“Zakat is only for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to truth); for those in bondage and in debt; in the cause of Allah and for the way-farer; it is ordained by Allah…” [Qur’an, 9: 60]
Introduction:
Islam comprises of five articles of faith: Belief in One Allah (the Creator), the Angels, the revealed Scriptures (the Qur’an being the Final Revealed Book), the Prophets (the Prophet Muhammad being the Last Prophet), and the Hereafter. The structure of Islam rests on five pillars, as described by the Prophet SAW: Testifying that there is no god but Allah and that Muhammad is the Messenger of Allah, establishing the prayer, paying the Zakat, performing the Hajj pilgrimage to the House, and fasting in Ramadan.” [Bukhari, Muslim]
These five articles make up the bedrock of Islam. One who believes in them becomes a member of the Muslim Community. But one does not become a bona fide Muslim in earnestness (or a Momin) by mere vocal confession. To become a Momin, one must fully carry out the instructions communicated by the Prophet SAW as ordained to him by Allah SWT. Thus, after the admission to Islam through the articles of faith, obedience to Allah SWT becomes a Muslim’s duty. He is a full-fledged Muslim only when his practice is consistent with his confession of the articles of faith. The first and foremost thing in this respect is the Ibadah – the primary duty that must be observed by each and every capable Muslim. The Islamic concept of Ibadah or worship is comprehensive. If we obey the law of Allah SWT in our economic affairs and abide by it in our dealings with others, all these activities are also Ibadah. If we help the poor and weak only to seek the pleasure of Allah, or if we earn our living through lawful means to feed our dependents, this is all Ibadah. In short, all activities of a Muslim are Ibadah if they are in obedience to Allah SWT per His commands. Thus, molding the entire life into the patterns of Islam for the pleasure of Allah SWT is the true meaning of Ibadah.
To help achieve this mission, a set of formal Ibadah has been established and mandated for Muslims to practice as training programs and internalize Islam’s principles for their observance in every aspect of real life. Therefore, these formal programs of Ibadah are the pillars on which the structure of Islam rests. They include: Salat (Prayer) five times daily, fasting during the month of Ramadan, Zakah (Poor Due), and Hajj (pilgrimage to Mecca).
Institution of Zakat:
Zakat, a term ingrained in the fabric of Islam, holds immense significance as a mandated Islamic practice of charitable giving. The essence of Zakat is beautifully woven into the teachings of the Quran and further emphasized in the Hadith (the Prophet’s sayings), shaping it as a fundamental aspect of Islam in practice. It is the third obligation of a Muslim toward Allah SWT and society.
Every Muslim whose finances are above a certain specified minimum (combined wealth equivalent to 3 ounces of gold) during a given year must pay 2.5% of his net worth to deserving poor. This minimum is the value of 3 ounces of gold. That is, if the cash value of the combined net worth is equivalent to the value of 3 ounces of gold or more over which one full year has passed, the owner must pay 2.5% Zakat that year to the poor. The net worth may consist of gold, silver, merchandise, cattle, and other valuables. Zakat means purification, cleanliness, or growth. All these meanings are applicable to Zakat. It purifies the wealth and one’s own self. Allah SWT promises that Zakat does not reduce one’s wealth, it increases it instead. It is also for the common good when the more fortunate share wealth with the less fortunate in society. In that sense, Zakat is the economic side of worship and a cornerstone of social justice in Islam. While it is a virtue, at the same time it is a strong stimulant for economic activity and a restricting measure against idle accumulation of wealth. Thus, charity which is as old as man has been made an institution and a public law in Islam.
The Muslim society has much to gain from the institution of Zakat. A well-to-do Muslim must help financially his lowly placed, poor fellows. His wealth does not belong to him solely for his comfort and luxury. Nation’s widows, orphans, poor, disabled, and those who have the ability but lack the means to get on their feet, and those who have the talent but not the money to acquire knowledge and become contributing members of society, also have a share in a Muslim’s wealth. Islam is a sworn enemy of greed and selfishness. It enjoins its capability to share their wealth to help others to become self-sufficient and contributing members of society. Thus, the institution of Zakat combines the virtues of both the capitalist and the socialist economic systems and avoids their vices.
Obligation of Zakat:
Salat and Zakat are two obligatory duties that the followers of all previous Prophets were required to perform. They go hand in hand in Islam: “O Believers! Your real friends and supporters are only Allah, His Messengers, and the believers – such people who establish Salat and pay Zakat and bow down before Allah.” [Q, 5: 55] This is just one of the sixty-three verses in the Qur’an where Zakat has been mentioned in close connection with Salat. A basic principle is laid down in these verses that only those who establish Salat and pay Zakat are the believers. This establishes the importance of Zakat in Islam. After the death of the Prophet SAW, some of the tribes, who believed in Allah SWT and observed regular Salat, refused to pay Zakat. They were new Muslims who had entered Islam just before the passing of the Prophet SAW. The Caliph Abu Bakr Siddique decided to use force against those tribes. Umar bin Khattab advised the Caliph to show tolerance toward them. The Caliph replied, “By Allah I would definitely wage war against them who separate Salat from Zakat.”
This incident signifies that refusal to pay Zakat constitutes a crime against the State in Islam. The obligation of Zakat is clearly spelled out in the Qur’an: “(O Prophet!) Take alms out of their riches and thereby cleanse them and bring about their growth (in righteousness)…” [Q, 9: 103] One must not worry about a reduction in wealth because of Zakat. The Prophet SAW swore that Zakat never reduces one’s wealth: “The wealth of a person does not decrease by paying Zakat” [Bukhari] Allah SWT compensates for it in some unknown way: “One who pays Zakat, Allah will make their wealth increase” [Bukhari] Satan scares people of poverty, but Allah SWT assures: “…As for the Zakat that you give… that is multiplied manifold.” [Q, 30: 39] Allah SWT has put on notice multiple times in the Qur’an that Zakat is one of the conditions that bring a person into the fold of Islam: “But if they repent and establish Prayer and give Zakat they are your brothers in faith... [Q, 9: 11]
The Prophet SAW used to collect Zakat from Muslims and distribute it to the needy. If someone refused to pay it, the Prophet SAW would say: “One who gives seeking its reward, he will be rewarded. But one who refuses to pay it, we will take it by force and we will take with it half of his properties. As a command of Allah’s commands, none of it may be given to Muhammad and his family.” [Ahmed, Nasai, Dawud, Bayhaqi]
Social Aspects of Zakat:
The good of individuals depends mostly on the good of the society. The wealth which they spend for supporting the poor ultimately returns to them, passing through many stages, with profit. Consequently, the whole economy grows, benefiting the rich and the poor. The system of capitalism has led to the concentration of wealth in fewer and fewer hands and to the growing unrest of the masses. Communism, which came as a reaction against capitalism with its high claim of liberating the people, is in a way as much of a bondage as capitalism. Though it sympathizes with labor, it denies labor its fruits. The rigid system of controlling everybody’s thoughts and actions and rationing even the basic necessities of life to all alike, to the lazy and hardworking, the naive and the intelligent, is clearly against nature’s recognized laws. It provides no incentive to individuals for personal growth and fulfillment. Islam, on the other hand, has solved the problem of wealth by the prohibition of interest and the introduction of equitable laws of inheritance. At the same time, it has developed through the institution of Zaka, higher sentiments, and character, on which alone can be laid the foundation of a lasting civilization. The rigid laws of communism give the body sufficient to live on but diminish the higher sentiments of sympathy and love. Islam accomplishes both objectives of nourishing the body and the soul through its institution of Zakat. By paying Zakat, the rich in an Islamic community improves the financial condition of the poor.
Zakat, therefore, acts not only as a leveling influence, doing away with the inequities of capitalism, but also as a means of developing the higher sentiments and personality of a person. As the wealth is redistributed, the economy grows and goodwill between social classes in the society flourishes as well, which is necessary for the physical and spiritual uplift of a nation as a whole.
Rates of Zakat:
The following categories of production, profit, investment, and savings are subject to Zakat:
1. The production of land. The rate is 10% of the produce of the land which is watered by river or rain, and 5% if irrigated and developed.
2. Salary, professional fees, and economic profit from business after deduction of any associated costs, taxes, and household expenses.
3. Investment, machinery, equipment, merchandise, inventories, and the like.
4. Real estate as income property.
5. Cash, gold, silver, stock, bonds, savings and checking accounts, and all financial instruments.
Zakat is payable on all above items and the like if kept in inventory for a full year and if the combined fair market value net of expenses and liabilities (debts) is above a certain value defined as Nisab. For assets other than agricultural production and cattle, the Nisab is 3 ounces of gold or the equivalent cash value of the items combined. For these articles, the rate of Zakat is 2.5% of the total amount if it is equal to or more than Nisab. Real estate for rental income is like other businesses and is Zakatable at 2.5% on its market value minus any loans or liabilities against the property.
Zakat must be differentiated from government taxes. It is one of the pillars of Islam and is a right of the poor without any obligation. It must be paid without any benefits in return. On the contrary, taxes are paid for the services citizens receive in return, such as roads, schools, parks, hospitals, and defense. Regardless of the system of government, Zakat will still be paid besides state taxes.
Recipients of Zakat:
It is important to note that Zakat is the right of recipients in the payer’s wealth. Thus, the recipient is not under any obligation to the Zakat payer. Allah SWT makes it clear: “And in whose wealth there is a recognized right of the needy and the destitute.” [Q, 70: 24] It is simply an obligation.
The Zakat collection may be divided for payment to any one or all of the eight categories of recipients Allah SWT has specified in the Qur’an: “Zakat is only for the poor and the needy, and those employed to administer the (funds); those whose hearts have been (recently) reconciled (to truth); and to free those in bondage, and to help those burdened with debt, and for expenditure in the way of Allah and for the wayfarer. This is an obligation from Allah…” [Q, 9: 60] The hypocrites had accused the Prophet SAW that he was not just in the distribution of charity and he would give anything to whoever he wanted. By specifying the recipients of Zakat, Allah SWT has dispelled this accusation and has made it clear that it is He alone Who makes the decisions and the Prophet SAW simply carries them out. It is reported that a man came to the Prophet SAW asking him for something. He replied: “Allah has not left the decision of distribution of alms (Zakat) to even His Prophet or anybody else. Instead, He Himself has specified the eight heads of its expenditure. If you fall within these eight categories, then I can give you.” [Dawud, Dar Qatni]
The eight heads of expenditure specified here may be lumped together in three categories. The first includes the poor, the needy, those whose hearts are to be reconciled, captives, debtors and the way-farers. In the second group are the officials appointed for the collection and disbursement of the funds, who are to be paid for their services from the funds collected. The third is the cause of Allah SWT which may be supported with Zakat collections.
It should be noticed that six kinds of people fall under the first head. The first are the fuqara or disabled people, who are unable to earn their living. The second are masakeen, who are fit to earn but are unable to do so because of a lack of resources. The unemployed fall in this category. The other groups falling in this class are also persons who stand in need of help for some sufficient reasons. In the category of those whose hearts are to be reconciled would fall individuals who just entered Islam and are deprived of the means of their subsistence because of their conversion. In some cases, they lose family support Then there are the captives of those unable to regain their liberty by paying its cost by their own exertion the debtors who are unable to pay their debts and, lastly, there are the travelers who are stranded far from their homes and unable to return.
Besides these, there are two other heads of expenditure of Zakat. The first is the maintenance of an establishment and office for the collection of Zakat. This shows that Zakat must be a state institution through which the collection and disbursement should be administered.
The only item of expenditure left out is what is called Fi-Sabil-Allah or for the cause of Allah. A broader meaning of this phrase is to carry the message of the Qur’an to distant corners of the world. Hence, while the institution of Zakat chiefly aims at improving the fate of the poor and stopping the wrongs coming out of the man-designed systems, it also has in its view the defense and advancement of the Muslim Community and the propagation of Islam. After all, the establishment of a just and balanced society based on the Qura’nic Laws is the ultimate purpose of Islam for the betterment of human conditions, both economic and principled.
Essential Points:
The literary meaning of Fi-Sabil-Allah is very broad. Any act which is to seek the pleasure of Allah SWT can be characterized as Fi-Sabi-Allah or in the path of Allah SWT. However, this word, in the context of Zakat refers to only those who struggle in the path of Allah SWT but do not have the resources to equip themselves necessary for this purpose. Also included in this category are those on whom Hajj had become obligatory but now they do not have the resources left to perform the obligatory Hajj. This suggests that if a person wishes to perform a good deed or work in the path of Allah SWT, but does not have enough means (adding up to Nisab), he is Zakat eligible under the category of Fi-Sabil-Allah. Of course, if he is above Nisab, he cannot receive it.
It would be wrong and against the tradition and interpretation of the Prophet SAWS to include each and every good deed in the head of Fi-Sabil-Allah for the payment of Zakat, such as: the construction and maintenance of Masjid, school, hospital, rest house for travelers, wells, bridges, or roadways. It should be understood that if the meaning of the word Fi-Sabil-Allah were so broad in the context of Zakat that all good deeds could be classified under this term, then the specification of eight groups by Allah SWT in the Qur’an would be meaningless. Furthermore, if we consider all good acts as Fi-Sabil-Allah then the statement of the Prophet SAW: “Allah has not left the decision of distribution of Zakat to even His Prophet … Instead, He Himself has specified the eight heads….” would be rendered incorrect.
It is important to note that there is a consensus among the jurists that it is essential for the purpose of the payment of Zakat in each of the eight categories that the recipient acquires the ownership of Zakat (money or in whatever form). Without transferring ownership rights to individual recipients, even if the funds are spent for their benefits, Zakat is not considered paid. Because of this, the Imams of the four major schools of thought (Shafai, Malik, Abu Hanifa, Ahmad-bin Humbal) as well as the majority of jurists and Muslim scholars agree that it is not permissible to spend the Zakat funds on the construction or maintenance of Masajid, schools, hospitals, or orphanages. It is true that the poor and the needy who deserve Zakat benefit from such establishments, just as those who are not Zakat eligible. However because they do not acquire ownership rights over these entities or the services therefrom, the obligation of Zakat is not fulfilled. Note, that ownership allows discretion over spending. Zakat is explicitly for individuals who are financially strapped, and not for organizations that serve all alike without discernment.
By the same account, Zakat money cannot be spent on the burial of a dead person or for paying off that person’s loan, as a dead body is not capable of ownership. However, a deserving person can receive Zakat and may, at discretion, pay for the burial or loans of the dead. Spouses, parents, grandparents, children, and grandchildren cannot be paid Zakat. The Hashimites, the family and descendent of the Prophet SAWS are also excluded from receiving Zakat, even if they are poor or needy. If a Muslim wishes to help them, he should give them a gift rather than Zakat. The relatives and the needy of their own community are more eligible for Zakat. Though it can be paid anytime, most Muslims pay Zakat in Ramadan for good deeds that are valued higher in this month.
Islamic Point of View 