Chapter 21: Pillars of Islam by Dr Muhammad Sharif Chaudhry

Part III: Charity (Az-Zakat)

Chapter 21

Rules and Regulations

The rules and regulations of Zakat as laid down by the Muslim Jurists and Ulema in the light of the teachings of the Qur’an and the Sunnah and also keeping in view the practice of the companions of the Prophet are briefly presented as under:-

1. Who is liable to pay Zakat?

According to the jurists and scholars, persons on whose wealth Zakat is imposed must be (i) Muslim, (ii) adult, (iii) sane, (iv) free, and (v) solvent. Since Zakat is one of the fundamental religious articles, it is obligatory on a Muslim only and no non-Muslim is obliged to pay it. Person liable to the payment of Zakat must be adult and sane. According to Imam Abu Hanifa, no Zakat is due from a minor and insane. According to Imam Malik, Imam Shafii and Imam Ahmad, Zakat is payable on the wealth of a minor as well as on the wealth of an insane but that will be paid by the guardian. The opinion of Imam Malik, Shafii and Ahmad appears to be more convincing since it is based on a Hadith, according to which the Prophet of Islam is reported to have said that the wealth of the orphan should be invested in the trade and should not be allowed to lie idle that Zakat may not finish it. Similarly a slave is not liable to pay Zakat, since the payer must be a free person. An insolvent debtor is also not liable to its payment. But if after the payment of debt, the amount of wealth left with him exceeds the level of Nisab then he would be required to pay Zakat. Zakat on the wealth of a prisoner would be paid during his imprisonment by that person who is entrusted to look after has properly.

2. Assets which attract liability of Zakat

Assets and properties which were subjected to Zakat in the early Islamic State included gold and silver, animal wealth, articles of trade, agricultural produce, treasure trove, mines, etc. During the reign of Caliph Umar, horses were also subjected to Zakat when they were bred and traded on a larger scale.

Industrial revolution and technological developments have brought in their wake certain properties and assets which were not known in the early days of Islam such as: Industrial machinery, bank or currency notes, bank deposits, bonds, securities, shares, stocks, debentures, certificates of credit, bills of exchange, insurance policies, provident funds, certificates of investments, etc. Modern jurists and scholars of Islam are almost unanimous that these assets are chargeable to Zakat.

We will discuss in detail all these assets which are chargeable to Zakat in Chapter No. 22. Please refer to it.

3. Conditions which create the liability

There are two basic conditions which create the liability of Zakah: That the Zakatable property or the asset should be equal to or more than Nisab prescribed for it and that the period of one year must have elapsed since you owned it.

No Zakat is due on property before a year elapses. Ibn Umar reported that the Messenger of Allah said: Whoever acquires wealth, there is no Zakat therein till a year passed over it. – (Tirmizi)

For purpose of Zakat, the Muslim financial year begins with the month of Ramadan. According to the majority of the Muslim jurists, a person must possess wealth of nisab level at the beginning of the Zakat year as well as at the end of that year in order to become liable to pay Zakat on that wealth. If during the year the wealth comes down of that level, it would not make any difference.

4. Nisab of various assets

Nisab is the minimum level of wealth or property which makes the owner liable to pay Zakat. Islamic law has prescribed the minimum level of property which a person must possess to become an assessee of Zakat. If his wealth is less than that, he is exempted from the liability.

For each category of wealth, nisab is different. For gold it is 20 misqal or 7.5 tolas or 3 ounces or 85 grams; for silver it is 200 Dirhams or 52.5 tolas or 21 ounces or 612 grams; for camels it is 5 in number; for cows it is 30 in number, and for goats it is 40 in number. In case of agricultural produce, nisab is 5 wasqs or 948 kg.

In case of merchandise, cash, currency notes, bonds, securities, shares etc. according to the most of the modern scholars, nisab of silver would be applicable.

Each category of wealth constitutes a separate block for the levy of Zakat. For example, a person who possesses animals, gold and silver would be required to pay Zakat separately on each type of his wealth. If any of these categories of his wealth does not come up to the level of nisab, that would be exempt from Zakat. The value of all these categories of wealth would not be clubbed for imposition of Zakat.

5. Rates of Zakat

Rate of Zakat in case of gold and silver is 2.5%; in case of cattle wealth it varies between 1% to 2.5%, while in case of articles of trade it has been fixed at 2.5%. Assets of modern times like shares and stocks, cash and coins, deposits in banks, investments and debentures, etc. are also charged to Zakat at the rate of 2.5%.

In respect of agricultural produce Zakat (called Ushr) is levied at the rate of 10% if the land is irrigated by natural sources like rain, spring, stream, etc. But if the land is irrigated by artificial means involving labour as tubewell, water drawn by buckets from a well, water of canal, etc. then the rate is 5% or half ushr.

Rate of Zakat on honey is 10%, rate of Zakat on discovery of buried treasure is 20%, and according to some jurists, the rate of Zakat on mines is also 20%.

6. Classification of properties and assets

For the purpose of levy of Zakat, properties or goods were divided into two categories by the jurists in the early period, goods of increase and goods of no increase. Goods of increase are real and capable of measurement. Real things are animals which increase by their young ones. Things capable of measurement are gold and silver which give profit by their use. Things of no increase are buildings and personal effects. Zakat is levied on the former but not on the latter.

The principle behind this classification is that of productivity. Things or properties which are productive because of procreation or trade or their profitable use are charged to Zakat. The jurists of the early Islam found productivity in the following three properties and hence the same were charged:

1) Pastured animals or Swaim.

2) Gold and Silver or Naqd-o-Saman.

3) Articles of trade or Uruz-ul-Tajarah.

Another classification for the purpose of charging Zakat made by these jurists is that of Amwal-e-Zahirah (visible properties) and Amwal-e-Batinah (Invisible properties). Visible property means that wealth which cannot be hidden easily in order to avoid Zakat, for example, farm produce, fruits of orchards, cattle, etc. Invisible property is that wealth which can be easily hidden to avoid Zakat, such as gold, silver, cash, commercial goods, etc.

However, these classifications may not be of any great benefit practically for purposes of levying Zakat especially in modern age.

7. Properties and assets exempt from Zakat

The following properties and assets have been exempted from the levy of Zakat:

1) Personal effects like clothes, articles of furniture, household goods except ornaments and utensils of gold and silver.

2) Horses mules and asses for conveyance or Jihad.

3) Arms or weapons for personal use.

4) Cattle employed in farming or transportation of goods.

5) Tools of a professional for his personal use.

6) Residential house.

7) Slaves and servants.

8) Books for personal use in profession, for studies, for research.

9) Food for oneself and his family.

10) Agricultural land and factory building and machinery etc., but there would be Zakat on its produce.

11) Buildings, houses, shops, land given on lease or rent is exempt from Zakat but rentals or lease money would be subjected to Zakat.

12) Animals or trucks or buses or taxies, etc. employed for hire or for own transport business are exempted from Zakah but income received from hire or transport business would be subjected to Zakah.

13) Articles of adornment other than those made of gold and silver.

14) Precious stones like gems. pearls, emerald, rubies, etc. provided they are for personal use and not for trade.

15) Dimar properties, i.e. properties or claims which have been lost with little chances of recovery, for example, run-away slaves, property buried in a forgotten place, property fallen into the sea, debts disowned by the debtor while creditor having no evidence to prove, etc. etc. Such properties when recovered are not charged to Zakat for past years.

However, if any of the above mentioned properties is article of trade, it would pay Zakat as such.

8. Persons eligible to receive Zakat

According to the jurists, any Muslim who is poor and needy is eligible for receiving Zakat. He must not be in the ownership of properties and assets which, after deduction of debts he owes, come to the level of Nisab and make him liable to payment of Zakat. Among the persons eligible for Zakah, the poor and needy relatives and neighbours enjoy priority over others because Zakat paid to them carries more rewards and merits. It should also be paid to the widows and orphans who are needy. It can be paid to the debtors and prisoners. It can be paid to the teachers and students or the persons engaged in Jehad or research work or preaching who have no time to earn livelihood or their earnings are too small to support them and their families.

Zakat can be paid to the charitable institutions, schools, colleges, hospitals and other social institutions engaged in the welfare of common Muslims.

According to verse 60 of surah At-Taubah of the Holy Qur’an, Zakat is to be spent on the poor, and the needy, and those who collect it, and on those whose hearts are to be reconciled, and to free the slaves, and to free the debtors, and for the cause of Allah, and for the wayfarer. These heads of expenditure of Zakat would be discussed separately in detail later on.

We will discuss the subject of eligibility to Zakat in detail in Chapter No. 24.

9. Persons not eligible for Zakat

Following persons are not eligible for Zakat

1) Non-Muslims are not eligible for Zakat according to consensus of Muslim Jurists because the Prophet told Mu’az bin Jabal when he sent him to Yemen that Zakat would be collected from the Muslims and would be distributed among the poor of them. However, Muslims can help the non-Muslim needy persons from voluntary charity and alms.

2) A person who is himself liable to pay Zakat being owner of property at the level of Nisab.

3) Members of the Prophet’s family and of tribe of Hashim who was the grandfather of the Prophet. According to some traditions the Prophet is reported to have forbidden them to receive Zakat and Sadaqat from the people.

4) A healthy and young person who can easily earn his living is not supposed to beg for Zakat or Charity.

5) Slaves and servants cannot be given Zakat in lieu of their services. But if they are being paid properly for their services, then as poor and needy Zakat can be given to them.

6) Parents cannot pay Zakah to their children, nor the children can pay Zakah to their parents as both the parties are legally liable to pay Nafqah (expenses for living) to each other in case of need.

7) Husband cannot give Zakah to his wife as he is responsible for her maintenance and all of her expenses. But a rich wife can give Zakah or Sadqah to her husband because she is not responsible in Islamic Shariah to provide maintenance to her husband.

8) According to some Jurists, the wicked, the gamblers, the thieves, persons indulging in major sins, the apostates, the atheists, the critics of Islamic injunctions, the persons rebellious to God and His messenger are not eligible for Zakat. In any case, the pious and practicing Muslims should be preferred over such bad characters.

However, if Zakat is paid by mistake to an ineligible person whom one does not know or believes to consider him eligible, the liability of Zakat is discharged.

10. Treatment of Debts

When you make assessment of the value of your assets and properties for the purpose of Zakat, you should add to it the amount of debts receivable by you from others, and deduct from it the debts payable by you to others. If the debts receivable or payable are under litigation in courts of law, then you should not consider them till the decision of the courts. If the debts receivable are irrecoverable due to any sound reason, then you can ignore them while assessing your assets.

We will discuss this subject in detail in chapter No. 22 Please refer to serial No. 8 of that chapter.

11. Assessment of wealth for the purpose of Zakat

The following principles are to be kept in mind while making assessment of assets and properties for the purpose of Zakat:

1) Assets which are exempt from Zakat (as stated above) such as house, articles of personal use, food, clothes, conveyance, etc will be ignored.

2) All the wealth and assets owned by a person which are chargeable to Zakat would not be clubbed together because each has its own nisab e.g. gold has its nisab, animals have their nisab, agricultural produce has its nisab, etc. Only the articles belonging to the same genus should be put together.

3) In case of joint ownership of some wealth or asset, share of each would be determined and considered separately in his hands.

4) The articles of trade are valued in terms of gold or silver coins or according to Imam Abu Yusuf in that money by which they were purchased.

5) Zakat can be assessed and paid in kind or in cash whichever is convenient to the state and the Zakat payer. In the early Islamic state Zakat was calculated and paid in kind on each category of wealth as it was considered convenient in those days. For example, Zakat on gold was paid in gold, Zakat on silver was paid in silver, Zakat on sheep was paid in sheep, Zakat on dates was paid in dates and Zakat on honey was paid in honey.

However, if today you want to pay Zakat in cash or currency you can do it. For example, you intend to pay Zakat on your gold jewellery of 100 tolas. Zakat on it works out at 2.5 tola. If you do not want to pay 2.5 tola of Jewllery in Zakat, you can pay its market price in cash i.e. you can pay Rs. one lac fifty thousand (suppose the price of gold is Rs. sixty thousand per tola). You should remember that in case of payment of Zakat in cash, the value of the asset or property would be made on the basis of market price and not on the basis of purchase price or its cost on which you had acquired it.

12. When and how to pay Zakat

Neither the Qur’an nor the Prophet of Islam have fixed a date on which Zakat becomes due. However according to a Hadith reported by Ibn Umar, the Prophet said: Whoever acquires wealth, there is no Zakat therein till a year passed on it (Tirmizi). This means that the Zakat payers would have no one fixed date for payment of Zakat, rather they would have different dates because they are required to pay Zakat whenever a year passes over their ownership of Zakatable asset.

But Zakat is generally paid by the Muslims in the Holy month of Ramadhan which is the ninth month of the Islamic lunar (known as Hijarah) calendar in order to earn more reward. So on the 30^th or the last day of the month of Shaaban (the month preceding Ramadhan), the assessment of all the Zakatable assets and properties is made and Zakat is computed thereon. It is paid on the first of Ramadhan or in the following days of Ramadhan. In a way you can say that the Islamic financial year starts from first of Ramadhan and it ends on 30^th or the last day of Shaaban. Thus the Muslims pay Zakat in the month of Ramadhan on their assets and properties which they have acquired in the years preceding it. However, a Muslim is allowed to fix his own year for the purpose of assessment of his Zakat at his convenience.

Although Zakat is normally calculated on the last day of Shaaban and becomes due on first of Ramadhan, yet it can be paid in advance before it becomes due, as Income tax these days is paid in advance. Prophet Muhammad (PBUH), according to a Hadith, allowed his uncle Abbas to pay Zakat in advance. Similarly Zakat can be deducted at source as Income tax these days is deducted at source at the time of payment of salary by the employers. It is reported that Ameer Muawiyyah used to deduct Zakat from pensions at the time of their payment.

13. Intention to pay Zakat

To make intention for payment of Zakat is essential as it is essential in case of other acts of worship like prayer, fasting, pilgrimage, etc. So before payment of your Zakat, you should make intention in your mind that you are going to pay Zakat.

14. Responsibility to collect and distribute Zakat lies with Islamic state.

It is the responsibility of the government of an Islamic state to collect Zakat from the wealthy Muslims and to distribute it among the poor Muslims. Thus Zakat is a state institution and not a private charity. The Qur’an addresses the Prophet as the head of the Islamic state of Madinah and enjoins him: “Take alms (here it means obligatory alms i.e. Zakat) from their wealth wherewith you may clean them and purify them, and pray for them” (9:103). In verse No. 60 of this surah No. 9, the Qur’an enumerates the famous eight heads of expenditure on which an Islamic state may disburse its Zakat revenues. It says: “The alms (here means obligatory alms i.e. Zakat) are only for the poor, and for the needy, and for those who collect them, and for those whose hearts are to be reconciled, and for freeing the captives, and for freeing the debtors, and for the cause of Allah, and for the wayfarers”. In verse No. 41 of Surah 22, the Qur’an describes the duties and responsibilities of the Muslims when Allah gives them power in a land, that they establish (the system of) prayer and Zakat, enjoin good and forbid evil.

The Ahadith of the Prophet and the history of the period of pious caliphate show that the Prophet and the pious caliphs established a very good system of collection and disbursement of Zakat on government level. They appointed very honest and efficient persons for collection of Zakat, for keeping its accounts and for making its distribution. They were paid handsome remuneration so that they could avoid temptations, gifts and bribes. In the times of Umar, a full-fledged department of collection of Zakat and Bait-ul-Mal was established. Abu Bakr had even fought a war against those who refused to pay Zakat to the government.

However, unfortunately, later caliphs and Muslim rulers avoided their responsibility in respect of collection and distribution of Zakat and so the people themselves started paying Zakat to the poor directly and thus Zakat became a private charity. Today if government of an Islamic state makes proper arrangements for collection and disbursement of Zakat at governmental level, you should pay Zakat to the government instead of paying it individually and directly to the poor. This was the practice of the Muslims of the period of the Prophet and early caliphate and it definitely carries more rewards than paying to the poor directly.