System of Zakat: Purifying Wealth, Empowering Society

By: Mufti Jaseemuddin Qasmi
Coordinator Online Darul Ifta & Lecturer, MMERC, Mumbai

Zakat is a compulsory due upon Muslims but this is not a burden for a true and wise Muslim. Paying zakat has many benefits. To take an example, paying zakat is opening a business with Allah which is free from loss by all means as the Glorious Qur’an says: “Surely those men who give sadaqah (alms) and those women who give sadaqah and have advanced a good loan to Allah, for them it will be multiplied, and for them there is a noble reward.”

Paying zakat purifies our wealth as there is a right of poor in our wealth, so wealth becomes  solely pure by paying poor’s rights as the Qur’an speaks: “And those in whose riches there is a specified right for the one who asks and the one who is deprived,” [Surah Ma’arij]
Furthermore, the giving of zakat lessens the love of money in a Muslim’s heart. This brings him closer to Allah (swt).

Our heart becomes pure from the rust of miserliness by paying zakat. We strengthen our inner human feeling and morality by helping the indigent and destitute. Our wealth increases and gets the blessing of Allah if zakat is paid as the most truthful book the Qur’an declares: “Allah destroys riba and nourishes charities, and Allah does not like any sinful disbeliever.” [Surah Baqrah, Ayah: 276] It further speaks: ‘The example of those who spend in the way of Allah is just like a grain that produced seven ears, each ear having a hundred grains, and Allah multiplies (the reward) for whom He wills. Allah is All-Embracing, All-Knowing. [Surah Baqrah, Ayah 261]

Zakat is a source to get admission in paradise as a hadith reads: ‘Narrated Abu Ayyub: A man said to the Prophet (saws) “Tell me of such a deed as will make me enter Paradise.” The people said, “What is the matter with him? What is the matter with him?” The Prophet (saws) said, “He has something to ask. The Prophet (saws) said: (In order to enter Paradise) you should worship Allah and do not ascribe any partners to Him, offer prayer perfectly, pay the zakat and keep good relations with your kith and kin.” [Sahih al-Bukhari 1396]
Zakat arrests the coming of troubles and calamities and it protects against bad death. [Tirmizi]

Paying zakat will save us from the severe and humiliating punishment in the  Hereafter   as the Glorious Qur’an says: “…And those who accumulate gold and silver and do not spend it in the way of Allah, give them the glad tiding of a painful punishment”[Surah Tauba-34]

And Allah’s prophet (saws) says: “Anyone whom Allah has given wealth but he does not pay its zakat, then, on the Day of Resurrection, his wealth will be presented to him in the shape of a bald-headed poisonous male snake with two poisonous glands in its mouth and it will encircle itself round his neck and bite him over his cheeks and say, “I am your wealth; I am your treasure.” Then the Prophet (saws) recited this Divine Verse: Surah Aal Imran Ayah No.180.” [Sahih al-Bukhari 1403] 

If we eat, drink or accumulate wealth, it quenches our thirst and satiates us but when we pay zakat and help poor then it fills our inner world with joy and gives us real contentment.

This mortal world is like an exam period for us. Allah Almighty blessed us with wealth, possessions and other good things of this world in order to test us; the test is that whether we are totally lost in them or use them judiciously for Allah and thank Him profusely again and again. It is to examine us how much we are obedient to His command. So, the wealth is given to us is as a part of exam as the Glorious Qur’an termed the wealth as a trial saying: “Your riches and your children are but a trial and Allah has with Him a great reward. So, observe taqwa (total obedience to Allah in awe of Him) as much as you can, and listen and obey, and spend (in Allah’s way), it is better for your selves. And those who are saved from the greed of their hearts are the successful.”[Surah Tagabun-15, 16]

Allah provided us with wealth and informed us that we are owner of 97.5 percent out of our wealth and the rest one is the right of needy people. So, if we are not giving the right to the poor, it means we are oppressors and consumers of other’s wealth wrongfully which is strictly prohibited in Islam.

It is sufficient to mention the virtues and importance of zakat that Allah Almighty Himself mentioned zakat in the Holy Qur’an at 32 places and at 15 places denoted the word sadaqa which includes zakat as well. 

The conditions to pay zakat

In Islam, zakat is incumbent on every sane, matured and wealthy Muslim. ‘Wealthy’ means, the person who possesses quantum of zakat, that is, 612.35 grams of silver or its equivalent value.

The conditions which relate to wealth are as follows:

1. One must be absolute owner of the wealth. So if someone borrowed money from someone, there is no zakat on him on the borrowed amount because, he is not an absolute possessor of that amount. Similarly, if someone handed over his property to someone as mortgage, there is no zakat on the mortgage as long as it is in the custody of mortgagee. In the same way, woman is not obliged to pay zakat on mahr amount if it is yet to receive from the husband. But if some has saved his wealth somewhere as in bank or at someone’s custody or lent money to someone and there is hope to get it back then zakat is compulsory on that amount because he is absolute owner in these cases. 
2. The quantum must be besides the basic needs. Basic needs means necessary things and objects of daily use.
3. Zakat is only incumbent on the objects which are presently able to grow financially that means zakat is obligatory in that asset which is of a productive nature and if the asset has the capacity to increase.  For example, in the animals which are regarded as zakatable, namely camels, cows, goat and sheep, grow and increase in reality by reproduction.  These assets in reality are of a productive nature.  Hence, zakat is obligatory on them. Another form of assets being of a productive nature is by virtue of their innate nature in such assets, the actual asset doesn’t multiply or increase, but it inherently possesses the characteristic of being productive; they have the potential to result in a profitable return by business.  Thus, gold, silver, money and merchandise fall under this category. 
4. Zakat is obligatory when one complete year crossed over the quantum. As a hadith reads: ‘Aishah said: “I heard the Messenger of Allah (saws) say: ‘There is no zakat on wealth until one year has passed it. ”'[Ibn-e-Majah-1792]

It is to be noted that it is not necessary to pass the year on every wealth but passing the year on the quantum of zakat is sufficient. Thus  if someone possessed the 50000 rupees in 5th Ramzan for example and after five months he earned 50 thousand more than in the coming year on 5th Ramzan, he will have to dispose the zakat of 100000 rupees that is 2500 rupees though one complete year did not pass on 100000 rupees.

Increasing or decreasing in the middle of the year does make any difference. So, if someone owned 500000 rupees on 5th Ramzan and in the middle of the year he lost 300000 rupees then when next year will come, he will pay just 200000 rupees’ zakat. In the same way, if someone got the quantum of zakat on 5th Ramazan and in the middle of the year, he had less than the quantum, he will have to pay zakat too if he will gains the quantum of zakat again before 5th Ramzan.

5. Gold and silver are always zakatable though they are used as ornaments. The quantum of zakat by silver is 52.5 tola i.e. 612.36 g. and in gold 7.5 tola i.e. 87.479 g. If someone possesses silver and gold or both or silver and rupees or both rupees and gold both or all three then the quantum of zakat for him would be in silver. So if someone has 300 gram of silver and an amount by which 400 grams of silver can be purchased then he will have to pay zakat. Likewise, if one has silver and gold and both are less than their quantum then silver would be the criteria for him. So, if the price of both jointly will reach 52.5 tola of silver then he will have to spend 2.5 percent amount as zakat.
6. Objects and land are zakatable if they are for business. If someone purchased any land for his use then there is no zakat on it though later his intention changed and he wanted to sell it unless he sells but if someone purchased something for the purpose of business and later his intention changed and he wanted to save it for his use then owing to the intention it will remain zakatable no longer. 

Payee of Zakat

The holy Quran mentioned eight categories of those who deserve zakat. The Quran says: “The sadaqat are (meant) only to be given to the poor, the needy, to those employed to collect them [zakat], to those whose hearts are to be won (for Islam), in emancipating the slaves and those encumbered with debt, in the way of Allah and to a wayfarer. This is an obligation prescribed by Allah. Allah is All-Knowing, All-wise.” [Surah Taubah Ayah: 60]

The verse contains eight types of people:

1) Poor (fuqaraa): They are those people who do not own in excess of their personal needs any type of wealth that is equal to the value of nisaab (612.36g of silver).

2) Needy (masaakeen): According to some scholars, they are those whose economic status is better than the poor (fuqaraa).  The difference is a technical difference, but the principle is that neither of them possesses in excess of their personal needs any type of wealth that is equal to the value of quantum of zakat.

3) Zakat collectors (amileen): This refers to those individuals commissioned by the head of the Islamic government to collect zakat. 

4) Those whose hearts are to be won (mu’allafah al-quloob): This was an avenue to spend from zakat in during the early days of Islam.  The zakat money would be given to three types of people: a) Those disbelievers from whom it was perceived that by giving this donation, they would embrace Islam. b) To the leaders of the disbelievers in order to save the believers from their evil. c) To those who have just accepted Islam.  This payment would be made to elevate their spirits. According to the Hanafi scholars, this is unapplicable at present. [Sharhfath al-qadeer 2/265]

5) Emancipating slaves (fi ar-riqaab); Zakat money can be used to purchase a slave from his master in order to set him free.  Again, this is inapplicable at present.

6) Debtors ( al-gharimeen) This is regarding a person who despite having assets at his disposal, he is overwhelmed with debt in a way that if he would pay debt then he would not have the quantum of zakat in his possession.

7) Those in the way of Allah (Fi sabeel Allah); According to the majority of scholars, this refers to and is restricted to only those people who are engaged in jihad (military struggle).  Some famous scholar like author of Zahiriyyah and Marginani say it includes those who are busy in getting the knowledge of Islam and AllamaKasani says in his book Badaiussanaie  ‘Fissabilillah’ means all those who are engaged in the struggle of Islam. [RaddulMuhtar 2/344]

8) Wayfarer (ibn as-sabeel): This refers to those travelers who are in a desperate situation and have no access to money.  Money nowadays can be wired across the globe in a matter of minutes, hence, one who has the ability to receive his money, will not be allowed to take zakat.

Some important points about zakat

Allah subhanahutala said in the Glorious ‘Atuzzakat’ that means pay zakat so, it is necessary in zakat to make the payee owner of the paid amount. So, if some feeds someone with zakat money then it is not sufficient unless he hands him over the food.

Zakat is obligatory every year and it is never forgiven. If some did not pay some previous years’ zakat, he will have to pay. If someone is paying previous years’ zakat, then amount payable in first year will be deducted from the total property while paying second year’s zakat. For example, he did not pay zakat of gold for the last five years and now he wants to pay it, then he will pay 2.5 percent out of whole value of the gold for the first year but in second year, he will pay 2.5 percent out of the value of gold after deducting the 2.5 percent and similarly for the third, fourth and fifth year. While paying previous years’ zakat of gold, silver or merchandise, one would regard the rate of the time when zakat became compulsory upon him not the rate of time while paying zakat. [RaddulMuhtar]

Zakat would be paid according to the lunar year. [RadduiMuhtar] There is no zakat on pearls, diamonds and lands if they are for business. 

Intention to pay zakat is necessary for being zakat valid. So, if someone gave something to the needy but he did intend to pay zakat, zakat would not be counted as paid  In this case, if he makes intention before the recipient spends zakat money then his intention would be taken into account otherwise not.

Debts are of two types; what people take normally to fulfill their need, so, this kind of debt would be deducted and other type of debt is that which is taken just to increase his wealth and taken for business purpose for example, one has one factory and he wants to establish another factory, so in this case if he purchased the non-zakatable assets by the borrowed amount then the debt would not be deducted. For example he borrowed one crore rupees from bank to buy a plant then his debt would not be deducted, but if he purchased zakatable assets like raw materials then the debt would be deducted while paying zakat. 

Etiquette in paying zakat

It is better that zakat money should be given to any needy person in a way that he could fulfill his need.  For instance, if he is debtor, he could pay his debt by the given amount, and if he is a traveler then he could reach to his destination and if he needs cloth, he could purchase cloth. It is not better to give zakat money to thousands of people in such little amounts that they could not fulfill even their basic need.

One should pay zakat sincerely and he should spend for the needy in a respectful way. Allah says in the Glorious Qur’an: “O you who believe, do not nullify your acts of charity by boasting about (doing people a) favour and by causing (them) hurt, like the one who spends his wealth to show off before people, and does not believe in Allah and in the Last Day…[Surah Baqrah, Ayah:264] 

 So, if someone comes to us to receive zakat, we should not look down him but we should consider him as he is favoring us. As Allah’s prophet (saws) says: “When the charity collector comes to you, then he should not depart from you except after being pleased.”[Jami` at-Tirmidhi 647]

In zakat expenditure, priority should be given to those who are pious and God-fearing because Allah’s prophet (saws) said: “You should eat from a pious person and feed a pious person.”  And to the ulama and the student of Islamic knowledge because there are two rewards in it one for helping needy by zakat and secondly for helping them in spreading Islam. 

Zakat in Ramzan 

This is a custom almost all over the world that Muslims pay their zakat in the month of Ramzan. This custom is appropriate because in Ramzan the reward of deeds grows in contrast to other month. The reward of farz (obligatory worship) grows 70 fold and the reward of nafl or optional worship grows equal to the reward of farz. 

UthmanibnAffan (ra) used to say about Ramzan, “This is the month for you to pay your zakat. If you have any debts then pay them off, so that, you can sort out your wealth and take the zakat from it.” [Muatta Malik-17]

This hadith ahows that it was also the common custom in the age of sahaba to pay zakat in Ramzan and it proves too that the debt would be deducted from the main balance while paying zakat.

Who are not eligible to receive zakat money?

Zakat cannot be given to two kinds of relatives; 1. With whom one has a relation of birth and 2.With whom one has marital relation. [RaddulMuhtar] So, one cannot give zakat to his son, daughter, grandson, granddaughter, father, mother, grandfather, grandmother because one has birth based relation with them. In the same way, husband cannot dispense his zakat to his wife and wife cannot give her zakat to husband.

There is no harm to give zakat to other relatives such as brother, sister, uncle, aunt, father in law, mother in law, sister in law if they are needy. Rather it is better to prefer relatives in zakat expenditure because Allah’s prophet (saws) said: “Charity given to the needy is counted as charity, and if it is given to relatives, it is counted as two: charity and nurturing (the ties of kinship).”[Nasai- 2582]

Zakat and compulsory payable sadaqah cannot be dispensed to Sayyed and Hashim families and they are five families; 1. Descendants of Hazra Ali (ra), 2. Descendants of Hazrat Abbas (ra), 3. Descendants of HazratJafar, 4. Descendants of HazratAqeel and 5. Descendants of HazratHaris bin Abdul Muttalib (ra). In the same way, zakat money cannot be given to non-Muslims.

Zakat on shares and bounds

It is obligatory to pay zakat on shares. However, there is some detail to this based on whether the share was purchased for (a) capital gain or (b) to receive a dividend.

If the share was purchased for the purpose of capital gain, meaning one bought it with the primary intention of selling it, then zakat will be due on the market value of the share. For example, an individual purchased a share for $10 with the primary intention of selling it in the future. This is now considered a trade good and therefore zakat will be due on it. On the day zakat is due, the value of the share is $20. Zakat will now be due on $20, not $10.

If the share was purchased in order to receive a dividend, then one pays zakat on one’s share in accordance with the percentage of zakatable-assets within the company.

For instance an individual purchased a share for $100 with the intention of receiving a dividend. The company he has invested in has ten percent gold assets, twenty percent cash, and twenty percent manufactured goods. The remaining fifty percent are non-zakatable assets, such as cars, furniture, land, and so forth. Here, the individual only has to pay zakat on fifty percent of the share, which here would be $50.

Bonds and certificates are like cash, so zakat would be on its principle value. So Muslims should not look upon zakat as an onerous duty, but they should readily give away their portion of zakat so that they may be purified and this will earn them the pleasure of Allah (swt). They should also remember that that the wealth left behind after paying zakat would be blessed with barakah.