Paying Zakat – Is It obligatory?
Conditions for the obligation of Zakat (five conditions)
- Islam: Zakat is obligatory upon a Muslim; it is not accepted from a non-Muslim.
- Freedom: Upon a free This is because a slave is considered property that is owned by another and does not own.
- Full/Absolute Ownership: established ownership of said wealth with no one else laying claim to it.
- Possession of the Nisaab: The minimum threshold amount on which Zakat becomes an obligation. No Zakat is due on property that is less that the nisaab.
- Elapse of a complete Lunar year for the following property – monetary assets, trade commodities and livestock.
- Puberty and being sound of mind are not conditions for the obligation of zakat. Therefore, a young pre- adolescent child or a mentally challenged person with the qualifying property will have Zakat due on them payable by their guardians.
- If it is difficult or not possible to use the lunar calendar then the solar calendar can be used with some adjustments to the Zakat rates to account for the extra days in the solar calendar.
Zakat is meant to relieve the poor without impoverishing the rich; once you have reached the Nisaab threshold you are only required to give 2.5% of your zakatable assets. In essence we are required to give a little from a lot – and in doing so, not do ourselves any financial damage whilst providing security for those who are in need.
Who Receives Zakat
There are eight categories of people to whom Zakat can be distributed. These have been identified as:
1) Al-Fuqara: The Poor
This refers to those who do not own any Zakatable asset nor surplus asset which equates to the Nisab.
2) Al-Masakin: The Needy
According to some scholars, they are those whose economic status is worse off than the needy. In essence, they refer to those people who do not own any Zakatable asset or surplus which equates to the Nisab.
3) Al-‘Amilina ‘Alayha: Administrators of Zakat
They are the people chosen by the Muslim leaders to Collect, Safeguard and Distribute Zakat.
4) Al-Mu’allafate-Qulubuhum: Reconciliation of Hearts
This term applies to people who have embraced Islam or who are inclined to it.
5) Fir-Riqab: For those in Bondage
Zakat may be allocated to help Muslims free themselves of bondage / slavery.
6) Al-Gharimin: Those in Debt
Zakat may be given to those in debt. Those individuals whose liabilities exceed their Zakatable and surplus assets can receive Zakat to pay off debt.
7) Fi-Sabilillah: In the Cause of Allah
Muslim jurists differ on who or what can be covered under this category, although most seem to agree that it can be used in the defence of Islam. In the wider sense however, this channel covers promoting the Islamic value system.
8) Ibnas-Sabil: The Stranded Traveller
A wayfarer refers to a traveller who left his home for a lawful purpose and for whatever good reason does not possess enough money to return home, even if he is rich in his own country.
Distribution of Zakat
- Zakat is strictly for the eight mentioned groups of recipients.
- Zakat collected can be divided amongst all the eight legally recognized recipients; or restricted to some or even one of the categories e.g. the poor only.
- Zakat is acceptable even if it is given to the people who claim to be entitled out of pretence and their falsehood becomes apparent thereafter.
- It is prohibited for any person that is able to earn by working or is wealthy from begging.
Zakat should be paid as soon as possible. Zakat is an immediate obligation. Only when there is a valid reason can it be delayed. It must be paid when one can genuinely pay.
Who Has to Pay Zakat?
Zakat is required to be paid if a person is:
- Adult ( have reached the age of puberty)
- Muslim (Zakat is not paid by non-Muslims)
- In complete ownership of the Nisab
See Paying Zakat – Is it obligatory? for further information
When Is Zakat Paid?
- Your Zakat year should begin on the date your wealth equals or surpasses the Nisab; Zakat should then be calculated and paid after one lunar year has passed. Annually, Zakat should always be paid on this date. If you cannot remember the date you first became owner of the Nisab, then the date should be estimated. If this is not possible, then a specific Islamic date should be selected arbitrarily and adhered to annually.
- Paying Zakat in Ramadan is not necessary, although giving charity in this month guarantees greater rewards.
What is the Nisab?
- Zakat is a compulsory act of worship that requires Muslims who own wealth at or above a certain threshold to donate a portion of that wealth, typically 2.5%, to those who are eligible. This threshold is called the Nisab.
How To Calculate Your Zakat
Calculating your Zakat isn’t as difficult as you think. We find that breaking your assets down into different categories makes the Zakat calculation process a whole lot easier. We have broken down the calculation process into three simple parts so that you can calculate the Zakat you owe with ease:
- Part A: Your Zakatable assets g. cash, savings, gold, silver, business asset, cows, goats and sheep, camels etc.
- Part B: Your deductible liabilities g. outstanding bills, immediate debts/short-term debts.
- Part C: Your final Zakat calculation – this will give you your net assets.
Whether you have to pay Zakat or not will be determined once you have calculated your net assets. You then need to see whether your net assets are equal to – or exceed – the Nisab threshold (this is the minimum amount that you must own to be deemed wealthy enough to pay Zakat).
We have devised a fantastic online calculator to help you calculate your Zakat in the most efficient way but if you’re not a fan of doing things online (after all, not all of us are!) you can download our Zakat guide here and calculate your Zakat the traditional way! With your pen and paper!
Your Zakatable Assets fall into the following categories:
- Cash & liquid investments
- Gold & silver
- Shares, unit trusts and equity investments
- Property and fixed assets
- Debts owed to you
- Business assets; including grain and agricultural produce
- Livestock: cows, camels and goats/ sheep.
Your deductible liabilities fall into the following categories:
- Personal liabilities
- Business liabilities