Donate Your Zakat

Zakat is the third pillar of Islam. The Quran mentions zakat eighty-two times, along with prayers to emphasize the importance of it. Zakat means to grow (in goodness) or ‘increase’, ‘purifying’ or ‘making pure’. So the act of giving zakat means purifying one’s wealth to gain Allah’s blessing to make it grow in goodness.

A certain fixed proportion of the wealth and of each and every kind of the property liable to Zakat of a Muslim to be paid yearly for the benefit of the poor in the Muslim community. The payment of Zakat is obligatory as it is one of the five pillars of Islam. Zakat is the major economic means for establishing social justice and leading Muslim society to prosperity and security.

Paying zakat is Fard (compulsory).  The Quran says that only those who pay zakat are in the “brotherhood of faith”.

The Holy Quran also says that Zakat purifies assets and creates virtue (SU:9 103).

The Holy Quran classifies the due recipients of zakat under the following eight categories: “Zakat is for the poor, and the needy and those who are employed to administer and collect it, and the new converts, and for those who are in bondage, and in debt and service of the cause of Allah, and for the wayfarers, a duty ordained by Allah, and Allah is the All-Knowing, the Wise” (Sura Al-Tauba: 60).

Nisab is the threshold amount that a Muslim’s wealth should total to make them eligible to pay Zakat. There are two values used to calculate the Nisab threshold –

1. Gold at the value of 87.48 grams
2. Silver at the value of 612.36 grams

The monetary value is calculated on the current price of gold and silver when working out your Zakat contribution.

Hawl is the term used to describe the lunar year, the Islamic year, or 354 days. The payment of Zakat is expected to be made once every Hawl after your wealth has crossed the Nisab threshold and has remained above the threshold for a full Islamic year.

Once your wealth has passed the Nisab threshold, you are eligible to pay Zakat. However, it is not paid straight away. Zakat should be paid after your wealth has been held for a full lunar year but only if the value remains above the minimum threshold amount.

Zakat is distributed among 8 asnaf (categories) of people, namely:

1. Fakir – One who has neither material possessions nor means of livelihood.
2. Miskin – One with insufficient means of livelihood to meet basic needs.
3. Amil – One who is appointed to collect zakat.
4. Muallaf – One who converts to Islam.
5. Riqab – One who wants to free himself from bondage or the shackles of slavery. (In Singapore, zakat due to this category of recipients is spent on those who need help to pursue education or to improve their standard of living).
6. Gharmin – One who is in debt (money borrowed to meet basic, halal expenditure).
7. Fisabillillah – One who fights for the cause of Allah.
8. Ibnus Sabil – One who is stranded in the journey.

1. One possesses more than 87.48 grams of gold or 612.15 grams of silver or cash equivalent to that (At present, the market price of gold is  3,51,667 BDT and the market price of silver is 48,983 BDT) after fulfilling the yearly expenditure.
2. If the separate or collective value of gold, or silver ornaments, gems, savings, company shares, foreign currencies, saving certificates, fixed deposits etc more than 87.48 grams of gold or 612.36 grams of silver or cash equivalent.
3. The value of business products; animals reared for business, lands or house rents is above the same amount.
4. The amount of agricultural products is more than 1,100 kilos, one-tenth of naturally produced crops and one-twentieth of crops produced with irrigated water should be given as Zakat.
5. Zakat is to be given at the rate of 2.5% (2.5 taka per hundred) on all saved up money, gold, silver ornaments etc.
6. Zakat is to be paid after minute calculation with proper niyat (intention). If given without intention or calculation, it will be Sadka, not Zakat.

Zakat on Gold and Silver
Zakat is to be paid on Gold and Silver in Pure form or Jewelry, Utensils, Decorative items, and all household items including crockery, cutlery made of gold or silver at 2.5% of the prevailing market rates. A Reduction of 2% from the weight of Jewelry can be allowed towards studded stones jewelry & 25% from the weight of KUNDAN Jewelry.
Zakat should be calculated at 2.5% of the market value as of the date of valuation. Most Ulema favors the Market Value prevailing as on the date of Calculation and not the purchase price.

Zakat on Cash and Bank Balances
Zakat should be paid at 2.5% on all cash balance and bank balances in your savings, current, or FD accounts. The amount technically should be in the bank for one year. Usually, it happens that the balance keeps on changing as per personal requirements.
You may make your best judgment and the best way is to pay the remaining amount on the day of calculation.

Zakat on Loans given, Funds, and etc.
Zakat is payable by you on loans you have given to your friends and relatives. It should be treated as Cash in Hand. You may deduct the Loans payable by you to arrive at the net present value of your wealth.
Zakat is payable on all Govt Bonds, Public Sector Bond, Paid-up Insurance Premiums, Paid-up Portion of Provident Funds, Govt Bills receivables, and etc.

Zakat on Landed Property
Zakat is not payable on personal residential House even if you have more than one and meant for residential purpose only. Also, Zakat is not applicable on property given on rent irrespective of how many. However, Zakat is payable on the rental income.
However, if your intention of holding properties is to sell at a future date for a profit or as an investment, then Zakat is payable on the Market Value. Also, if your intention of holding properties changes in the current year, I.e. from self-use to business then you need to pay Zakat on that Property Value.

Zakat on Business
This is for Business Persons only. No matter what business you are into, you’ve got to pay Zakat on all STOCK-IN-TRADE. The stock must be valued at its Landed Cost Price. If you have any bills receivable (sales given on credit) then you need to add the same towards calculations.
Deduct the Amounts due to your suppliers and deduct the loans on stock on the date of calculation. Dead Stock should be calculated on scrap value or its saleable value. The damaged stock should also be valued at its scrap value.
Be honest in the calculations, as ZAKAT is an INSURANCE on your STOCK directly from ALLAH and who better an insurer than Him.
There is no Zakat on Factory Buildings or any kind of machinery, but there is zakat on products produced in the factory (i.e. finished goods value). Please consult your local Scholar or Maulvi or Imam who can shed more light on your specific issues.

Zakat on Partnership Firms
Zakat can be paid EITHER by the firm OR separately by the owners. If the firm is not paying, and the partner wants to calculate his share, he should take the amount standing to his capital and loan account as per the last balance sheet. Add his estimated share of profit till the date zakat is calculated.
This can only be estimated as it is difficult to calculate the exact profit or loss between an accounting year.

Zakat on Agricultural Product
Zakat is payable on all Agricultural produce including fruits, commercially grown flowers, vegetables, and all types of grains at the harvest time itself. The passing of one year does not apply to agricultural produce. If there are two or more crops on the same land per year, then Zakat has to be paid as many times on the crop, irrespective of the time.
The formula for Zakat calculation on Agriculture is as follows:
On crops dependent purely on rainwater it will be 10% of produce, On crops not irrigated through rainwater but use Canal Water, Tank Water, Borewell and Open wells, the Zakat is 5% of the produce. For Crops dependent partly on Rain Water and partly on other water, the Zakat applicable would be 7.5% of produce.

Zakat on Animals
On all grazing animals like goats, sheep, camel, cows, broiler chickens, the consensus Zakat payable is one animal/bird for every 40 animals owned. However, you may wish to give cash in lieu of the animal/bird itself.
Please consult your local Scholar or Maulvi or Imam who can guide you in the right direction, or refer to books of Fiqh if you would like to have first-hand confirmation of the situation.

Liabilities Deductions
If you have any pending tax payable to the govt, as of the date of Zakat Calculation, then the same may be deducted before arriving at the net worth. If you have taken any loans from any person or institution, and if you have not already deducted the same from any of the above sections, then you can deduct your Payables over here.
Please be truthful, as Zakat is a sure way of protecting one wealth if Zakat has been paid on it regularly and fully.