Zakat is one of the five pillars of Islam. In importance, it is next to prayer and the commandments concerning Zakat and prayer in the Holy Qur’an occur together.
Zakat literally means purification, growth, righteousness, and blessing. According to the Shariah or Islamic law, it denotes a specific amount in the wealth of Muslims due for distribution among the needy in the community. The obligatory character of Zakat and punishment for those unmindful of this responsibility are spelled out in the Holy Qur’an thus: “Take sadaqah (alms) from their wealth in order to purify them and sanctify them with it, and invoke Allah for them.” (9:103) and;
“… And those who hoard the gold and silver (Al-Kanz: the money, the Zakat of which has not been paid) and spend them not in the Way of Allah, announce unto them a painful torment – on the Day when that (Al-Kanz) will be heated in the fire of Hell, and with it will be branded their foreheads, their flanks and their backs. “This is the (treasure) which you hoarded for yourselves: Now taste of what you used to hoard.” (9:34)
The payment of Zakat has a healthy impact on the giver, the recipient and the society at large. It purifies the assets of the giver, retains his quest for material goods and creates in him the virtue of sharing his wealth with others. It uplifts him from a life of material pursuit to a life endued with moral purpose.
Zakat satisfies the recipient’s needs and alleviates his suffering. Poverty is an invitation to disbelief; it may kill virtue. That is why Islam, instead of abandoning the poor to the caprice of the rich, makes a compelling demand for Zakat payment. The payer gives Zakat as an act of worship, while the destitute receives it as a right, without any obligation towards the payer.
Zakat thus creates love and brotherhood between the rich and the poor, minimizes social tensions and bridges the gap between the haves and the have-nots. It provides social and economic security to the Muslim community and brings its members closer together. Its rewards are boundless.
According to some Islamic scholars, Zakat in the legal sense means “a right on wealth” or “the specified part of wealth designated by Allah to be given to certain beneficiaries.” Zakat is not a tax.
It is a spiritual-material obligation on every Muslim in possession of a minimum amount of wealth, or more, for a period of one lunar year. The minimum Zakat payable on monetary wealth and on gold and silver is 2.5 per cent, or the 40th part of the wealth.
There are eight conditions which make Zakat obligatory, some of them relating to the owner and others to the possessions. They are: Anyone owning Zakatable wealth must be a Muslim, free person (not a slave), of sound mind, an adult, in complete ownership of his wealth, in possession of such wealth which is over and above the requirements to satisfy the essential needs of the owner and of those legitimately dependent on him or her, free from debt, and in possession of a defined quantity of wealth for one complete lunar year.
Zakat is not obligatory on those who have not reached the age of puberty. A child is not required to pay Zakat even if he or she is the owner of enough wealth which makes Zakat obligatory on an adult. The moment a minor reaches the age of puberty, the regulations relating to Zakat will become applicable. According to some Islamic scholars, however, the guardian of such a child should pay Zakat on behalf of the minor.
Zakat is calculated on the wealth possessed by a person, and unless and until he or she attains the minimum quantity of the specified wealth, he or she is not liable to pay Zakat. This minimum limit is known in the Shariah as Nisab.
The person who has the specified minimum and over is considered wealthy enough to pay Zakat and, in this manner, share his wealth with the indigent. Besides cash, Zakat is applicable only to the following categories of wealth: gold, silver, livestock that graze, and all types of commercial merchandise.
The possession of 7.5 tolas (87.48 grams) minimum gold or 52.5 tolas (612.36 grams) minimum silver, or their equivalent of cash, for one lunar year makes one liable to pay Zakat at the rate of 2.5 percent. It is payable on the minimum and whatever is in excess thereof. If someone possesses some gold and some silver but the quantity of each of the metals does not reach the minimum limit by itself, but they touch the minimum value if put together, then Zakat will become payable on the total.
Gold and silver in any shape or form – jewelry, utensils, etc. are all considered as wealth and Zakat becomes payable on them if the weight reaches the minimum limit and their possession completes 12 lunar months.
All jewelry made of gold or silver is subject to the payment of Zakat if the quantity reaches or exceeds the Nisab limit and remains in possession for 12 months, even if the jewelry is used everyday by the owner or kept for future use, because gold and silver in any form are liable for payment of Zakat. The same is applicable to gold and silver utensils.
Some other schools of Fiqh are of the view that the jewelry worn in normal use of Muslim women of that social status is exempt from Zakat.
Clothes, irrespective of cost and quantity, are exempted from Zakat. But if they have gold or/and silver embroidered or thread work on them, and the weight of gold or/and silver metal used therein reaches or exceeds the minimum Nisab limit, then Zakat will have to be paid on that portion alone at the end of every 12 months.
The amount of money possessed by one which could purchase the minimum Nisab quantity of gold or silver will be regarded as eligibility for the Nisab for the purpose of Zakat. If a person possesses, say, five tolas of gold or 25 tolas of silver, but he also possesses enough cash to purchase 2.5 tola of gold or 27.5 tolas of silver, then he will be considered as having reached the Nisab limit and will be liable to pay Zakat.
There is no Zakat on pearls and/or precious stones, provided they are not meant for trade or investment. Whenever a person’s wealth reaches the minimum Nisab, from that date calculation of the year will begin for the purpose of Zakat and Zakat will have to be paid on the completion of 12 months of the Hijra calendar.