Summary of Zakah rulings

The position of Zakah and the Basic Rule of Its Ordainment:

Zakah is one of Islam’s pillars and great foundations. It is Joined by Allah The Almighty with prayer in many locations of His Glorious Book. The source of its obligation lies in the Quran, the Prophetic Sunnah and the consensus of the Islamic ummah.

Concerning the Book of Allah The Almighty, a mention may be made of His Saying (what means):

• {And establish prayer and give zakah and obey the Messenger - that you may receive mercy.} [Quran 24:56]

• {O you who have believed, indeed many of the scholars and the monks devour the wealth of people unjustly and avert [them] from the way of Allah. And those who hoard gold and silver and spend it not in the way of Allah - give them tidings of a painful punishment. The Day when it will be heated in the fire of Hell and seared therewith will be their foreheads, their flanks, and their backs, [it will be said], "This is what you hoarded for yourselves, so taste what you used to hoard."} [Quran 9:34-35]

As far as the Prophetic Sunnah is concerned, the Messenger of Allah said: “Islam is based on five (pillars): to testify that there is none worthy of worship except Allah and that Muhammad is the Messenger of Allah; to establish prayer; to give Zakah; to observe the fast of Ramadan; and to perform Hajj to the House (i.e. the Ka‘bah) for him who could find thereto a way).” [Al-Bukhari and Muslim]

The Messenger of Allah  further said: "Any owner of gold or silver who does not pay the Zakah due on it will, on the Day of Resurrection, have his treasure heated in the Fire of Hell and then made into plates. His flanks, forehead and back will be branded with them. Every time they (i.e. the plates) get cold, they will be heated again on a day that will last fifty-thousand years. This will be done to him until Allah Pronounces the judgment on His slaves. Then one will be shown his path, leading him either to Paradise or to Hellfire." [Muslim]

Ruling on Zakah:

Zakah is due on everyone who meets the following conditions:

1- Faith in Islam: the disbeliever is not asked to give it even though he will be accounted for not giving it since the disbelievers are addressed by Sharee‘ah commands.

2- Freedom: it is not due on a slave’s wealth even though it is due on the wealth of the mentally disabled and children.

3- The full possession of the due Nisab (i.e. the minimum amount liable for Zakah) and the Nisab of each kind will be accurately defined later. If one’s wealth is less than the Nisab, no Zakah will be due except for the Rikaz, which is what is found buried from the time of Jaahiliyyah (i.e. pre-Islamic period of ignorance).

4- Stability of Nisab: it is not due on the share of the Mudharib before distributing the money.

5- The elapse of a full lunar year on prices, articles of merchandise and live stock. Concerning grains, fruits, what comes out from the land, products of grazing animals, the profit from trade and Rikaz, Zakah is due on that even if a full lunar year does not elapse on it.

In other words, Zakah is due on every free Muslim in full possession of a due Nisab upon which a lunar year has elapsed, whether he is young or old, sane or insane. The only exception is that the young or insane does not give out his Zakah by himself but it is given out by his guardian.

Kinds of wealth on which Zakah is due:

1- Currencies and prices (i.e. gold, silver and cash money)
2- Articles of merchandise
3- Livestock
4- What comes out from the land of grains and fruits
The focus will be made in what follows on prices and articles of merchandise.

The due Nisab of Zakah on prices and articles of merchandise:
1- The Nisab of gold is 20 dinars (i.e. approximately 85 grams).
2- The Nisab of silver is 200 dirhams (i.e. approximately 595 grams).
3- The Nisab of cash money is debatable.

It is more precautious to be that which benefits the poor better. Take this illustrative example: suppose that a gram of gold is worth 50 riyals and that of silver is 1 riyal: if gold is considered, then the Nisab is 50×85=4,250 riyals and if silver is considered, then the Nisab will be 1×595=595 riyals. Thus, consideration of silver will be more beneficial to the poor. Being so, whoever has 595 riyals and above has indeed possessed the due Nisab and Zakah becomes due on him. Some scholars measure the Nisab only in gold especially these days when silver is very cheap and he who possesses 595 riyals is not rich.

Zakah on articles of merchandise:

Articles of merchandise are goods planned for sale with the intention of making profit, like cars, equipment and various kinds of commodities ready for trade (i.e. those which are purchased with the intention to be sold in trade rather than to be used). If a lunar year elapsed, a merchant should assess the commodities he has according to their market value at the very time Zakah became due on him rather than according to their value on the day he bought them. This is in order not to wrong the poor, in case the price rose, or the merchant, in case the price fell. The assessment should depend on the retail price for the retailers, the wholesale price for the wholesalers and the average for those who combine both.

Notice: a man may buy a commodity with the intention to sell it and make a profit but he uses it instead. On the other hand, another man may buy a commodity with the intention to use it and, seeing it improper, he sells it instead. On which of both is Zakah due?

The separating limit is the original intention. If one’s original purpose when purchasing a commodity is to sell and trade in it, then it will belong to the articles of merchandise on which Zakah is due even though it may probably be used. If the original purpose of buying is to use it, then no Zakah will be due on it even though it may probably be sold.

If one bought a commodity with the intention to use it and a year later intended to sell it, it would be considered an article of merchandise from that very date and not from the date he bought it. Vice versa, if he bought it with the intention to traffic in it and a year later he intended to use it, Zakah would not be due from that very date and would be due only for the previous time.

Zakah on shares:

Concerning the Zakah of shared companies, the purpose of a shareholder from possession is one of two:

1- To intend an investment in the long term and gain profits and revenues. If he is in the Saudi market, no Zakah will be due on the shareholder because the company pays it on his behalf. If he is in another market where the companies do not abide by paying Zakah, he should estimate the Zakah by accounting the real holdings on which Zakah is due far from the market value. If it is difficult for him and he likes to be more cautious, then he should give Zakah like the rights of sharers (i.e. owners) which is 2.5%. The rights of sharers are the total assets minus the total deductions and the result is multiplied by 2.5%.

2- To intend by possession of shares to trade or make a Mudharabah with the expectation that their price will rise so as to sell them. That is to buy today and sell tomorrow and so on. This person should give Zakah on the shares he has like articles of merchandise. If a lunar year elapsed on him, he should consider the market value rather than the nominal or real value of the shares and give Zakah on them as articles of merchandise (i.e. 2.5%).

A differentiation should be made between an investor and a Mudharib. The one who intends to sell a share within a year is a Mudharib on whom the Zakah of articles of merchandise is due and the one who intends to sell after more than a year is an investor.

Equity funds:

Equity funds are frequently like a Mudharib in purchasing and selling shares. So the Zakah due on them is like that due on articles of merchandise as was clarified in number (2). If it is the day that ends a lunar year on which an almsgiver gives out his Zakah, he should assess the equities he has on that day and give out as much as 2.5% thereof. It is worth mentioning that the funds themselves usually do not give out Zakah and it is entrusted to the customer, the owner of the equities.

Zakah on jewelry:

Scholars have two different opinions about the obligation of Zakah on jewelry. What is intended by jewelry is only gold and silver. No Zakah is due on precious stones, pearls and the like, regardless of how high their price may be.
1- The first opinion claims that no Zakah is due on jewelry because the purpose is to use them permissibly rather than to trade in them. Thus, the meaning of increase does not apply to them, neither in reality nor in consideration. They bring many indications in support of this opinion and, at the same time, render weak the indications of those who advocate the obligation of Zakah on jewelry. This opinion is adopted by many scholars.

2- The other opinion argues that Zakah is due on jewelry in view of the general traditions concerning the Zakah on gold and silver and the Hadeeth of the woman with the two bracelets and others. This is the opinion of many including Ibn Baz, Ibn ‘Uthaymeen  and others.
However, it is worth mentioning that, in the case of adopting the opinion that no Zakah is due on the jewelry of women, the following criteria should be observed:

a- To intend only adornment thereby and, in case saving is intended, Zakah becomes due on it.

b- To intend to use it in a current rather than a future need. An example of a future need is that one keeps it for his would-be wife. In this case, Zakah becomes due on it.

c- To remain fit for adornment. But whatever is crushed or broken and thus becomes unusable thereof, then Zakah is due on it because it is not prepared for such use.

d- To be used permissibly. If its use is impermissible, then Zakah becomes due on it. An example of impermissible use is to be in the form of a statue or an idol and so on.

e- Not to exceed the limit of moderation and usage in the amount of jewelry that is used. But if it exceeds the limits of extravagancy, then Zakah becomes due on what is beyond the limit of moderate usage.

Zakah on salaries:

Zakah is not due on a salary once it is received. It should be joined with what one has. If a lunar year elapsed and he has something thereof, he should give out Zakah for it.

Zakah on residential date-palm trees:

Some people have date-palm trees in their homes or resorts whose fruits reach the due Nisab and take no heed of giving the Zakah due on them. The due Nisab of fruits is five Wasaqs and the Wasaq is sixty Saa's (i.e. three-hundred Saa's or nearly six-hundred and fifty-three or six-hundred and twelve kilograms). If the date-fruits reach the due Nisab, one-twentieth (i.e. 5%) becomes due because it is irrigated by artificial means as is prevalent in our lands these days. If it is watered by rain, then one-tenth (i.e. 10%) is due. If it is equally watered by artificial as well as natural means then 7.5% is due.

Channels of spending Zakah:

The channels of spending Zakah are the eight categories mentioned in Saying of Allah The Almighty (what means): {Zakah expenditures are only for the poor and for the needy and for those employed to collect [Zakah] 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.} [Quran 9:60]

The following points should be made here:

• Zakah is neither permissible nor sufficient for him upon those whom the almsgiver should spend like a child, wife or father. According to some scholars, Zakah is not valid for everyone whom the almsgiver should inherit when that one dies.

• Zakah to a relative is better than to anyone else because it acts both as Zakah and a means of strengthening kinship ties. Relatives are worthier of the favor, provided that they are not among those upon whom the almsgiver should spend as was previously clarified.

• Zakah should not be paid to the almsgiver’s employees, such as a driver and servant, in order to avoid mixing Zakah with obligatory fees.

• It is permissible to pay Zakah in advance to serve a public benefit such as when a calamity befalls the Muslims or there is a needy person whose state requires Zakah to be given in advance. In such a case, Zakah may be paid in advance and deducted from the obligatory alms when a lunar year elapses.

• It is also permissible to delay Zakah to serve a predominant need or benefit. Such a case is when the lunar year elapses on one upon whom Zakah is due and he has no money at hand to pay Zakah from or he has goods offered for sale which he could only sell after a long time. In this case, there is no harm to delay Zakah till money becomes available. Another example is that the almsgiver knows that his relative is in need and he could only convey Zakah to him after a long time. At any rate regardless of what Zakah is delayed, with or without a legal excuse, the almsgiver remains liable for it and will not be free from this obligation until he gives it. It should be accounted from the very day it becomes due rather than the day on which it is paid.

How to calculate Zakah:

A Muslim could calculate his Zakah according to one of the following two ways:

1- To make for each lump sum he gains an independent lunar year from the very moment he possesses it until it amounts the due Nisab and, if a lunar year elapses on that kind of money, he will give Zakah on what he has of it and the same applies to all kinds. For example, if one receives the salary for the month of Muharram, its lunar year will be Muharram of the following year and the lunar year of the salary of Safar will be Safar of the following year. The same applies to any money he receives, that is, to record the very day on which he receives that money and then wait for the elapse of a lunar year on it. But it should be kept in mind that if the money is a trade profit or comes from that of a previous Zakah, it should have the same lunar year of the principal and not an independent year. Nevertheless, this way is somewhat difficult.

2- The other way is easier; it is to consider the time at which one attains a due Nisab and waits until a lunar year elapses from the very date he got the Nisab. Then, he gives Zakah on all the wealth he has on which Zakah is due even if no lunar year elapsed on the whole of it. At the same time every year, he should give out Zakah on the wealth he has. This way he will be relieved of calculating Zakah on each part of his wealth individually.

A practical example for Zakah according to the second way:

Fix for yourself a day for Zakah, say, the fifteenth of Ramadan every year. Being so, when it is the fifteenth of Ramadan this year, you should collect the following:

• Your cash stock whether in bank accounts or cash in hand.
• The market value of the Mudharabah shares on that day.
• The last assessment of equities on equity funds.
• Gold and silver not prepared for the adornment of women like gold ingots.
• Gold and silver prepared for adornment according to the opinion which adopts the obligation of Zakah on it.
• Debts you have with others in case your debtors are rich and the debts are payable during the same year.
• All you offered for sale of land, homes, livestock or goods in a marketplace or others.
• The total of all that was previously mentioned minus the debts you owe and expect to pay throughout the same year. For example, if you buy a house in installments for one million riyals, you should not deduct the whole sum but only what you will pay throughout the present year: the installment sum multiplied by twelve.

The final result of all that was previously mentioned minus debts is the money on which Zakah is due.

In conclusion, I remind all brothers and sisters to exalt the symbols of Allah The Almighty, perform them as they are commanded by their Lord and learn that wealth belongs to Allah The Almighty which He Distributes among His servants to Test which of them is better in deed and in this let the competitors compete.

May Allah Accept from all of us our fasting, Qiyam and righteous deeds. Allah Knows best and may He Send blessings and peace upon our Prophet Muhammad  all his family and Companions. -islamweb.net