What is zakat?
Zakat is a compulsory act of worship and the third pillar of Islam. It is an obligation that Allah S.W.T has imposed on our wealth to ensure that those who are most needy are not neglected.
In the Arabic language, zakat means increase, purification, and blessing. When said to a person it means to become better or to improve. By paying the zakat that we owe, we are fulfilling our obligation as Muslims and Allah will allow us to reap the reward for this both in this life and hereafter.
How can we achieve the purpose of Zakat?
- Firstly, by taking a holistic approach to distributing Zakat across the eight categories of Zakat recipients (Qur’an 9: 60). This provides support for those most in need, builds up community institutions and enables advocacy.
- Secondly, all scholars agree that each country is worthier of its own Zakat. Locally is where our primary responsibility lies as we know our context and needs best. Read more on local giving here.
- Thirdly, a central operation is best placed to pool resources for a strategic purpose, provided it is trustworthy and effective.
By paying the Zakat that is due, for the purposes which we believe God has decreed, we are fulfilling our obligation as Muslims. Some of the outcomes of local Zakat distribution are:
- Those most in need in our community will feel a sense of belonging, their situation can improve and they can strive to become Zakat payers themselves.
- Our community will improve in its understanding of faith and in its participation in wider society, while external perceptions of Islam and Muslims improve.
- This will enable Muslims to increasingly be faithful, successful and contribute to society for the benefit of all, and will allow all of us to reap the rewards both in this life and the hereafter, God willing.
Zakat in Islam.
As the third pillar of islam, zakat is first of all an Ibadah – an act of worship. Zakat is an Islamic concept that seeks to bridge any socio-economic injustice.
‘Abd Allah ibn ‘Abbas (May Allah be pleased with him) narrates that when the Prophet (peace be upon him) sent Mu’adh ibn Jabal ( May Allah be pleased with him) to Yemen he told him, “You are going to a people who have a Scripture, so call them to testify that there is no deity but Allah and that I am the Messenger of Allah. If they respond to this, then teach them that Allah has imposed five Salat upon them every day. If they respond to this, then teach them that Allah has imposed upon them a charity to be taken from the wealthy amongst them and given to the poor. If they respond to this, then beware of taking any more of their wealth!”
Zakat was understood to be the transfer of a certain portion of wealth from the wealthier to those that are needier.
History of Zakat
Zakat before the advent of Islam
The history of Zakat is the same as that of Salat (prayer). It is evident from the Qur’an that like Salat, the act of Zakat has always existed in the law of the previous prophets.
All the followers of the religion of Ibrahim (Upon whom be peace) were fully aware of the concept of Zakat. For this very reason Surah Al-Ma’arij (70:25) describes it as “A specified right.” Because of Zakat and charity being a pre-existing Sunnah, the Prophet (peace be upon him), continued this act of worship with necessary reforms.
The Qur’an gives examples in several verses telling us how Zakat was imposed on the previous Prophets. For example:
Zakat of Prophet Isma’il (Upon whom be peace): “Also mention in the Book (the story of) Isma’il: He was (strictly) true to what he promised, and he was an apostle (and) a prophet. He used to enjoin on his people Salat and Zakat, and he was most acceptable in the sight of his Lord.” [Surah Mariam 19:54-55]
Zakat of the Jews: “And (remember) when We made a covenant with the Children of Israel, (saying): Worship none save Allah (only) and be good to parents and to kindred and to orphans and the needy and speak kindly to mankind; and establish Salaah and pay Zakat.” [Surah Al-Baqarah 2:83]
Zakat to the progeny of Prophet Ishaaq (Upon whom be peace): and Prophet Yaqub (Upon whom be peace): “And We sent them inspiration to do good deeds and to be diligent in the Salat and pay Zakat.” [Surah Al-Anbiyaa 21:73]
Zakat of Prophet Isa (Upon whom be peace): “He said: Lo! I am the slave of Allah. He has given me the Scripture and has appointed me a Prophet. And has made me blessed wheresoever I may be and has enjoined upon me Salat and Zakat so long as I remain alive.” [Surah Maryam 19:30-31]
Zakat in the time of the Prophet (peace be upon him)
When we go back to the way Zakat was at the time of the Prophet (peace be upon him), in essence we are studying Zakat from its source – from its beginnings. In Makkah, the verses on Zakat generally pertained to voluntary payments, and it was left to the individuals faith and own conscience to decide how much to give and whom to give it to.
Surah Al-Ma’arij (70:24-25) advises: “And in whose wealth there is a right acknowledged. For the beggar and the destitute.”
After migration to Madina, around eighteen months after the arrival of the Prophet (peace be upon him) to Madina, Zakat became a Fard, or an obligation on Muslims. Madina verses gave clear directives, ordering the payment of Zakat and since that time the Prophet (peace be upon him) used to send out Zakat workers to collect and distribute the due Zakat.
The Qur’an does not give the definition of Zakatable wealth, except in a few cases, only the general principles are given without the details, e.g:
1) Gold and Silver: “And there are those who hoard gold and silver and spend it not in the way of Allah. Announce unto them a most grievous penalty.” (Surah Al-Taubah 9:34)
2) Crops and Fruits: “Eat of their fruit in their season, but render the dues that are proper on the day that the harvest is gathered.” (Surah al-An’am 6:141)
3) Earnings of Trade: “O ye who believe, give of the good things which ye have earned.” (Surah Al-Baqarah 2:267)
4) Wealth from beneath the earth: “And of that which we have produced for you from the earth.” (Surah Al-Baqarah 2:267)
Furthermore, the Qur’an mentions Zakat in general and the word amwal (i.e. property or wealth or earning) is used as in the verse, “Out of their wealth take Sadaqah thereby purifying and sanctifying them.” (Surah Al-Taubah 9:103) and, “In their wealth and properties is the right of the poor, the beggar and he who is in deprivation.” (Surah Al-Dhariyat 51:19)
It is the Sunnah of the Prophet (peace be upon him) that gives us, by example and by directives, details of the general Qur’anic command and converts the theoretical axioms of the Qur’an into a living reality. The Prophet (peace be upon him) is the one who knows most about what Allah ordained and as such the Sunnah gives us detailed specifications of the kinds of Zakatable wealth, the minimum exempt of each of them and the applicable rates. The Sunnah also gives the details of the categories of people that should receive Zakat.
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 person. 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 e.g. cash, savings, gold, silver, business asset, cows, goats and sheep, camels etc.
- Part B: Your deductible liabilities e.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