Islam for Muslims
- THE FAITH OF MUSLIMS
- GOOD DEEDS IN PERSONAL LIFE
- GOOD DEEDS IN SOCIAL LIFE
The Essentials of Charity (Zakat, Fitr and Qurbani)
22: THE ESSENTIALS OF CHARITY (ZAKAT, FITR & QURBANI)
Introduction: Zakat is an annual spending obligation for the solvent, sane, adult Muslim men and women. Among the Five Pillars of Islam, it is third in line of importance after faith and salat. Accordingly, Quranic verses repeat citations of zakat alongside salat like the example: Be “steadfast in prayer and spend (as charity) out of what I have provided for (you)” (2:3). You are also warned to “spend” for zakat “before the Day (of Death comes) when no bargaining, friendship or intercession (will work)” (2:254).
Zakat vs. Tax: Zakat is annually payable at the rate of 2.5% on specific types of possession. Zakat apparently may look like a tax but a basic difference draws a line between the two. In case of ‘zakat’, the Quran has settled on eight specific avenues for anti-poverty charitable spending. By contrast, the collections of a modern tax go to a melting pot from where government spends on diverse programs according to its own priority. Moreover, the rate of ‘zakat’ remains fixed forever at low 2.5% of qualifying items while that of taxes are often very high (worldwide rate often being 25-50% of income), depending on political decisions.
Importance: The Arabic word ‘zakat’ means “purification” which has double meanings. One is: your payment of ‘zakat’ would “purify and sanctify” your wealth (i.e. 2.5% zakat purifies 97.5% residual wealth) and the other is its potential for your spiritual “self-purification” (9:103; 92:18). In fact, ‘zakat’ does not ultimately impose any burden on the payers. Instead it is a profitable investment which will bring ultimate benefits as guaranteed by God’s promise for an “(increase)” of your wealth (30:39). Though the payment of ‘zakat’ appears to your naked eye as a reduction from your wealth, in the final account, the Invisible Hands of God will more than compensate your sacrifice. For example, His blessings may connect you to a high paying job and/or protect you from income drainage like theft, robbery, fire, expensive medical treatment etc. In this manner, you may have access to bottomless bounties of God through donation of ‘zakat’.
Consequences of Non-Payment: On the other hand, failing in ‘zakat’ obligation will result in your painful consequences. Those who hoard “gold and silver and do not spend (‘zakat’) in the way of God, announce to them a most grievous penalty. On that Day, heat will be produced out of that (wealth) in the Fire of Hell, and therewith will be branded their foreheads, flanks and their backs” (9:34/35). There is another grim warning against he “who piles up wealth and saves it by counting (penny by penny), thinking that his wealth would make him last forever! By no means! He will certainly be thrown into the (Crusher) that breaks into pieces” (104:2-4). If you “covetously withhold the gifts which God bestowed (on you) graciously”, then on the Day of Judgment these things will be “tied to (your) necks like a twisted collar” (3:180).
Sometimes punishment does not wait long for the life beyond. For example, an infamous stingy Karun during Moses era, was penalized by the earth as God’s agent that miraculously “swallowed him up and his house (of wealth)” (28:81). In another example, Abu Bakr, the first Caliph of Islam acted upon divine mandate by using armed forces for bringing down rebellion against zakat. The overwhelming importance of zakat is therefore easily understandable and barely questionable.
Dual Conditions for Zakat Liability: Zakat is an obligation for any sane, adult Muslim men and women who satisfy the following two conditions:
(1) ‘Nisab’ Quantity of Ownership: The first condition is having qualifying ownership of wealth known as ‘nisab’ The term ‘nisab’ means any of the following:
(A) Metallic: (i) About 85 grams (3 ounces) of gold or gold items/ornaments or (ii) 612 grams (21.6 ounces) of silver or silver made items/jewelry; (iii) mix of gold and silver or articles made thereof. In the last case, their combined value of the two metals should equal the total value of either 85 grams of gold or 612 grams of silver, whichever has the lower value. Usually 612 grams of silver has lower value and therefore that is practically important for your calculation. Zakat is levied on the sale value of gold and silver which is often lower than their purchase price.
(B) Non-Metallic: (iv) Non-metallic items of zakat include cash money on hand, bank deposit (current, savings or fixed; in local or foreign currency), money lent out with sure chance for return, business merchandise/raw materials/inventory (illegal business excluded), dividend from long-term investment in stock or share, provident fund, retirement savings, income from gift/inheritance, rental income from house or taxi etc. These items have to be equal to the value of 85 grams of gold or 612 grams of silver, whatever is the less.
(2) Yearlong Ownership: The second condition for zakat liability is your complete ownership of the above ‘nesab’ quantity for one lunar year (about 354 days). If you had ownership of ‘nesab’ wealth at both ends of the year, you will have to pay zakat (for the lower amount of the two) even if ‘nisab’ briefly went down in the mid-year. For example, in 2020 Ramadan if your ‘nisab’ was $10,000.00 and in 2021 Ramadan your ‘nisab’ becomes $20,000.00, then your zakat will apply to $10,000.00. If, however, your ‘nisab’ evaporates before the year ending, then you are excused from zakat.
It is advisable that you mark down on calendar the time when your ownership reaches the ‘nisab’ level and from that time you will count one year period, end of which marks the beginning of zakat liability. Since keeping track of this timing may not always be easy, some people choose Ramadan as a regular baseline for annual zakat payment while also eying extra blessings of this holy month. Zakat is your personal obligation if you have ‘nisab’ amount of possession for one year. If you are short on cash, then you need to arrange zakat money even by selling off a portion of your wealth, if needed, in case nobody else pays off on your behalf.
Other Relevant Details: Zakat will be due on the above items, either you use them personally or store them. There is no zakat payable for any precious metals other than gold and silver (like diamond, gem etc.) nor for any luxurious household items, if not made of gold and silver. However, if you are doing a business in precious metals like diamond or household items like furniture etc., then zakat is due on only saleable merchandise (i.e. diamond or furniture) and not on capital goods like show room, iron safe, cash machine, computer etc. If you have any assets (e.g. taxi or apartment) from which you make rental income, zakat will apply to their income flow (i.e. rent minus maintenance expenses) and not their capital value (i.e. purchase price of taxi or apartment). There is no zakat on haram business merchandise e.g. liquor. If you have any bank interest, you cannot use that for zakat and you need to hurriedly get rid of that burden by donating to the poor without desiring any reward.
Rate of Payment: Upon fulfillment of the above dual conditions, you have to pay zakat at a flat rate of 2.5% on combined possession. For example, if the total monetary value of your zakat worthy possession (‘nisab’) is valued at $40,000.00, then you have to pay annually $1,000.00 as zakat. This otherwise means you pay $2,500.00 for every $100,000.00 of ‘nisab’. Obviously, this 2.5% rate is extremely low by comparison with any global standard and it is fixed forever. You should therefore never think of avoiding or underpaying this obligation as you are under watch of Almighty God.
Pious Calculation: It is therefore paramount that you piously compute your ‘nisab’ accurately, if necessary by erring on the higher side of zakat estimate in case of any confusion. This means on the balance sheet, you will not knowingly miss out or undercount any ‘nisab’ possession. On the other hand, you must not inflate the liability by including your long-term loan or future obligations like 30-year home mortgage, son’s education loan, daughter’s marriage, personal pilgrimage etc. You can factor into calculation only immediate expenses (e.g. monthly portion of mortgage loan, utility bills, rent etc.) or any difference between your borrowing and lending. For example, if your borrowing is $20K and lending is 10K, then the difference of 10K (20K-10K) can be deducted from zakat. Conversely, if your lending (say $10K) exceeds borrowing (e.g. 5K), then the difference of $5K (10-5) will be added to your zakat liability. Zakat is payable if and when your possession hits the ‘nisab’ quantity, otherwise not. If needed, you can seek online help for calculation of zakat.
(C) Zakat on Crops, Animals & Minerals (Treasures): Zakat is also due on farm products when “the harvest is gathered” (6:141). With ‘nisab’ (minimum quantity for eligibility) set at 653 kilo of produce, the zakat rate on consumable and storable crops and fruits is 5% of net value (after deduction of cost) for the produce on irrigated land and 10% on those grown on rain-fed land. The ‘nisab’ varies widely for different types of livestock i.e. 40 for sheep and goat, 30 for cattle and buffalo and 5 for camel. The rate of zakat is also widely variable for these animals which can be learned from reading or consultation. The ‘nisab’ for mines/treasures is any quantity and zakat rate is 20% of value of the produce.
Eight Spending Avenues: Zakat is payable to only eight fixed avenues specified in the Quran (9:60). These are spending for (i) the poor (ii) the needy (iii) the zakat officials (iv) those in slavery (v) the debt-ridden (vi) the needy travelers (vii) the new converts (viii) in the way of God. The difference between the poor and the needy is very subtle. The poor have very little or almost nothing and they may go on begging publicly. By contrast, the needy ones have some but that falls short of their basic needs as well as ‘nesab’ quantity.
The staff engaged in administration of zakat is allowed a modest share in zakat. You can use zakat fund to free slaves or by extension help prevention of slavery that now mostly exists in different non-traditional forms. Zakat money can also be used to pay off loan that someone incurred for meeting very basic minimum needs and now unable to repay. A traveler who faces crisis in a foreign land is eligible for needed amount of zakat despite solvency in homeland. This ruling, however, lost much of relevance due to modern banking devices like credit cards etc. Zakat can be spent for the program that is intended to attract non-Muslims to Islam or rehabilitate the new-Muslims. Spending zakat “in the way of God” is an open-ended purpose which most scholars understand in the sense of funding for Jihad while some also accept liberal view to include spending for promotion of God’s religion Islam, as there is no clear-cut prohibition for that. However, of all 8 spending heads, #1 priority is spending for the poor. Particularly the local poor have more rights over those located elsewhere and feeding their hungry stomachs should be your top target. To highlight the gravity of feeding the poor, the Quran uses a dialogue to be staged in the Afterlife “What led you into Hellfire? (They will say): We were not of those who fed the indigent” (74:42/44).
Zakat is not payable to the ascendants (parents, grandparents etc.) and descendants (children, grandchildren etc.) as they belong to your family under your responsibility. Zakat is not for the non-Muslims with access to your optional charity.
Methods of Payment: Payment in both cash and kind is allowed. Absent any intense needs justifying split payments among multitude of recipients, you may also choose to offer meaningful help to relatively fewer poor by purchasing them sewing machine, computer and printer, tricycle, cattle etc. Such self-employment projects financed by zakat are more likely to lift them out of poverty permanently. Advance payment is permissible, subject to adjustment with final count of zakat due for next year.
Intention: You must make intention (niyet) before making payment. If you give away money with early intention as optional charity or loan, later on you cannot switch intention for zakat. If you spend in optional charity in access of zakat amount, zakat still remains an obligation. You better keep your intention to yourself if your declaration is likely to embarrass the recipients. Zakat cannot be a replacement for your due payments such as wages for servants or allowance for dependent family members. Nor is it payable with “a hope of getting a reward in return” (92:19).
The foregoing account may not address all the details regarding individual cases of zakat. In that case, knowledgeable persons like the Imam of a mosque or reliable books may be consulted. If problem still remains with respect to clarity on the exact liability of zakat, then it is better to make higher payment to be on the safe side.
(B) Qurbani (Animal Sacrifice): God mandates every solvent Muslim to “turn in prayer and (annual) sacrifices (of animals) to your Lord” (108:2). He also prescribed on earlier communities “the rites (of sacrifice) so that they might celebrate the name of God over the sustenance He gave them from animals” (22:34). The Prophet also highlighted the importance of ‘qurbani’ by saying that “the reward of ‘qurbani’ is as countless as the hair of sacrificial animals” (Hadith). This ritual will be semi-compulsory (wajib) if you possess zakat worthy ‘nisab’ only on the days of Eid-ul-Adha (from 10th to 12th ‘zilhajj’), without any condition of yearlong ownership as in the case of ‘zakat’. Sacrifice needs to be done on these days after Eid prayer, without any condition of location. By default, equivalent amount of money needs to be sacrificed for the poor.
Eligible Animals: The ‘qurbani’ will be flawed if the pleasure of God is totally absent in your intention and your sole purpose is something else like only eating meat or gaining fame etc. The number of eligible animals is limited to a selection of 5: camel aged above 5 years; cow, bull, ox and buffalo above 2; goat and sheep above 1. Among them, only camel, cow, bull, ox and buffalo are divisible into 7 even shares, each counting as one for meeting the obligation of ‘qurbani’. Sharing should base on weight and not estimation. The shares may include the one(s) for the dead or Aqiqah for the newborn as well. With no provision for sharing, goat and sheep each counts as one. The beast must be healthy and free from any physical defects like blindness, lame, missing teeth or horn etc.
Distribution: God allows you “to eat thereof (meat) as well as feed the distressed ones in need. (Also) feed the one who is content and the one who wishes to receive (among relatives)” (22:28; 22:36). Accordingly, the Prophet picked up the applied meaning of the above verses by ruling that sacrificial meat be roughly divided into 3 shares: one for the poor, another for friends and relatives and the third one for self and family. In effect, this is not a rigid triple divisions and exception can be made depending on the circumstances. For example, you may sacrifice more for the poor if there are too many of them around you. Or you yourself may take more if you have a big family who rarely can afford meat and therefore will feel grateful for God’s gift by eating some more. The guiding force will therefore be your sense of “piety” or “righteousness” (22:37; 5:27) used in balancing between the sacrifice for the poor and gratitude (to God) through self consumption. Any physical part of the animal cannot be used as compensation for slaughtering.
(C) Fitr: Giving out ‘fitr’ (charity) is wajib (semi-compulsory) for the household that possesses the ‘nesab’ quantity of wealth only on the day of Eid-ul-Fitr; the whole year possession is not necessary as in case of zakat. As another difference from zakat, Fitra is preferably for donating to the poor who do not have enough money to buy food while zakat has wider eight categories of recipients. Noticeably, the word ‘fitr’ links to ‘iftar’ or breaking fast during Ramadan and therefore it has to do with feeding the poor on the eve of Eid-ul-Fitr. The eligible household will spend on ‘fitr’ (for the poor) for its every member regardless of age including your dependent relatives, servants etc. The rate of donating ‘fitr’ is (i) around 5 pounds of wheat or flour or (ii) its equivalent value in terms of other food items or money.
Conclusion: Mentioned above are 3 sources of compulsory and semi-compulsory spending in charity. You must clear off all these financial obligations while not forgetting about optional spending as well.