What Is Zakat?
The concept of giving is a cornerstone of Islam. As Muslims we must seek to please Allah by submitting our will to Him and living in the way that he has intended for us. An important part of us submitting our will to our Creator involves fulfilling the five pillars of Islam. These pillars are obligatory aspects of our faith, that help us to enrich our lives, and the lives of others, but more importantly than this we are fulfilling Allah’s divine doctrine of how to live righteously as a Muslim.
Zakat is an integral component of Islamic faith and the third pillar of Islam. It is a religious obligation for Muslims to pay Zakat, a form of obligatory charity, from their personal wealth. Zakat holds a significant position in the Muslim community, playing a major role in social welfare and economic justice.
Zakat is often referred to as Zakat al-Mal, which means “purification of wealth.” It involves the calculation and payment of a specific portion of a Muslim’s total savings and wealth each lunar year. By giving Zakat, Muslims fulfil their duty and strengthen their faith in Islam, bringing blessings, removing evil, and ensuring spiritual growth.
The Difference Between Zakat al-Mal and Zakat al-Fitr
Both Zakat al-Mal and Zakat al-Fitr hold significant importance in Islam, but they serve different purposes. While Zakat is an obligatory annual donation based on one’s accumulated wealth, Zakat al-Fitr is a specific donation paid during Ramadan, just before the Eid prayer.
Zakat is calculated based on one’s financial assets, following specific rules and regulations, and is typically paid to the needy. On the other hand, Zakat al-Fitr is a fixed amount per person, intended to purify the fasts of Ramadan and provide assistance to the less fortunate.
Unlike Zakat, Zakat al-Fitr is not paid into a bank account, the donation is used to buy food for the poor. Both forms of giving, whether it’s Zakat or Zakat al-Fitr, emphasise the importance of charity and compassion towards others.
How to Calculate Zakat
Muslims are encouraged to calculate their Zakat accurately, including various assets and distribute it to the deserving recipients. By fulfilling the obligation to pay Zakat, Muslims engage in a selfless act of charity, ensuring the well-being of those in need and seeking the pleasure of Allah.
Calculating Zakat follows certain guidelines and necessary criteria. The minimum amount of wealth that qualifies for Zakat is known as the Nisab threshold. It is crucial to determine the current Nisab value, which is based on the total value of gold, silver, and other precious metals owned by an individual within the current lunar year. Islamic scholars, along with Islamic financial analysts often provide guidance on Zakat calculations.
Zakat is not limited to cash; it can include various assets, such as gold and silver jewellery, investments, and the money in one’s bank account, although there is no Zakat paid on precious stones. The total Zakatable wealth is assessed, and a specific percentage is paid as Zakat. The purpose of Zakat is to assist the poor and needy in the community, ensuring that they have access to vital necessities and a dignified life.
Here’s a step by step breakdown of how to calculate your Zakat.
Step 1 – Determine Your Total Income
Identify the types of assets that fall under the category of Zakatable wealth and determine the total value of all the assets that you have owned for the past year. You must add up the cash, gold and silver, debts owed to you, investment properties, shares and stocks, money in investment and saving funds and business assets, this will give you your total income.
Step 2 – Calculate Your Total Living Expenses
To calculate your total living expenses you must total up your personal Expenses, the debts you owe and your business expenses. This amounts to your total living expenses.
Step 3 – Calculate Your Total Zakatable Wealth
Your total Zakatable wealth is obtained by subtracting your living expenses from your total income.
Step 4 – Establish the Nisab Threshold
Check the current Nisab threshold, which is the minimum amount of wealth an individual must possess for Zakat to become obligatory. The Nisab value is typically based on the value of gold or silver in the local currency.
Step 5 – Assess Eligibility
Ensure that your total Zakatable wealth exceeds the Nisab threshold after deducting any outstanding debts or liabilities. If your wealth falls below the Nisab, you are not obligated to pay Zakat.
Step 6 – Calculate Zakat You Have to Pay
The process of calculating Zakat is an easy process. You simply multiply your Zakatable wealth by 0.025 (2.5%) to obtain the total figure for the Zakat you owe for the lunar year.
Step 7 – Pay Zakat
Once the Zakat amount is calculated, it is recommended to distribute it to eligible recipients, such as the poor, needy, or charitable organisations. If you pay more than the minimum 2.5% required donation, the excess charity will be considered Sadaqah, a voluntary charitable donation. It is advisable to pay Zakat to reliable and recognised institutions that ensure the funds are distributed appropriately.
Different Forms of Islamic Charity
In Islam there are many forms of charity. Zakat is the only one that is compulsory however, there are other forms of voluntary charity which include Sadaqah, Sadaqah Jariyah and Lillah.
What Is Lillah? <-[INSERT LINK TO “What Is Lillah?” ARTICLE HERE]
Lillah, also known as Sadaqah Lillah or “charity for the sake of Allah,” refers to voluntary donations given with the intention of seeking Allah’s blessings and supporting various charitable causes. Unlike other types of charity, Lillah donations are not specifically tied to a particular category and can be allocated to any legitimate charitable project or endeavour.
What Is Sadaqah? <-[INSERT LINK TO “What Is Sadaqah?” ARTICLE HERE]
Sadaqah is a general term in Islam that encompasses acts of voluntary giving or charity. It can be in the form of money, goods, services, or even a kind gesture to help others. Sadaqah is not restricted to a specific time, amount, or recipient, and Muslims are encouraged to give it regularly as an expression of compassion, solidarity, and gratitude to Allah.
What Is Sadaqah Jariyah? <-[INSERT LINK TO “What Is Sadaqah Jariyah?” ARTICLE HERE]
Sadaqah Jariyah, also known as “ongoing charity” or “continuous charity,” refers to charitable acts or projects that continue to generate rewards for the donor even after their passing. Examples include funding the construction of a mosque, a school, a water well, or supporting educational initiatives that have a lasting positive impact on the community.
Muslims are encouraged to donate and give generously as a way to help those in need and support worthy causes. While there are no fixed basic rules regarding the amount or frequency of voluntary charity, it is recommended to give according to one’s means and with a sincere heart, seeking the pleasure and reward from Allah.
For more information regarding these selfless charitable acts please click the links provided in the headings.
Who Receives Zakat?
With regards to Zakat, the donation must be paid to another Muslim. It cannot however be paid to any Muslim, it must be donated to a Muslim who fits into one of the following eight categories.
The Poor (Al-Fuqara)
This category includes individuals who are living in poverty and lack the basic necessities of life. They struggle to meet their daily needs, such as food, shelter, and clothing. Zakat provides them with a lifeline, offering financial support to alleviate their hardships and improve their living conditions.
The Needy (Al-Masakin)
Needy individuals are those who are in dire financial circumstances and are unable to support themselves adequately. They may be facing significant challenges in meeting their basic needs and require assistance to sustain their livelihood. Zakat helps lift them out of destitution and provides them with the means to lead a dignified life.
Zakat Collectors and Administrators (Al-Amilin)
These individuals are entrusted with the collection and distribution of Zakat funds. They play a crucial role in ensuring that the funds are collected effectively and disbursed to the deserving recipients. They receive Zakat as a means of sustaining their efforts in managing and facilitating the distribution process.
Those Whose Hearts Are to Be Reconciled (Al-Mu’Allafah Qulubuhum)
This category encompasses individuals who are embracing Islam or those whose hearts require strengthening in their faith. Zakat can be utilised to support them in their journey of faith, providing them with the necessary resources and assistance to deepen their connection to Islam.
Freeing Slaves (Fir-Riqab)
Originally intended for the liberation of slaves, this category has evolved in modern times to support those who are trapped in various forms of bondage or exploitation. Zakat funds can be used to help free individuals from oppressive situations and provide them with the means to regain their freedom and autonomy.
Debtors (Al-Gharimin)
Debt can be a heavy burden on individuals and families, trapping them in a cycle of financial instability. Zakat can be utilised to alleviate the debts of those who are unable to repay their creditors. By providing financial relief, Zakat allows debtors to regain control over their lives and work towards financial stability.
In the Cause of Allah (Fi Sabilillah)
This category refers to supporting charitable projects, initiatives, or individuals working for the greater good and the advancement of Islam. It includes funding educational institutions, building mosques, sponsoring Islamic scholars, and development workers supporting humanitarian efforts that align with the principles of Islam.
Travellers (Ibnus-Sabil)
Travellers who find themselves stranded or in need of assistance and with little money are also eligible to receive Zakat. It aims to support individuals who may face unexpected financial challenges while away from their homes, ensuring they have the means to return safely or continue their journey.
By distributing Zakat among these eight categories, the overall objective is to uplift the disadvantaged, alleviate poverty, promote social welfare, and create a more equitable society. Zakat serves as a powerful tool for fostering compassion, empathy, and solidarity within the Muslim community.
Is Zakat Compulsory?
It is crucial for an eligible adult Muslim to fulfil their Zakat obligations, as it not only benefits the recipients but also promotes social cohesion and economic stability within the Muslim world. Through Zakat, Muslims demonstrate their commitment to charity, justice, and the principles of Islam.
Zakat is an essential pillar of Islam that promotes the redistribution of wealth and supports those in need. By fulfilling their Zakat obligations, Muslims contribute to the well-being of their community, and strive to attain spiritual growth and righteousness.
In addition, Zakat is a means of purifying a person’s wealth, as it will have its evil removed. Zakat serves as a means to cleanse one’s wealth and soul from any potential negative impacts or ill consequences that accumulated wealth may bring.
Understanding who is obligated to pay Zakat is crucial to fulfilling this religious duty. The following categories encompass the individuals for whom Zakat is compulsory.
Adult Muslims of Sound Mind
As one of the five pillars of Islam, Zakat is a religious obligation for adult Muslims who meet the necessary criteria. Adult Muslims who possess a certain minimum amount of wealth known as the Nisab are required to pay Zakat. Both men and women who have reached the age of maturity are required to pay Zakat if they possess the financial means to meet the Nisab threshold. The individual must also be sane and of sound mind. It is an act of devotion and an expression of faith in Allah’s teachings.
Wealthy Individuals
Zakat is mandatory for individuals who fall under the category of wealthy Muslims. It becomes obligatory once their personal wealth exceeds the Nisab threshold. This is the minimum amount of wealth a person must possess for Zakat payment to become compulsory. By paying Zakat, wealthy individuals fulfil their obligation and contribute to the betterment of the Ummah. Those who do not possess the minimum Nisab value, such as individuals with limited wealth, debts surpassing their assets, or those who are dependent on others for their basic needs, are exempt from paying Zakat.
Possessors of Gold and Silver
Zakat payment extends to individuals who possess gold and silver jewellery or other precious metals. These items are considered part of one’s wealth and are subject to Zakat calculation. Muslims who own such assets should evaluate their total value accurately and pay Zakat accordingly.
Those With Zakatable Wealth
Zakat is compulsory for individuals whose total wealth, including cash, investments, business assets, and possessions, exceeds the Nisab threshold. It is essential to calculate the value of this Zakatable wealth accurately and fulfil the obligation of Zakat accordingly. By doing so, Muslims support charitable causes, uplift the needy, and strengthen the bonds of the Muslim Ummah.
Zakat, as one of the pillars of Islam, plays a vital role in the lives of Muslims worldwide. It is an obligation that must be fulfilled by adult Muslims who possess the necessary wealth. By paying Zakat, individuals purify their wealth, support charitable endeavours, and contribute to the welfare of the community. Understanding the categories of people for whom Zakat is compulsory allows Muslims to adhere to the teachings of Islam, foster social justice, and embrace the spirit of charity and compassion.
The Impact of Zakat
Zakat, one of the fundamental pillars of Islam, serves as a powerful mechanism for poverty alleviation and social welfare. Paying Zakat is not only a religious obligation but also a means to bring about positive change in the lives of the less fortunate. It is a form of charity that holds great significance in Muslim countries and communities worldwide.
Islamic scholars and financial analysts emphasise the impact of Zakat as a vital tool for wealth redistribution and addressing socioeconomic disparities. By calculating Zakat based on the value of one’s personal wealth, including gold, silver, jewellery, and other precious metals, individuals contribute a specific portion to help those in need. This Zakat charity is aimed at eradicating poverty and ensuring the basic necessities of life for the less privileged.
Zakat, being the third pillar of Islam, works in conjunction with the other four pillars to establish a just and compassionate society. Muslims are required to pay Zakat annually, this helps to combat the societal issue of poverty.
The impact of Zakat donations on poverty alleviation is profound. The donations help individuals and families who lack sufficient financial resources to meet their basic needs. The money collected through Zakat contributions enables them to access food, shelter, healthcare, education, and other essential services that can improve their overall well-being. It serves as a safety net for those facing financial hardships, ensuring that they can lead dignified lives.
The Benefits of Zakat
Another crucial aspect of Zakat is its ability to instil a sense of empathy and social responsibility among Muslims. When individuals pay Zakat they develop a deep understanding of the challenges faced by the poor and gain a greater appreciation for their blessings. This fosters a culture of giving and encourages individuals to engage in voluntary acts of charity beyond their obligatory Zakat payment. Through Zakat, Muslim communities actively work towards uplifting the less fortunate and creating a more equitable society.
Moreover, Zakat acts as a deterrent against the accumulation of wealth in the hands of a few individuals, thus preventing the concentration of resources and addressing income inequality. It promotes a more just distribution of wealth and ensures that everyone has access to the basic necessities required for a decent life.
Zakat holds immense significance in Islam and has a profound impact on poverty alleviation. By paying Zakat, individuals fulfil their religious duty, contribute to the welfare of their communities, and actively work towards creating a just and compassionate society. Through wealth redistribution, community development, and the cultivation of empathy, Zakat plays a major role in uplifting the poor, eradicating poverty, and fostering social well-being. It is a testament to the values of Islam and the spirit of compassion and generosity that lies at the heart of the Muslim faith.