01. What is Zakat?

Zakat is one of the important pillars of Islam, which is sometimes referred to as Al-Sadaqa Al-Wajiba (obligatory alms).

Zakat is a pillar of Islam, it is a compulsory act of worship for all Muslims that can afford to give, Zakat can also be referred to as Al-Sadaqa Al-Wajiba (obligatory alms).

02. What are the conditions that make Zakat obligatory?
  • (Zakat is not applicable on non-Muslims).
  • Mature (i.e., above the age of puberty)
  • Mentally sound (Zakat is not compulsory on those who are insane).
  • Free (i.e., not a slave or in prison).
  • Complete ownership of the wealth (wealth can only be subject to Zakat if it is in complete ownership of the individual. For example, if someone buried some possessions somewhere and forgot where he had buried them, and then remembered years later, the Zakat will not have to be paid for the interim period when the possessions were missing.)
  • One’s wealth should exceed that which is required to fulfil the basic necessities of life.
  • One should be free of debt. For example, if someone has £1000 saving, but he also has a debt of £1000, he is not liable to pay the Zakat, so long as his savings do not exceed his debt.
  • Zakat is payable on that wealth or property which grows either materially, such as trade goods or free-grazing livestock, or in value, such as gold or silver.
  • Total value of wealth and property should be above threshold determined by Shariah.
  • Person must have been above Zakat threshold for a whole lunar year. One does not pay Zakat as soon as one reaches threshold; rather a whole lunar year has to pass before one pays the Zakat on the condition that one still above the threshold one year on.
03. Who is supposed to pay Zakat?

The person who possesses the required threshold which makes Zakat obligatory must give a specific amount of his wealth to those who are eligible to receive Zakat.

04. Who is eligible to receive Zakat?
There are seven categories of people who are eligible to receive Zakat:
  • The poor
  • The Destitute
  • Administrators of Zakat
  • To soften the hearts of people
  • Those who have been enslaved.
  • Those in debt
  • Those in the path of Allah
  • Travelers (including refugees)
05. What is Nisab?

Those assets, wealth, and property upon which it is compulsory to pay Zakat must pass a threshold in order for Zakat to become obligatory on a person. This threshold is known as ‘Nisab’.

06. What is Nisab of gold?
Zakat becomes obligatory if someone is in possession of 87.48 grams of gold. `Ali b. Abi Talib narrates that the Holy Prophet [SAW] said,
It is not compulsory upon you, i.e., on gold, until you are in possession of 20 dinars. When you have 20 dinars and a whole year passes, then half a dinar becomes obligatory on it, and whatever exceeds it, then it is in accordance to the excess (i.e., 1/40) [Abu Dawud, #1573].
It is narrated that `Abd Allah b. `Umar and `A’isha both narrate that the Holy Prophet (saw) used to take Zakat of half a dinar from 20 dinars, and one dinar from every 40 dinars (i.e., 1/40) [Ibn Majah, #1791]. It should be noted that in those days, dinars were gold coins and 20 dinars weighed 87.48 grams.
07. What is the Nisab of Silver?
Zakat becomes obligatory if someone is minimally in possession of 612.36 grams of silver. One-fortieth (1/40) of the total amount should be paid as Zakat. Abu Sa`id al-Khudri states that Holy Prophet [SAW] said,
There is no Zakat upon any silver that is less than five awqiya (612.36 grams) [Bukhari, #1390].
It must be noted that the Zakat due is equivalent to 2.5% either by weight or value.
08. Is Zakat payable on valuable stones and jewels?

If these valuable stones and jewels [i.e., other than gold and silver] are for the purpose of trading, then they are liable for Zakat. If however, they are used for one’s personal use, Zakat does not need to be paid on it, irrespective of its value.

09. Does one have to make a formal intention (niyya) when paying Zakat?

Yes, in order to fulfil one’s obligation, one must intend (i.e., specify) that they are paying Zakat. As an act of worship pertaining to financial dealings, an intention is required in order for it to be performed correctly. The intention (niyya) for fulfilling one’s obligation is to intend that one is paying Zakat, whether that be at time of distributing one’s wealth to those who are eligible (i.e., at the time of payment), or when setting Zakat money aside.

10. During the year, can Zakat be paid in advance through small instalments?

Yes, someone who is legally responsible to pay Zakat can pay through monthly instalments throughout the year, with the intention of paying Zakat. When lunar year comes to an end, Zakat should be calculated, and whatever remains outstanding should be paid off. In similar fashion, outstanding amount can also be paid through instalment.

11. Can the obligation of two years be paid at the same time?

Yes, it can be done, however, it is best to pay the Zakat on time. If the Zakat of the previous year is outstanding, then it can be paid together with the Zakat of the current year.

12. Can Zakat be paid in advance (before its due date)?
Zakat can be paid before its due-date and this is a correct method of paying it.
`Ali b. Abi Talib narrates that `Abbas asked the Holy Prophet [SAW], ‘Can the Zakat be paid before its time?’ The Holy Prophet [SAW] permitted him to do this [Abu Dawud #1624].
13. On the passing of a whole year, if one’s assets or wealth become lost or misappropriated and one has not yet paid Zakat, what would be the ruling in this case?

The obligation of paying the Zakat of that year will be dropped. That is, one will be forgiven for the amount which is lost or misappropriated.

28. I normally give a lot of money in charity throughout the year, do I still have to pay Zakat?

Whether the shares are bought on a profit/loss basis or for capital gain, in both cases the Zakat will be calculated using the current market value of the shares. The purchase value of the shares will not be taken into consideration, regardless whether at the time of calculating the Zakat the value of the shares increased or decreased in value from its purchase price.

14. On what kind of wealth or asset should the Zakat be paid?

It is obligatory to pay the Zakat upon four types of assets:

  • Gold, silver, and cash.

  • Livestock, such as camels, cows, and goats, etc.

  • All kinds of trade goods and merchandise (including property bought with the intention of re-sale).

  • Those products that are produced from the land such as fruit, vegetables, and minerals, etc.

15. Should the Zakat and sadaqa be paid only in Ramadan?

It is not a condition of Zakat and sadaqa that it is paid only in the month of Ramadan; however, it is the most recommended time to pay it. It is obligatory (wajib) to pay the Zakat as soon as the lunar year has passed, and its payment should not be deferred till the month of Ramadan. However, if Ramadan is drawing near, such as the Zakat is due in Sha`ban, then there is no harm in waiting till Ramadan to pay it. If however the year comes to an end in Muharram, one should not wait till Ramadan to pay it; rather it should be paid at the first instance. If someone wants to pay the Zakat in Ramadan, then the way of doing this would be to pay the Zakat in advance before the year is complete (i.e., the Ramadan prior to Muharram). It is not permitted to delay the payment of one’s Zakat after its due date.

16. Is Zakat compulsory (Fard) upon a woman’s dowry (Mahr)?

Being in complete ownership of one’s possessions is a precondition of Zakat. Before a woman decides whether the payment of Zakat is obligatory on her dowry, she should first ensure whether she is in full ownership of it. If the dowry is not in her full ownership, then she is not obligated to pay Zakat on it.

17. Whose is responsible to pay the Zakat on the wife’s jewellery?

Between the husband and wife, whoever is in real ownership of the jewellery will be liable to pay the Zakat. If the husband has given the jewellery to his wife simply for safekeeping, in that he can sell or dispose of them the way he wants, then in that case the Zakat will not be due upon the wife, as it will be the husband’s responsibility. However, if the wife owns the jewellery and the discretion is hers to either wear or sell them, then she will be responsible to pay the Zakat.

18. Can a husband and wife give their Zakat to each other?

No, a husband and wife cannot give their Zakat to each other.

19. Is Zakat obligatory upon a person in debt?

A person who is in debt should put aside the money he or she owes (to pay back the debtor). Whatever money or asset is leftover, if it reaches the nisab, the Zakat becomes obligatory; but if it does not reach the nisab, then the Zakat does not need to be paid.

20. Can a person’s debt be cleared by Zakat money?

Yes, if one in debt is poor and is not obligated to pay Zakat, then no doubt Zakat money can be used to clear his debt. However, if person in debt is wealthy and qualifies to pay Zakat, then it is not permitted for him to take Zakat money to pay off his debt. In the former case, where the person is eligible to receive Zakat, debtor do not need to mention that he is using Zakat money to cancel his debt; he simply needs to let him know that he is no longer liable to pay back the loan, so that his dignity and honour is not hurt.

21. If someone does not have any gold or silver, but has plenty of cash and other assets leftover after fulfilling his basic needs, is the Zakat obligatory? If it is, then what is the method of paying it?

After fulfilling one’s basic needs, if there is cash and other assets leftover, the Zakat will still be obligated on the person, even if the person does not own gold or silver. The reason for this is that gold and silver were used as currency in the time of the Holy Prophet [SAW]. Today, paper currency has replaced gold and silver, so paying Zakat upon all currency alongside silver and gold is obligatory.

The method of calculating Zakat is that any surplus cash that remains after fulfilling one’s basic needs that reaches the level of nisab (i.e., 612.36 grams of silver), has been held for a year, and there is no debt to pay off, then Zakat must be paid by giving 2.5% of that wealth

22. Which is used to determine the Nisab: Gold or Silver?

According to Imam Abu Hanifa,

one that is more beneficial to poor should be used as the nisab [Kasani 2:21]. Imam Marghinani, in al-Hidaya [1:105], states regarding this statement of Imam Abu Hanifa:

As a measure of caution one from either of gold or silver should be used that will better provide for the needs of the poor and destitute.

It is also the dominant opinion that silver can be added to gold, or vice versa, in order to reach the nisab amount. Trade goods and merchandise can also be added for this purpose. This is the view of the majority and it is supported by the following hadith related by Bukayr b. `Abd Allah Ashaj:

It was the practice of the Companions of the Holy Prophet [SAW] that gold was merged with silver, and silver with gold, in order to pay the Zakat [Kasani 2:19].

23. What is the ruling on cash which is above the Nisab amount?

Zakat is obligatory (fard) on any currency that reaches the amount determined as the nisab. The jurists have given the following conditions for the obligation of Zakat on paper currency:

  1. Currency should have reached amount of nisab.

  2. A whole lunar year must have passed.

  3. There is no debt to pay off.

  4. The cash that one has in his possession is excess of his basic needs such as his day-to-day expenditures, e.g., clothing, food and accommodation.

24. Is Zakat to be paid upon houses, flats, or lands which are used as one’s personal accommodation?

Zakat is not due on houses, flats, or lands which are used as one’s personal accommodation. However, if one rents a house, flat, or shop for the purpose of making profit, then the Zakat is due on the annual net earnings. If the annual profit from all the means of income reaches the nisab amount, then Zakat must be paid on it.

Zakat must also be paid on the value of one’s house, flat, or land which was bought originally with the purpose of re-sale (i.e., for business or trade purposes). The Zakat should be paid on the current market value, and not the purchase price. This is a point to be considered by those investing in land or property.

The tenant must pay the Zakat on the deposits which he or she pays as guarantee for renting a property. Likewise, the Zakat of security deposits that are paid by traders and agencies to firms or organisations that is returnable must be paid by the depositor.

25. Is the Zakat compulsory on trade goods and equipment?

Zakat is compulsory on trade goods and merchandises (i.e., items which are bought with the intention of re-sale), but not on tools or equipment used in trade or business. Equipment and tools which are used for one’s business and trade are a means of one’s income, and the means of income have been declared as exempt from Zakat by the Shariah. However, the profit gained by their use, if it reaches the nisab and a year has passed, it becomes compulsory to pay the Zakat on this.

26. Which value should be used in order to calculate Zakat upon shares?

Whether the shares are bought on a profit/loss basis or for capital gain, in both cases the Zakat will be calculated using the current market value of the shares. The purchase value of the shares will not be taken into consideration, regardless whether at the time of calculating the Zakat the value of the shares increased or decreased in value from its purchase price.

27. How will the Zakat be paid in a business partnership?

In a business partnership, each partner will pay the Zakat in accordance with his share of the business. For example, if two people are equal partners in a business, then at the end of the year they will pay the Zakat on half of the value of the business. It is narrated by Anas that Abu Bakr al-Siddiq writes with regards to this ruling,

Any assets that are shared, they should be worked out proportionally [Bukhari #1383].

28. I normally give a lot of money in charity throughout the year, do I still have to pay Zakat?

You must pay zakat with the intention of paying it. It is important that you make an intention to give a donation as a zakat payment.

29. I paid Zakat on 4000 last Ramadan. This year I have a total of 10,000 of wealth liable to Zakat. What value do I take the 2.5 % from as I paid for the 4000 last year?

Zakat is to be paid on the total savings regardless of what was paid on it in the past. Therefore, you would pay 2.5% of 10,000, 250.

30. What is Hawl?

The length of time that an individual must possess the wealth that they will pay zakat on.

31. If one has not yet possessed their wealth for one lunar year, can they still pay Zakat.

Yes, they can pay Zakat, but they would need to factor in any expenditures or liabilities when calculating how much they would need to pay.

32. A group of us have set up a fund to pay for any emergency needs that we may have. Is this liable for Zakat?

It sounds as if the mentioned fund would count as a Waqf. The general rule is that a Waqt is not liable for Zakat. As long as, there is no personal ownership, or nobody is personally benefitting from this fund, and also depending on the nature of the fund, Zakat may/may not be liable. However, you would need to check this with a scholar.

33. What is the definition of the poor and needy?

The Fuqara & the Masakin. Fuqara are those that do not own wealth to the amount of Nisab. Masakin are those who do not have food for the day (15-20% of the world).

34. How do you assess whether someone is poor and needy?

We have delivery offices in the countries in which we work, and they carry out assessment – using selection criteria – because we want to ensure that we are reaching the most vulnerable people.

35. Can I give Zakat to my family members?

It can only be given to people from one of these seven categories. Most scholars agree that you can give zakat to a family member if they’re from one of the categories. E.g. they are poor and unable to provide for themselves, and is not already dependent on you. But if he/she is one of your dependents, you are obliged to spend on them anyway and cannot give them anything from your Zakat.

36. Can I use my Zakat to sponsor an orphan?

If the orphan is eligible to receive zakat (E.g they or their family own less than the nisba or do not have food for the day) then they will be eligible to receive it. Orphans would come under category 1 and 2 recipients of Zakat.

37. What kind of projects do Zakat funds support?

We spend Zakat funds on projects where we can guarantee that the recipients are poor and needy and directly receive the assistance. So, for example, we can provide food packs to destitute people so they can feed themselves and their families.  But we would not use the funds on a well that would benefit the whole community. This is because we could not guarantee that only poor and needy people will get water from that well. However, we will use other funds such as Sadaqah to pay for projects that benefit whole communities.

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