Although every Muslim seems to know what Zakat is, very few of them have a detailed understanding of this all-important concept. Zakat, a form of religious obligation or tax that every Muslim should give to the poor and the needy provided that he or she has the means to do so.
Zakat, being one of the five pillars of Islam, is an important act of worship as stressed by being highlighted at least 82 times in the Quran along with Salat. Zakat is a form of charity made compulsory in Islam. Through Zakat, the prosperous and rich people can uplift the poor, help them in trouble and console them in their hardships.
Usually, the government of Pakistan announces the Nisab for each year before Ramazan. Zakat nisab is generally set according to the cash value of 3 ounces (87.48 grams) of gold or 21 ounces (612.36 grams) of silver.
Zakat should be calculated at 2.5% of the market value as of the date of valuation (Lunar date).
It purifies the soul of the donor because it removes greed and selfishness from one’s heart. Giving from one’s acquired wealth requires strength, therefore, the practice of giving to the poor strengthens the donor’s integrity of the character and helps to develop sympathy for the poor and needy.
As one of the pillars of Islam, Zakat is a form of obligatory charity that has the potential to ease the suffering of millions. With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying Zakat purifies, increases, and blesses the remainder of their wealth.
What are the main objectives of Zakat?
The main objective of Zakat is to achieve socio-economic justice. Concerning the economic dimensions of Zakat, it is aimed to achieve favorable effects on several dimensions such as aggregate consumption, savings and investment, the aggregate supply of labor and capital, poverty eradication, and economic growth.
What does Quran say about Zakat?
“And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.”
In Surah Al-Tawbah, (9:60), it is said “Indeed, charitable offerings are meant to be given to the poor and the indigent, and to those who work on [administering] it, and to those whose hearts are to be reconciled, and to [free] those in bondage, and to the debt-ridden, and for the cause of God, and to the wayfarer. [This is] an obligation from God. And God is all-knowing, all-wise.”
Zakat establishes the rights of the poor and the needy, people in debt, slaves or captives and travelers, etc.
Zakat can be paid to deserving individuals or groups who fall into one or more of eight Zakatable categories mentioned by the Almighty in the Quran.
8 kinds of people who can accept Zakat:
- The poor
- The needy
- 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 God.
- The wayfarer, meaning those who are stranded or traveling with few resources.
To be liable for Zakat, one’s wealth must amount to more than a threshold figure, termed the “nisab.” To determine the nisab, there are two measures: either gold or silver. Gold: The nisab by the gold standard is 3 ounces of gold (87.48 grams) or its cash equivalent.
Zakat is payable at 2.5% of the wealth one possesses above the nisab. Nisab, which is equal to three ounces of gold, is the minimum amount of wealth one must have before they are liable to pay Zakat. The nisab by the gold standard is 3 ounces of gold (87.48 grams) or its equivalent in cash. You can calculate this online, by multiplying the number of grams by the current market value of gold. The Nisab by the silver standard is 21 ounces of silver (612.36 grams) or its equivalent in cash.
How do you calculate Zakat on money?
Now deduct your immediate expenditure from your current assets, which will be 25,000 -13,000 = 12,000 USD. To calculate Zakat now multiply 2.5% with the leftover amount: 2.5% x 12,000 USD = 300 USD is due for Zakat.
Zakat on Pure Gold and Gold Jewellery
Zakat should be calculated at 2.5% of the market value as of the date of valuation (Lunar date). Most of the Ulema favor the market value prevailing as on the date of Calculation and not the purchase price.
Who is not eligible for Zakat money?
To be eligible to receive Zakat, the recipient must be poor and/or needy. A poor person is someone whose property, above his basic requirements, does not reach the nisab threshold. The recipient must not belong to your immediate family; your spouse, children, parents, and grandparents cannot receive your Zakat.