It is narrated in Holy Quran, “(O Prophet), take sadaqa (zakat) out of their property. It will clean their wealth and purify their soul (Quran, ix. 103). The word Zakat is mentioned thirty-two times in holy Quran. It is third pillar of Islam followed by Belief in Allah (1st pillar) and Prayer (2nd pillar). It has multiple benefits. For example, it purifies soul, cleans the wealth, minimizes class differences (in monetary context), promotes brotherhood, a kind of help to needy people, and many more. In short, benefits associated with Zakat are many, thereby, every Muslim should know about Zakat in all perspectives. Here is a complete guide to inform readers about Zakat, its importance, when to pay, who are payers, who are receivers, and how to calculate.
Before moving on, it is imperative to first understand basics about Zakat. By definition, Zakat is a fixed amount that Sahib-e-Nisab Muslims are obliged to pay once time in a year on their assets. It was made obligatory in 2. A.H. It is paid by those Muslims who have 7-1/2 tolas for gold and 52-1/2 tolas for silver and other assets equivalent to that. It should be clear that Zakat is not a charity which one can pay on his will, but it is a responsibility that every Sahib-e-Nisab is bound to pay. So, one must be very conscious while paying to the right person as described in Islam. There are following eight kinds where your Zakat can go.
- The poor, meaning low-income or indigent
- The needy, meaning someone who is in difficulty
- Zakat administrators
- Those whose hearts are to be reconciled, meaning new Muslims and friends of the Muslim community
- Those in bondage (slaves and captives)
- The debt-ridden
- In the cause of Allah
- The wayfarer, meaning those who are stranded or traveling with few resources
What assets must be added while calculating ZAKAT?
This is an important question. A Zakat payer must know what assets should be or included while calculating for Zakat. Following are assets that you must include
- Cash, whether it’s at home or in the bank
- Foreign currency that you own
- Savings set aside for a specific purpose, such as Hajj, marriage, buying a car, etc.
- The value of all the gold and silver that you own in your local currency
- The market price value of any shares that you might own if you wish to sell them
- The dividend received from shares if you are not selling them in the near future
- Money that is owed to you and will be repaid in the near future
- Business owners should also include the balance sheet value of the stocks that they own
Note: your house, your clothes, your car, your appliances, and other items of daily use are not included in the calculations for Zakat.
How to calculate ZAKAT?
So, when one has calculated the Nisab and found out that he/she is eligible to pay Zakat for. There are a number of Zakat calculators available online, most of them will not show you how they’ve actually calculated Zakat for a particular year. You can use this simple method to calculate the Zakat for your clarification and satisfaction; calculate assets, calculate liabilities, and then use this formula.
ZAKAT Assets – ZAKAT Liabilities = Total Zakat worth
Assuming that you have PKR 600,000 in cash, PKR 200,000 in gold and PKR 200,000 in foreign currency. Your total assets will be PKR 1000,000.
When you have calculated total assets, now you can minus the total worth of liabilities. Let suppose you have to pay PKR 20,000 for pending utility bills and a rent of PKR 15,000. So total liabilities will be PKR 35000. As per above formula;
PKR 100,000 – PKR 35,000 = PKR 965,000
You can multiply, PKR 965,000 with 0.025 (2.5%) to get the amount to be paid for Zakat. In this case the amount will be PKR 24,125.
Hoping that this write will address a lot of queries in your mind about Zakat, how to calculate, whom to pay, and so on. Try to give your Zakat on time to those who are in need, so they can be able to meet their both ends. May Allah (SWT) accept everyone’s Zakat.