This Ramadan Muslims all over the world will choose this blessed month to fulfil the Islamic duty of paying their Zakat. For nearly 14 centuries Muslims have continued to pay Zakat collected by the ruler and distributed to the categories Islam ordained.
The rules of Zakat come under taxation, however they transcend taxation due to the wide ranging implications they have. Zakat is a source of revenue for the state and from an economic perspective they play an important role in wealth circulation. This is why Zakat is often compared to the system of tithing and alms but unlike these older systems, it also serves as a welfare contribution.
Linguistically Zakat means 'grow', 'purify', or 'foster,' like many Arabic words their meaning was changed and came to be defined in the Shar'ah as a determined right due from certain types of wealth.
Zakat forms part of worship (‘Ibadat) and is a basic element (Rukn) of Islam like prayer, fasting and Hajj. The Zakat is a personal duty (Fardh ‘Ayn) on every Muslim who possesses the minimum amount (Nisab) in excess of his debts for the duration of a year. Zakat is obliged upon Muslims only, and is not taken from others. Its obligation is established by the Qur'an and Sunnah. Allah سبحانه وتعالى says in the Holy Qur'an:
"Give the Zakat" [TMQ Al-Muzzammil: 20]
There are a number of hadith that indicate the obligation of Zakat: the Messenger of Allah صلى الله عليه وآله وسلم sent Mu'az to Yemen and said to him: "Inform them that Allah obliged Sadaqah upon their wealth that is taken from their rich and given to their poor."
Allah سبحانه وتعالى ordained harsh punishments to those who withhold Zakat. Abu Hurayra narrated that the Messenger of Allah صلى الله عليه وآله وسلم said: "No owner of gold or silver who fails to give its due right except that he will have sheets of fire made for him on the Day of Judgement. They will be heated in the Hellfire then used to burn his sides, forehead and back. Whenever they cool, they are reheated to him in a Day which is 50,000 years long, until it is judged between the people and he is shown his path, either to Paradise or to the Fire."
The Zakat revenues are one of the funds that are placed in the Treasury. It is different from the other revenues because its collection, in regards of with its collected amounts and in regards with its spending.
Islam restricted the sources from where Zakat is collected, it is collected from the wealth of Muslims only and not from the non-Muslims. It is, as well, not a general tax, rather one of the pillars of Islam. Besides this, paying Zakat achieves a spiritual value, like the prayer, fasting and the hajj.
The levying of Zakat does not proceed in conformity with the needs of the State, nor according with the interest of society as is the case with all the other types of taxes levied from the Ummah. It is a specific type of tax that must be paid to the Treasury, whether there was a need for it or not. A Muslim is not absolved of the duty to pay the Zakat when it becomes due on his wealth. Its payment is obligatory on the Muslim who owns the Nisab (minimum amount eligible for Zakat), after deducting his debts and his needs. Zakat is not an obligation upon the non-Muslim. It is however an obligation upon the adolescent and the insane, this is because At-Tirmidhi reported on the authority of Abdullah Ibn Amru that the Messenger of Allah صلى الله عليه وآله وسلم said: "He who acts as guardian for an orphan who has property, let him trade in that property and not leave it until the Sadaqah devours it", meaning that he should not leave it until it all perishes from paying Zakat upon it.
The disposal of Zakat and the areas of its expenditure have been determined and restricted to eight categories Allah سبحانه وتعالى mentioned in the Qur'an. Allah سبحانه وتعالى said:
إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاء وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِّنَ اللّهِ وَاللّهُ عَلِيمٌ حَكِيمٌ
"The alms are only for the poor, and the needy, and those who collect them, and those whose hearts are to be reconciled and to free the slaves, and the debtors, and for the way of Allah (Jihad) and for the wayfarers." [TMQ At-Tauba: 60]
The poor, are those who have money, but their expenses are higher than what they own. Whilst the needy are those with no money and no income.
The individuals the state employs to collect and distribute the Zakat are also paid from the Zakat collections.
Those whose "hearts have been reconciled" are those the State deems appropriate to give them from the Zakat as an incentive to establish them firmly in Islam.
The slaves are also given money so that they can be freed. This category is not existent today.
Those in debt, who are unable to pay off their debts all receive a share.
In the way of Allah means Jihad; whenever "in the way of Allah" is mentioned in the Qur'an, coupled with spending, its meaning is Jihad.
The wayfarer is the traveler.
It is forbidden to pay Zakat to any other than from these eight categories, and it is also forbidden to spend it upon the other expenditures of the state.
Zakat is obliged on the following properties:
2. Crops and fruits
4. Trading goods and merchandise
Zakat is obliged on these properties if they reach the Nisab for the duration of one year except for crops
With the absence of the khilafah, the role Zakat plays in an economy is absent in the Islamic lands, Zakat is not enforced by the Islamic lands although many Muslims willingly pay their dues. Without the Khilafah the obligation of Zakat remains as its not based upon the existence of the state, it is an obligation which has its own evidences, so it's obligatory for itself.
Zakat is liable upon various animals if they are kept for year for grazing, the nisaab is different depending on the animal, and hence no Zakat is due on camels until they are more then five in number. Other animals that Zakat is liable upon are cattle, Lamb, Sheep and goats. The nisaab is progressive which increases with the number of animals.
Fruits and Crops
Zakat is obliged upon wheat, barley, dates and raisins. The texts which oblige Zakat upon fruits and crops came in restricted form, hence there is no Zakat on other fruits such as maize, rice, beans, chickpeas, lentils or other types of grains and legumes. Similarly, it is not taken from apples, pears, peaches, apricots, promenade, oranges, banana or other types of fruits. Again the nisaab rate is progressive. The Zakat due is based upon an estimation of the fruits that people have from their palm trees and grapes after their ripeness becomes obvious.
Trading and Merchandise
Zakat is liable on merchandise, this is everything other than currency which is used for trading, buying and selling, for the sake of profit e.g. foodstuffs, clothing, furniture, manufactured goods, animals, minerals, land, buildings and other goods that are bought and sold. Zakat on trading merchandise is obliged when it reaches the Nisab value of gold and silver, and a year has passed over it.
Gold, Silver and money
Zakat is also liable for Gold and silver that is held for a year. The amount levied, was determined by Muhammad صلى الله عليه وآله وسلم. It has been determined as a quarter of the tenth (2.5%) in gold and silver and the. The amount is levied from a specific sum, which is the Nisab or over. The Nisab equates to either 200 silver Dirhams or 20 gold Miskals. The gold Miskal is equal to a Shari'ah approved dinar, whose weight is 20 carats, which is equal to 4.25 grams of gold. Hence, the Nisab would be equal to 85 grams of gold. As for the silver dirham, it is equal to 2.975 grams, thus the Nisab of silver would be 595 grams of silver. If the amount was less than the Nisab, nothing would be taken from it.
Zakat was obliged upon the two currencies, which were Gold and Silver at the time of Muhammad صلى الله عليه وآله وسلم. As today's currencies are paper based, they still carry the characteristics of currency as well as the characteristics prices, they therefore come under the Ahadith obliging Zakat on the two currencies, gold and silver. Hence any dollars or pound sterling held for over a year above the rate of nisaab would be liable for Zakat.
The weight of Gold and silver rates below are the Shari'ah rates, this need to be used to calculate Zakat.
Zakat form a fundamental aspect of the Islamic economic system, unfortunately with the absence of Islam in the Muslims lands, wealth although in abundance remains with the few who live in poverty. Its important Muslims view Zakat from an Economic perspective and not only as an individual practice as Zakat practically can only be implemented with the establishment of Khilafah.