The Meaning of Zakat
Zakat is one of the Five Pillars of Islam and is an obligatory form of charity required of every Muslim whose wealth exceeds a minimum threshold known as the Nisab. The word "Zakat" comes from the Arabic root meaning "to purify" and "to grow." By paying Zakat, Muslims purify their wealth and help it grow through the blessings of Allah.
Zakat is not merely a tax or charitable donation; it is an act of worship (ibadah) and a fundamental pillar of the Islamic faith, ranked alongside prayer (salah), fasting (sawm), and pilgrimage (hajj).
"And establish prayer and give Zakat and bow with those who bow [in worship]." Quran 2:43
Who Must Pay Zakat?
Zakat is obligatory upon every Muslim who meets the following conditions:
- Muslim: Zakat is a religious obligation exclusive to Muslims.
- Adult: The individual must have reached the age of puberty (though some scholars hold that Zakat is due on a child's wealth, paid by the guardian).
- Sane: The individual must be of sound mind.
- Free: Not in bondage or servitude.
- Possesses Nisab: Their net zakatable wealth must equal or exceed the Nisab threshold.
- One lunar year: The wealth must have been in their possession for one complete lunar year (hawl).
When to Pay Zakat
Zakat becomes due once a Muslim's zakatable wealth has remained at or above the Nisab threshold for one complete lunar year (hawl). While Zakat can be paid at any time during the year, many Muslims choose to pay during Ramadan due to the multiplied rewards of good deeds during this blessed month.
It is important to calculate your Zakat on the same date each year. Many scholars recommend using a fixed date on the Islamic (Hijri) calendar.
The Nisab Threshold
The Nisab is the minimum amount of wealth a Muslim must possess before Zakat becomes obligatory. It is defined as:
- Gold Nisab: 87.48 grams (7.5 tola) of gold
- Silver Nisab: 612.36 grams (52.5 tola) of silver
The monetary value of the Nisab changes daily based on current gold and silver market prices. Most contemporary scholars recommend using the gold standard as it provides a more stable and higher threshold, which is the method used by ZakatEasy.
Types of Wealth Subject to Zakat
Zakat is due on the following categories of wealth:
- Cash and bank balances: All money in savings, checking, and cash on hand.
- Gold and silver: Including jewelry (according to the Hanafi school), coins, and bullion.
- Investments: Stocks, mutual funds, bonds, and other financial instruments at current market value.
- Business inventory: Goods and merchandise held for sale at market value.
- Agricultural produce: Crops and harvests (calculated differently).
- Livestock: Camels, cattle, sheep, and goats (with specific thresholds).
- Rental income: Surplus rental income that has been saved.
Wealth NOT Subject to Zakat
- Personal residence (primary home)
- Personal vehicles
- Furniture and household items
- Tools and equipment used for work
- Daily-wear clothing
How Much Zakat to Pay
The standard rate of Zakat is 2.5% (1/40th) of your net zakatable wealth. The calculation is straightforward:
- Add up all your zakatable assets.
- Subtract any immediate debts and liabilities.
- If the remaining amount equals or exceeds the Nisab, pay 2.5% of the total net amount.
Who Receives Zakat?
The Quran specifies eight categories of people eligible to receive Zakat:
"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." Quran 9:60
The eight categories are:
- Al-Fuqara (The Poor): Those who have very little or nothing.
- Al-Masakin (The Needy): Those whose income does not meet basic needs.
- Amil az-Zakat (Zakat Administrators): Those appointed to collect and distribute Zakat.
- Al-Mu'allafatu Qulubuhum (Those whose hearts are to be reconciled): New Muslims or potential converts.
- Ar-Riqab (Those in Bondage): Freeing slaves and captives.
- Al-Gharimin (The Debt-Ridden): Those overwhelmed by debts.
- Fi Sabilillah (In the Cause of Allah): Those striving in the path of Allah.
- Ibn as-Sabil (The Wayfarer): Travelers who are stranded or in need.
The Spiritual Significance of Zakat
Zakat serves multiple spiritual and social purposes:
- Purification: It purifies the soul from greed and attachment to material wealth.
- Gratitude: It is an expression of thankfulness to Allah for His blessings.
- Social justice: It redistributes wealth and reduces inequality in society.
- Community: It strengthens bonds within the Muslim ummah.
- Barakah: It brings blessings and increase in one's wealth and life.
"Take from their wealth a charity by which you purify them and cause them increase." Quran 9:103