By Safia Malik
Charity is an integral part of Islam. Giving charity from our wealth is a means of purification from greed, selfishness, and excessive love of this world. It is also a source of blessings for us. Allah says in the Quran:
“Take, [O Muhammad], from their wealth a charity by which you purify them and cause them increase…” (Al-Taubah 9:103)
Zakat (or Zakah), the fifth pillar of Islam, is an obligatory form of charity which holds the utmost importance for Muslims. It involves giving a portion of your money to the underprivileged if your annual wealth exceeds a certain amount. Likewise, Zakat Al-Fitr is obligatory charity which the Muslims who meet specified criteria must pay towards the end of Ramadan.
Every Muslim obligated to pay Zakat might be familiar with the Islamic teachings regarding its payment. However, its calculation can be confusing and subject to much uncertainty in modern times. It is pivotal to accurately measure your Zakat and Zakat Al-Fitr to purify your wealth and follow the Islamic injunctions accurately. In this article, we discuss the calculation of Zakat and the common questions people have in this regard.
What is the Importance of Zakat?
First, begin by asking yourself why paying Zakat is essential. Without understanding the profound significance of Zakat, you may not truly experience the spiritual connection it fosters between you and your Creator. Zakat not only cleanses our wealth but also purifies our hearts. It is an obligatory act of worship that removes selfishness from our hearts and fills them with compassion for the hungry and destitute ones. The importance of Zakat is indicated by the fact that Allah has mentioned this word at least 30 times in the Quran. For instance, He says in the Quran:
“And establish Salat and give Zakat and bow with those who bow (in worship and obedience).” (Al-Baqarah 2:43)
Who is Required to Pay Zakat?
Zakat is not obligatory upon all Muslims. To pay Zakat, you have to meet the set eligibility criteria summarized below:
- You are a Muslim.
- You are above the age of puberty.
- Your wealth meets the prescribed threshold known as Nisab.
- Nisab has been maintained for one lunar year.
In simple terms, if a Muslim above the age of puberty has wealth that meets the required amount, which has been in his or her possession for at least one lunar year, he or she must pay Zakat. It is calculated at the rate of 2.5 percent on most types of wealth, including money. It is preferable to pay Zakat as soon as it becomes due. While many people pay Zakat during the month of Ramadan to maximize the reward of fulfilling this religious duty, you can choose to pay it in any month without delaying it inordinately.
What is the Amount of Nisab?
You might wonder if your current wealth meets the prescribed threshold for paying Zakat. Nisab amounts to 87.5 grams of gold or 612.4 grams of silver. The value of either gold or silver may be taken to calculate the sum in currency terms on which Zakat becomes due. In case of any doubt, it is best to pay Zakat and not risk forsaking its payment erroneously.
It should be kept in mind that the value of such items should be calculated at the current market rate, not based on their purchase price. Today, the market value of gold and silver changes abruptly, so stay updated about the market rates to make accurate estimates.
What is Included in Nisab?
Another typical confusion among Muslims pertains to the types of wealth eligible for Zakat. While there may be some differences in opinion among scholars, the following assets are typically considered liable for Zakat:
- Cash
- Gold and silver
- Agricultural produce
- Livestock
- Money lent to others
- Business stock in merchandise or trade
- Property owned for investment purposes
- Shares and stocks owned directly or through investment funds
It is worth noting that Zakat is paid on wealth, not income. For instance, if you earn $50,000 annually, but have an annual saving of $3,000, then Zakat shall be due on this $3,000 saving, not your yearly income. Also, assets such as real estate and cars are exempt from Zakat if these are owned personally. However, if you intend to sell such items, they become tradable goods, and if your intention to sell them exceeds one lunar year, you may be required to pay Zakat on them.
How is Zakat Calculated?
Now that you have a clear picture of how much of your wealth is eligible for Zakat, you need to calculate the Zakat due on your Nisab.
Compute the value of your total Zakat-eligible assets using the above-mentioned list. Subtract any outstanding loans that you have acquired. If your remaining amount exceeds the Nisab, you must pay Zakat. Calculating 2.5% of this value shall give you the amount of Zakat you are liable to pay. You can also use a Zakat Calculator to estimate your Zakat amount precisely.
Who is Eligible to Receive Zakat?
The next step after calculating your Zakat is to pay the prescribed amount and ensure that it reaches the right people. Hence, it is important to know who is eligible to receive your Zakat. Allah says the following in the Quran in this regard:
“Zakat expenditures are only for the poor and for the needy and for those employed for it and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler – an obligation [imposed] by Allah. And Allah is Knowing and Wise.” (Al-Taubah 9:60)
From the above verse, it is clear that the following eight categories of individuals can receive Zakat.
- The poor – people who have very little wealth.
- The needy – people struggling to meet even their basic needs.
- Zakat administrators – those responsible for collecting, guarding, registering, and distributing Zakat to deserving people.
- Those whose hearts are to be reconciled – typically people who have recently accepted Islam.
- Those in bondage – the individuals held as captives or slaves.
- The debt-ridden – typically those struggling to repay their personal debts, but the debt should not be incurred through acts against Islamic law.
- Those striving for the cause of Allah – people engaged in promoting the cause and values of Islam, such as the construction of a mosque or Islamic learning center, subject to certain conditions (such money is donated to the project, not to those managing it).
- The wayfarer – needy travelers or people stranded away from home with limited financial resources, provided that their purpose of travel is not unlawful.
It is worth noting that the recipients of both Zakat and Zakat Al-Fitr (discussed next) can only be Muslims although other forms of Sadaqah (charity) may also be paid to deserving non-Muslims.
What is Zakat Al-Fitr?
Zakat Al-Fitr (also called Sadaqat Al-Fitr or Fitrana) is a special charity given at the end of Ramadan, before the Eid Al-Fitr prayer on the first of Shawwal. Zakat Al-Fitr is a means of helping the poor and needy ones to celebrate the joyous occasion of Eid with greater dignity and financial freedom.
How is Zakat Al-Fitr Calculated?
Ibn Umar narrates the following regarding the payment of Zakat Al-Fitr:
“Allah’s Messenger ﷺ enjoined the payment of one Sa’ of dates or one Sa’ of barley as Zakat Al-Fitr on every Muslim slave or free, male or female, young or old, and he ordered that it be paid before the people went out to offer the Eid prayer.” (Bukhari 1,503)
How much is one Sa’? It is approximately four times the quantity that you can take by cupping both hands. Hence, this measurement is associated with volume, not weight, although it is commonly considered equal to about three kilograms for reference purposes. It is for you to decide which food you use as a reference. If you are using dates, for example, calculate the market rate for one Sa’ of dates. You can also use barley, raisins, cheese, rice, and corn as a reference.
Next, count the number of your family members, including yourself, who depend upon you for financial support. Finally, multiply the Zakat Al-Fitr amount by the number of eligible family members. This will give you the total amount you must pay to the poor or the needy on behalf of yourself and your family.
Zakat and Zakat Al-Fitr are crucial to help those in need. While paying just 2.5 percent of your blessings will not make a big difference to your financial situation, it can transform the lives of those around you and make the world a much better place.
Guest Author Profile: Safia Malik is an experienced content writer who can be contacted via her LinkedIn profile.
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