Zakah Calculation

By: Murniati Mukhlisin @ Mu Kim Ni

This talk was delivered at As-Syifa Usrah @ Birmingham

Chaplancy Hall, University of Birmingham, 22 July 2012/2 Ramadhan 1433H

 

Obligation to Pay Zakah Zakah is the fourth pillar of Islam. It’s important is such that the Quran refers to Zakah in 82 separate verses and has associated Zakah immediately after Salah on 32 occasions. – …And Allah said, “I am with you. If you establish prayer and give zakah… (Al-Maidah 12)

– And give the relative his right, and [also] the poor and the traveler, and do not spend wastefully. (Al-Isra’ 26)

– ‘If someone is given wealth by Allah but does not pay its Zakah, that wealth will appear to him on the Day of Judgement in the form of a bald serpent with 2 horns, encircling him and squeezing him all day, then holding him by the lips and telling him, “I am your wealth, the treasure which you hoarded”’. (Bukhari & Muslim)

– And establish prayer and give zakah and bow with those who bow [in worship and obedience]. (Al-Baqarah 43)

– And He it is who causes gardens to grow, [both] trellised and untrellised, and palm trees and crops of different [kinds of] food and olives and pomegranates, similar and dissimilar. Eat of [each of] its fruit when it yields and give its due [zakah] on the day of its harvest. And be not excessive. Indeed, He does not like those who commit excess (Al-An-am 141)

Any reward for paying Zakah?
The example of those who spend their wealth in the way of Allah is like a seed [of grain] which grows seven spikes; in each spike is a hundred grains. And Allah multiplies [His reward] for whom He wills. And Allah is all-Encompassing and Knowing. (Al-Baqarah 261)
Types of Zakah
•Zakah Al Fitr; compulsory, no nisab/haul, payable from the first day of Ramadhan until before the Eid ul Fitr prayer
•Zakah on wealth; traditional type of zakat (agricultural produce, reared animals, business, gold and silver) and new types of wealth subject to zakah
Who are recipients of Zakah/Mustahik?
•At Tawbah 60; The people who have the right to receive zakah and legal uses of zakah are described by Allah SWT :
•The poor – those who have no income.
•The needy – those who may have an income but its below a minimum requirement.
•Employees of Zakah – those who identify the destitute and handle zakat.
•Sympathisers – those who might enter or who have already entered Islam.
•Zakah may be used to free slaves.
•Zakah may be used to relieve those in hardship under debt.
•Zakah may be used for the cause of Allah.
What is Zakat on wealth payable on?
•Zakah on Business Income
•Zakah on Employment Income
•Zakah on Saving
•Zakah on Shares
•Zakah on Gold
•Zakah on Pension
•Zakah on Crops
•Zakah on Livestock
How to Calculate?
•Zakat ul Fitr; The quantity the Prophet (SAWS) described as one saa’ of food. One saa’ is equivalent to four madd. A madd is the amount that can be scooped up when one puts their hands together. If we translate this into a monetary value based on the price of a staple food such as flour or rice, it is approximately £3.50.
Nisab
•Nisab is the minimum amount of wealth one must possess before the payment of zakat becomes an obligation on you. The value of Nisab can be calculated either using gold or silver. The Gold nisab is equal to 85 grams of pure gold, and the silver nisab is equal to 672 grams of pure silver.
•Current Monetary Nisab Value (09/07/2012):
£346 – Silver valuation
£2870 – Gold valuation
How to calculate?
Zakat on Business Income
•Growth method = Capital + Long Term Liabilities – Fixed assets – Investment and the result x 2.5%
•Working capital method = Current assets – current liabilities and the result x 2.5%
Livestock
–30 cows (nisab) – a calf (kadar)
–40 cows – a cow
–60 cows – two calves
–40-79 goats – a goat
–80- 119 goats – two goats
•For every 30 buffaloes, the zakat rate is 1 male buffalo, aged 1 year or more
•For every 40 buffaloes, the zakat rate is 1 female buffalo, aged 2 years or more
•If there are mixed female and male, the owner can choose any buffalo or cow to be paid a zakat
Notes:

Home and Cars.

•Anything you own and use on day to day basis is exempt from zakat except the cash and items made from gold and silver. This means you do not pay zakat on your home and personal car.
•If you have a second home or property and intend to keep it. It is not subject to zakat but any profit from rental income is fully subject to zakat.
•If you have property and intend to sell it for a profit, you must pay zakat on the value of the property as It is considered business stock

Businesses, Shares and Pensions

•Paying zakat on stock and business merchandise is obligatory. If you have shares in company, you must pay zakat based on the current value of the shares.
•Its strongly recommend you obtain specialist advise on calculating the amount of zakat due to businesses you own or run.
•Before retirement, an individual’s pension is not subject to zakat if the payment made to pension policy is deducted from the salary at source, without passing into the hands of individual.
•The pension an individual receives after retirement is liable for zakat provided they are sahib-un-nisab.

Livestock

•The livestocks are zakatable when the owners have fulfilled the conditions for nisab and haul
•Zakatable livestocks are sheeps, cows, buffaloes, and camels
•These livestocks must be healthy, not criple and must not be used to work in the field or carry the goods.
References:
•Islamic Relief, Zakat, http://www.islamic relief.org.uk/Zakat_ul_Fitr.aspx
•Fiqh Zakat, Dr. Yusuf Qardhowi
•http://www.quran.com

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