Zakah is one of the five pillars of Islam, serving as a spiritual obligation upon all eligible Muslims. It is not just an act of charity but a system of wealth purification, a means to help those in need, and a pathway to spiritual growth. Paying Zakah is both a personal and communal duty, designed to foster social justice, alleviate poverty, and redistribute wealth in a way that benefits society as a whole. In this guide, we will delve into how to pay Zakah, the conditions that make one eligible to pay, the types of wealth on which Zakah is due, and how to calculate and distribute it.
What is Zakah?
The term ‘Zakah’ comes from the Arabic root ‘zakā,’ meaning purification, growth, and blessing. Paying Zakah purifies a Muslim’s wealth and soul, fostering a sense of compassion, generosity, and responsibility toward the less fortunate. As Allah SWT has commanded in the Qur’an:
“Take, [O Muhammad], from their wealth a charity by which you purify them and cause them to increase, and invoke [Allah’s blessings] upon them.” (Surah At-Tawbah, 9:103)
Therefore, Zakah is not merely a financial transaction; it is a spiritual act that has a profound impact on both the giver and the receiver.
Who Must Pay Zakah?
Zakah is obligatory on Muslims who meet specific conditions, including:
1. Muslim Faith: Zakah is only required from Muslims. Non-Muslims are not obliged to pay Zakah.
2. Nisab Threshold: A Muslim must possess wealth that meets or exceeds the minimum threshold known as the Nisab. The Nisab is equivalent to the value of 87.48 grams of gold or 612.36 grams of silver. The market value of these precious metals fluctuates, so it is important to check the current rates before calculating your Zakah.
3. Lunar Year: Zakah is due once a full lunar year has passed since you first acquired wealth that reaches or exceeds the Nisab. This is known as Hawl.
4. Ownership and Control: The wealth must be fully owned and accessible to the person. If wealth is inaccessible or tied up in debts, it may not be Zakatable.
What Wealth is Subject to Zakah?
Zakah is due on specific types of wealth, not all possessions. The following assets are generally Zakatable:
1. Cash and Savings: Any form of currency held in savings, current accounts, or stored as cash is subject to Zakah. This includes foreign currencies as well.
2. Gold and Silver: Zakah is due on gold and silver, whether they are in the form of jewellery, coins, or bullion. If a person’s gold and silver exceed the Nisab threshold, 2.5% of their value must be given in Zakah.
3. Business Goods: Any inventory or goods intended for trade are also subject to Zakah. This includes stock, merchandise, and raw materials.
4. Investment and Shares: Profits or dividends from investments and shares are subject to Zakah, provided they meet the Nisab and Hawl criteria.
5. Rental Income: Any income generated from rental properties is Zakatable. The property itself may not be unless it is intended for resale.
6. Agricultural Produce and Livestock: For those who own farmland or livestock, Zakah is due on the produce and animals. Specific percentages apply depending on the type of produce or livestock.
How to Calculate Zakah
Calculating Zakah can seem complex, but it is straightforward if approached step by step. The general rate of Zakah is 2.5% of qualifying wealth. Here’s how you can calculate your Zakah:
1. Determine Your Total Assets: Begin by calculating the total value of all Zakatable assets. This includes cash, savings, investments, business goods, gold, and silver.
2. Subtract Liabilities: From your total assets, subtract any immediate liabilities or debts that are due within the next 12 months. Long-term debts such as mortgages are not typically deducted, only the instalments due in the coming year.
3. Check Against Nisab: After subtracting liabilities, if your remaining wealth equals or exceeds the Nisab threshold, Zakah is due. If it falls below the Nisab, you are not required to pay Zakah for that year.
4. Calculate 2.5%: Multiply the remaining amount of your wealth by 2.5%. This is your Zakah amount for the year.
Example:
If you have £10,000 in savings, £5,000 in business stock, and no significant debts, your total Zakatable wealth is £15,000. As this exceeds the Nisab (based on the value of gold or silver), Zakah would be calculated as 2.5% of £15,000, which is £375.
Who Can Receive Zakah?
Zakah must be given to specific categories of people as outlined by Allah SWT in the Qur’an:
“Zakah expenditures are only for the poor, the needy, those employed to collect [Zakah], for bringing hearts together [for Islam], for freeing captives [or slaves], for those in debt, for the cause of Allah, and for the [stranded] traveller.” (Surah At-Tawbah, 9:60)
These categories can be summarised as follows:
1. The Poor (Al-Fuqara): Those who have little or no wealth and struggle to meet their basic needs.
2. The Needy (Al-Masakin): Those who have some wealth but not enough to fulfil all of their basic needs.
3. Zakah Administrators: Individuals who are appointed to collect, manage, and distribute Zakah.
4. New Muslims or Those Close to Islam: Those whose hearts are inclined towards Islam, such as new converts or those who need encouragement.
5. Slaves and Captives: Historically, Zakah was used to free slaves. Today, this may extend to supporting efforts to free those unjustly imprisoned.
6. Debtors: Those burdened by debt can receive Zakah to help relieve their financial distress.
7. In the Path of Allah SWT: This means those fighting a just battle.
8. Travellers in Need: Those who are stranded during travel and cannot access their wealth.
When and How to Pay Zakah
Zakah should ideally be paid as soon as it becomes due. While there is flexibility in when and how you distribute your Zakah, it is highly recommended to pay promptly, ensuring that the needy can benefit from it as soon as possible.
There are several ways to distribute your Zakah:
1. Direct Giving: You may choose to give your Zakah directly to individuals in your community who are eligible to receive it.
2. Zakah Charities: There are numerous charities dedicated to collecting and distributing Zakah according to Islamic principles. These organisations ensure that your Zakah reaches those in need and is distributed efficiently.
3. Local Mosques: Many mosques collect Zakah and use it to support members of the local Muslim community.
Conclusion
Paying Zakah is a powerful way to purify your wealth, strengthen your connection to Allah SWT, and support the less fortunate in society. It is an obligation that carries great rewards, both in this life and the hereafter. By understanding the principles of Zakah, calculating it correctly, and distributing it to the rightful recipients, you fulfil a core tenet of Islam while contributing to the well-being and growth of the global Muslim community.