the year; then deduct the expenses from this total and pay zakat on the balance amount.
- Bonds
A bond is a receipt for debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time after which that entity is liable to return the amount with a defined amount of profit. Conducting business in bonds is haram (unlawful under Islamic law), because a specific amount of profit is taken on the loaned amount which is ‘interest’. However according to scholars, if deducting ‘interest’ from the actual value (price) of the bond results in the value of bond reaching the limit of nisab, then zakat will be paid on it. This is because zakat is obligatory on any loaned amount that is expected to become a ‘receivable’.
- Agricultural Output
This refers to those commodities which are consumed and stored; therefore zakat will not be applicable on commodities which are not eaten such as cotton; and will also not be applicable on commodities that cannot be stored such as vegetables. In the same manner zakat is also not applicable on fruits; however when these vegetables and fruits are sold and the amount earned on them reaches the level of ‘nisab’ and a year has passed on that amount then zakat will become obligatory.
Regarding the ‘nisab’ for agricultural output, The Prophet ﷺ said, “That there is no “No zakat due on less than 5 wasaq.”
‘Wasaq’ is used as a parameter equivalent to approximately 150 kilograms; therefore 5 wasaq would equate to 750 Kilograms; which is approximately 19 maund.
Regarding the agricultural commodities on which zakat is obligatory when they reach nisab; if the farmer does not spend on irrigating them, meaning they are irrigated via rainwater and canals then 10% zakat will be due on them. However if the farmer has to pay for their irrigation via using a tube well etc then 5% zakat will be applicable on the output.
- Cattle
No zakat is due on animals except camels, cows and goats, however when they are traded then zakat becomes due on them.
Zakat on animals becomes due when they graze themselves and their owner is not spending on their fodder. For each type of animal the zakat applicable is different; details of which can be acquired from the books of ahadith.
Zakat will not be applicable on those animals which have been kept with the sole purpose of milking them and selling that milk. However, the money earned from milk sales will be liable to zakat payment once it reaches the level of ‘nisab’. Likewise zakat will not be applicable on those animals which have been reared with the purpose of selling them; however zakat will be payable on the money earned from their sales.
- Merchandise
This refers to those goods that are traded – irrespective of whether zakat is applicable on them or not.
Whether those goods are purchased and then sold in the market or are manufactured by one self and sold.
The method to extract zakat out of one’s business and the merchandise is to specify a particular day and conduct a detailed audit. Firstly, the overall business profit earned in the past one year must be added to two things; the current market value of the merchandise in stock and the loans given which are expected to be received. Then from this total expenses and payable loans must be deducted and zakat paid on the balance amount.
Explanation:
There is no zakat applicable on the value of the place of business. Meaning the location from where the business activity is conducted; for instance factory or an outlet (shop). Likewise, any machinery used for the manufacturing of goods will also be exempted from zakat.
- Rented items
Zakat is not applicable on the value of the items that have been rented out; rather zakat will be applicable on the rent earned from those items. For instance if a house, factory, car, flat or machinery is given out on rent then zakat will not be payable on the value of these items, rather it will be payable on the rent earned from them.
Explanation:
If an individual purchases a plot of land, a house or property with the intention of personal use then zakat will not be applicable on them. However, if he purchases it with the intention of selling (as a business) then zakat will be obligatory every year on the reciprocating market value. And if he rents that property/house/plot of land then zakat will only be applicable on the rent earned from them.
The Procedure of Extracting Zakat from Currency
Total amount in an account: (Rs) 20,000 (Twenty Thousand)
Shares (with profit, excluding expense) : 50,000 (Fifty Thousand)
Bonds (original price): 30,000 (Thirty Thousand)
Total Currency: 100,000 (One Hundred Thousand)
Zakat (2.5%) (Rs.) 2,500 (Two Thousand Five Hundred Only)
Beneficiaries (Recipients) of Zakat
In Islamic Shariah whenever there has been an issue concerning distribution of wealth; particularly that wealth in which the rights are combined then Allah (عَزَّوَجَلَّ) has not left such distribution at the disposal of His slaves. Rather He has explained its distribution in the Holy Qur’an. For instance with regards to the wealth left in inheritance and wealth gained from the spoils of war; Allah (عَزَّوَجَلَّ) has in clear details described their distribution in different places in the Holy Qur’an. Likewise, Allah (عَزَّوَجَلَّ) has also made the distribution of zakat abundantly clear and specified those individuals or recipients apart from whom no one else should be paid zakat.
A person once came to the Prophet ﷺ and requested him for a share from zakat wealth, so the Prophet ﷺ replied “Allah is not pleased with a Prophet’s or anyone else’s decision in this regard until He has given a decision about them Himself. He has divided those entitled to them into eight categories, so if you come within those categories, I shall give you what you desire”.
Imam Shafi (Rahimahullah) opined that “Allah (عَزَّوَجَلَّ) has mentioned the distribution of charity in His book and further stressed upon it by stating
فَرِيضَةً مِنَ اللَّه
“A duty imposed by Allah”
Therefore it is not permissible for any individual to distribute charity to any other place/recipient apart from the beneficiaries that Allah (عَزَّوَجَلَّ) as clearly mentioned.
In verse number 60 of Surah At-Tawbah, Allah (عَزَّوَجَلَّ) has stated the 8 recipient categories of zakat:
إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّـهِ وَابْنِ السَّبِيلِ ۖ فَرِيضَةً مِّنَ اللَّـهِ ۗ وَاللَّـهُ عَلِيمٌ حَكِيمٌ ﴿٦٠﴾۔
“Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] 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] traveler – an obligation [imposed] by Allah. And Allah is Knowing and Wise.”
[At-Tawbah: 60]
“As-Sadaqât” (here it means Zakât) are only for the following:
- Fuqara’ – الفقراء (poor)
- Al-Masakin- المساکین (the poor, especially those who do not openly seek help)
- Those employed to collect (the funds) الْعَامِلِينَ
- For those to attract the hearts of those who have been inclined (towards Islam) –الْمُؤَلَّفَةِ قُلُوبُهُمْ
- To free the captives –الرِّقَابِ
- For those in debt –الْغَارِمِينَ
- For Allah’s Cause-فِي سَبِيلِ اللَّهِ (i.e. for Mujahidun – those fighting in the holy battle)
- For the wayfarer-ابْنِ السَّبِيلِ (a traveler who is cut off from everything); a duty imposed by Allah.
“And Allah is All-Knower, All-Wise”
[At-Tawbah : 60]
Details of these recipients:
- Faqeer [الفقراء] (poor): Refers to a person who has no means to fulfill his/her basic needs.
- Miskeen [المساکین](the poor): Refers to those individuals who have some means, yet these means are insufficient to meet the basic necessities of life,. As Allah (عَزَّوَجَلَّ) says in the Holy Qur’an:
أَمَّا السَّفِينَةُ فَكَانَتْ لِمَسَاكِينَ
As for the ship, it belonged to Masâkîn (poor people)
[Al-Kahf : 79]
From this verse of the Quran we come to know that these masakin had a ship and they used to work; nevertheless they were still poor.
- Collector of zakat:[الْعَامِلِينَ] Refers to a person who collects zakat; this individual has no right to take anything from his own will, however if the ruler or the ameer wishes to pay the collector something out of the zakat money then he can.
- Those whose hearts are inclined to Islam: [وَالْمُؤَلَّفَةِ قُلُوبُهُمْ] This is the only category of recipients in which zakat money can be given even to the disbelievers.
Three types of people fall under the category of those whose hearts are inclined to Islam:
- An individual expected to revert to Islam.
- On an individual from whose evil it is vital to safeguard Muslims; regardless of whether he is a believer or a disbeliever.
- A tribal leader, elder of a community or an influential individual who could provide invaluable support in the preaching (dawah) of Islam. Such individuals can be paid from zakat to incline their hearts.
- To free the captives:[وَفِي الرِّقَابِ] In present times, gaining a bail for an innocent Muslim prisoner.
- Debtors: [وَالْغَارِمِينَ]This refers to a debtor who had borrowed money not for extravagant spending or a sinful activity, rather to fulfill an immense need and is now unable to repay it.
- For Allah’s cause: [وَفِي سَبِيلِ اللَّهِ] in the zakat verse, “ for Allah’s cause” is not a generalized statement, rather it refers specifically to “Mujahideen”
In the light of evidence from Islamic Shariah, Jihad is categorized into three types:
- Jihad through pen and writings
- Jihad by tongue and speech
- Jihad by sword and weaponry
According to evidence from the Sharia, an individual who falls under any one of the above three categories and becomes a defender of Islam and its foundations can become a recipient of Zakat.
- The wayfarer [وَابْنِ السَّبِيلِ]:This is the eighth recipient of Zakat; refers to a person who is travelling. Regardless of how rich he may be in his own place of residence, if he falls upon hard times while traveling it is permissible for him to take Zakat money.
In light of the above details given, we learn that Zakat is a practical way to purify the wealth and channel it in such a manner that it gives a complete framework for a community to coexist without economic pressures on individuals. Alhamdulillah, the Islamic Sharia is designed to create ease for each individual and as Muslims as a community and nation.
