Zakat: A Comprehensive Guide to Islamic Charity

Any preliminary study of Islam inevitably guides one towards what can be called the crux of the Islamic Faith: the 6 Articles of Faith and the 5 Pillars of Islam. Any study that does not encompass these two is incomplete; and needless to say, it is incumbent upon every Muslim to acknowledge and believe in them. The five pillars of Islam are 

1. Tauheed/Shahada (Belief in Oneness of God)
2. Salah (Prayer)
3. Sawm (Fasting)
4. Zakat (Giving Alms)
5. Hajj (Pilgrimage)

Zakat (to give alms) is the third pillar of Islam, following shortly after prayer. Zakat literally means ‘to increase’ and technically it means ‘that which purifies’. Neither a tax nor a charity, Zakat is a compulsory act of worship stipulated by Allah SWT that requires Muslims to pay a particular amount of wealth to certain underprivileged groups specified in the Quran. To put the basic concept in a nutshell, Zakat means to pay 2.5% amount for the possession of a specific amount of wealth (gold/silver, cash, agriculture produce, livestock earnings, profits from stocks and investment or trade goods), on which a complete lunar year has passed. While it is a test of a believer from a financial perspective, it serves to purify his wealth not only physically but spiritually as well. Zakat is a test of a believer’s desire to part with his wealth. In the Quran, Allah SWT says (interpretation of the meaning): 

‘Take Sadaqah (alms) from their wealth in order to purify them and sanctify them with it, and invoke Allah for them. Verily, your invocations are a source of security for them.’ [al-Taubah 9:103)

Importance of Zakat

The mention of Zakat often comes right after Salah in the Quran in several places, marking its extreme significance in a believer’s life. 

‘And establish prayer and pay the poor alms. And whatever good you do for yourself, surely you will get the reward from Allah. Surely Allah is All-Seeing of what you do.’ (Al-Baqarah: 110)

In a world where contraries in financial positions are in abundance, the obligation of Zakat is truly an example of the Boundless Wisdom of the Creator. Some people have been made rich and some poor, and both are tested, the former in terms of gratitude and the latter for patience. Islam encourages the Muslim Ummah to become a brotherhood that transcends race, culture, riches and status while encouraging compassion, love, mercy and kindness. Zakat is an obligatory act that Allah has enjoined upon the Muslims which requires the wealthy to part from their riches and give to the poor. This balanced distribution of wealth not only purifies the wealth of the giver but goes a long way in eradicating social evils like thievery, beggary, exploitation, and crime. 

Narrated from a hadith of the Prophet ﷺ

‘If one gives in charity what equals (the size of) one date-fruit from the honestly-earned money and Allah accepts only the honestly earned money –Allah takes it in His right (hand) and then enlarges its reward for that person (who has given it), as anyone of you brings up his baby horse, so much so that it becomes as big as a mountain.’ (Sahih Bukhari, Vol 2, Book 24, No. 491)

What is Nisab? 

Nisab is the name given to the minimum amount of an Individual’s wealth at which he is eligible to pay Zakat. The different sources and assets of wealth have different calculations for the total nisab. Generally speaking, the value of Nisab is 625g (52.5 tola) silver or 87.5g gold (7.5 tola). Whichever is the lesser amount in contemporary market, forms the minimum threshold from which a person can conclude whether Zakat is compulsory on him or not. A person whose qualifying wealth equals or exceeds the Nisab amount is called Sahib-e-Nisab.

Who is Eligible for Zakat?

The conditions for one to become eligible for the obligation of Zakat are:

1. Being Muslim and sane
2. Above the age of puberty
3. Possesses the amount of Nisab on which a complete Lunar year has passed.

If a person qualifies for all these conditions, he is required to pay 2.5% Zakat on all his savings and applicable assets. So, once he has held the qualifying wealth for a full lunar year, zakat becomes obligatory on him. The Zakat year starts on the date his wealth first equaled or exceeded the nisab and should be calculated on that date for each subsequent year.

Zakat is due on:
• Gold & silver (ornaments or jewellery)
• Cash held at home or in bank accounts
• Pensions
• Property owned for investment purposes
• Stocks & shares owned directly
or through investment funds
• Money lent to others
• Business stock in trade & merchandise
• Agricultural produce

Who is Eligible to Receive Zakat?

There are eight categories of people who can receive Zakat. These groups are specified by Allah in the Noble Qur’an (9:60) - they include the poor and needy.

1. Fakir – poor and needy
2. Miskin – hungry and have nothing to eat
3. Amil – zakat collector who distributes it on behalf of others
4. Riqab – enslaved people or captives
5. Gharmin – people in debt
6. Fisabilillah – individuals who work towards the cause of Allah
7. Ibnus Sabil – stranded travelers

Calculation of Zakat

To calculate it, one needs to know the amount of wealth which qualifies for Zakat. For that one should add all the wealth in their possession and the sources of income such as gold and silver, cash, stocks, shares, property, etc. 

The next step would be to calculate the needs and living expenses of the year and subtract them from the total income. If the resultant amount is equal or above the Nisab or the threshold on which a lunar year has passed since in his possession, Zakat would be applicable on it. Calculate the 2.5% of this amount and that is the amount for the Zakat. 

Benefits of Zakat

The giving of Zakat is an act of worship that is far reaching and has a longstanding impact. Zakat is not just a source of purification and cleansing of the wealth of the giver, it purifies the soul from stinginess and miserliness. It stops the soul from hardening with selfishness and helps to mitigate hunger and destitution from society. Zakat, therefore, is a strong element of a society’s economic infrastructure that ensures the lawful circulation of wealth from the rich to the poor and ensuring the welfare of the needy. The acknowledgement that our wealth is in fact not our own, but a blessing to be shared strengthens the bonds of brotherhood of the Ummah and decreases negativity among people.

Zakat should not be considered a ‘burden’ but rather a command from Allah SWT that is for the benefit of the giver, the receiver and society in general.  Working towards a stabler economic system, businesses and workplaces should make an effort to encourage the betterment of society through the mandatory giving of Zakat and other voluntary charities. At DEENIN, we are strongly committed to giving back to the community in all the ways Islam encourages including Zakat and Sadaqah (voluntary charity).

Note: For more details regarding Zakat rulings, please consult a religious scholar.

Bibliography 

Al-Quran verses about zakat coupled with prayer commands - dompet dhuafa. Dompet Dhuafa -. (2022, December 16). https://www.dompetdhuafa.org/en/al-quran-verses-about-zakat-coupled-with-prayer-commands/ 

Hands, M. (2018, June 5). Zakat made easy. Muslim Hands UK. https://muslimhands.org.uk/latest/2018/06/zakat-made-easy 

Usama, M. (2023, September 19). Hadiths of Zakat in Islam: Importance of zakat in Islam. Transparent Hands. https://www.transparenthands.org/hadith-explaining-the-importance-of-zakat-in-islam/#:~:text=%E2%80%9D%20(Sahih%20Bukhari)-,%E2%80%9COne%20who%20pays%20Zakat%2C%20Allah%20will%20make%20their%20wealth%20increase,entire%20year%E2%80%9D%20(Sahih%20Bukhari) 

What are the pillars of islam? - islam question & answer. RSS. (n.d.). https://islamqa.info/en/answers/13569/what-are-the-pillars-of-islam#the-third-pillar-of-islam-zakah-poor-due-compulsory-charity 

What is zakat? – meaning, importance, who is eligible, and facts. Zamzam Blogs. (2022, June 7). https://zamzam.com/blog/what-is-zakat/

TL;DR:

This guide delves into Zakat, Islam's third pillar. Learn its significance, eligibility, and calculation. Discover how Zakat fosters economic welfare and serves as an act of worship, strengthening the bonds of society.