What is Zakat? A detailed guide
Many Muslims are unaware of the concept of zakat. Some believe that because zakat is similar to a normal act of charity or taxes, they do not need to pay any further money as zakat.
But that’s not the case – and many Muslims end up having to pay years of zakat later in their life.
In this article, we will help you understand what zakat truly is, by covering the following:
- What does Zakat mean?
- Zakat in the Quran and Sunnah
- Who must pay zakat?
- What is nisab?
- Who is eligible to receive zakat?
- Zakat vs Tax
- Zakat avoidance
- Role of Zakat and SDG
- Zakat in the UK context
- How to calculate zakat
What is Zakat?
Literally, zakat has three definitions:
Zakat functions like a tax, so where do those definitions fit in with its function?
Scholars say that zakat is a means of growth whether it’s in terms of reward for the payer, or in wealth for the recipient. These growths are also considered to be a source of blessing for both.
Some say that zakat is a means of purifying the soul of the payer from greed. It can also be a means of purifying the soul of the recipient from jealousy.
However, from a jurisprudence perspective, zakat is the discharge and transfer of a specific amount of zakatable wealth, to an eligible zakat recipient.
Zakat in the Quran and Sunnah
Zakat has been mentioned in various places of the Quran. For example:
“My Mercy extends to all things. That (Mercy) I shall ordain for those who have God-consciousness and give their Zakat and those who believe in Our Signs.” (Surah Al-A`raf 7:156).
And as important as Salah “And establish the prayer and pay the Zakat and bow (in prayer) with those who bow.” (Al-Baqarah: 43)
What is interesting though, is that Zakat has been mentioned thirty times in the Quran out of which twenty eight times, it is mentioned along with the word salah (prayer).
This tells us a very important lesson. We all know that salah is about fulfilling the right of God. On the other hand, zakat is about fulfilling the right of God but also the right of the recipients of zakat.
Not paying zakat is not just a betrayal to God but to His servants too. The emphasis in mentioning salah and zakat together, is to tell us that a true Muslim, must fulfill the rights of God and His servants. A person cannot be a complete Muslim if he worships God without respecting other of God’s creature. Similarly, a person cannot try to be a good person in society without worshiping His Creator.
Although zakat has been mentioned in various places of the Quran, it is in the sunnah that we will find detailed explanation on how much is the zakat rate and on which type of assets a person has to give zakat on.
Who must pay zakat?
All the schools of jurisprudence agree that zakat is compulsory for:
- Muslims (non Muslims don’t pay zakat)
- Adults (those who have reached puberty)
- Owners of an amount of wealth that reaches the nisab (see below)
However, they differ on whether the wealth of the children and people who are insane is zakatable or not.
According to the Hanafis, it is not zakatable, because zakat is only compulsory on adults and people of sound mind. This is the same principle for other acts of worship such as the five daily salah and the fasting of Ramadan.
In contrast, the majority of the scholars argue that, zakat is the right of the poor and needy and therefore, if the wealth of a Muslim has reached the nisab, then its zakat must be paid.
What is nisab?
Zakat is due on the day one’s zakatable wealth (possessions minus debts/expenses) reaches the nisab.
Nisab is the threshold (minimum) for zakatable net assets at which zakat becomes due.
Nisab was set by Prophet Muammad (pbuh) at: 20 Mithqal of gold) or 200 dirhams of silver.
If someone possesses only Gold as zakatable assets, then the Nisab level for Gold must be used, if however a mixture of assets are possessed then the (lower) Silver Nisab level must be used.
You can work out your zakat liability with this handy calculator we’ve created.
Let us assume that today is the zakat day for four individuals and that today’s gold nisab is worth £3500, and silver nisab is worth £360.
Zayd has cash only as assets which amounts to a total of £400. Since he has cash only, he has to do a comparison against the silver nisab which is currently at £360. As he has wealth above the nisab, he has to pay 2.5% zakat on the full £400.
Bakr has a mixture of assets £150 cash and £250 worth of gold. He has to add both value up £150 plus £250 equals to £400. He has to compare it against the silver nisab too which is £360, As he has wealth above the nisab, he has to pay 2.5% zakat on the full £400.
Aysha has got no cash and no silver. But she has an amount of gold worth £5000. She will compare the value against the gold nisab which is of £3500. As she has wealth above the nisab, she has to pay zakat on the full £5000.
Zaynab has got no cash and no silver. But she has £1500 worth of gold. She will compare the value against the gold nisab which is of £3500. As her wealth is below the nisab, she will not need to pay any zakat.
Who can receive zakat?
Only one verse of the Quran tells us about those categories of people that are eligible to receive zakat. There are eight of them in total:
- The Poor (whose wealth is below the nisab level)
- The Needy (who doesn’t have anything)
- Zakat administrators
- Reconciling hearts
- Freeing slaves
- Helping those struggling due to overwhelming debt
- The cause of Allah
- The traveller
At the beginning of Islam, people would bring their zakat to the prophet (PBUH) who would then distribute accordingly. But as the Muslims population was growing, some tribes were finding it difficult to travel all the way to Madinah to bring their zakat.
Hence, the Prophet would select and send people to different areas to collect zakat from the rich and distribute it to the poor. As this became a full time job, Allah made these administrators eligible to receive a wage from the zakat itself.
This is obviously so that they could carry out their role effectively without having to worry about earning money from elsewhere. This also shows, that despite being an act of ‘ibadaah, the administration to collect, manage and distribute the zakat must be structured and organised in an effective manner.
Hence, the khulafa who came after the Prophet continued the method of sending administrators to collect and distribute zakat. It is only in the time of Uthman (ra), when the Muslims territory was getting bigger, that the permission for individuals to distribute zakat themselves, was given if no administrator could reach them on time.
Today, for Muslims living in the West, there is no administrators of zakat that are appointed by a Muslim leader, since we are a minority in non-Muslim countries.
Hence, we tend to distribute the zakat ourselves to those eligible to receive it. However, with the rise of Muslim charities who collect and distribute zakat. The question arises as to whether these charities who fulfill the role of zakat administrators, can actually use part of the collected zakat to fund themselves?
Contemporary scholars tend to differ on this topic. There are some who believe that charities are merely agents who collect and distribute zakat. Since there are not appointed by the Muslim state. Thus, they are not eligible to receive anything from the zakat fund.
Whilst other scholars believe that the function of charities is indeed to administrate the zakat, it is logical for them to receive a portion of the zakat fund to cover the cost of the zakat administration.
The term Muallafatul Qulūb is one of the least explained terms in our faith. The term appears once in the Quran and is mentioned in relatively few ahadith. Upon examining the Quran and Hadith literature very little is found with regards to understanding the criteria, application and ruling of those who would fall under the category of Muallafatul Qulub’.
This has led to various opinions amongst the scholars on who exactly falls under the category of Muallafatul Qulub and whether this category still exists today.
Although the Prophet tried to reconcile the hearts of new Muslims who were still weak in their faith, It is actually not proven that he ever distributed zakat to a non-Muslim. This is the opinion of many classical and contemporary scholars such as Imam Nawawi (ra), Hafiz Ibn Hajar (ra), Imam Bayhaqi (ra), Hafiz Ibn Khatir (ra), Mufti Shafi (ra), Allama Mazhari (ra) and many others.
It has also been argued that zakat can be given to those whose harm is feared. Qadhi Abu Bakr Ibn Arabi (ra) gives the example of Aamir Bin Tufail whom the Prophet did taleef with in order to protect the Muslims from his harm.
However, no clear hadith seems to support this argument.
As for the scholars of jurisprudence, they have differed on whether zakat must be given to non-Muslims to bring them closer and eliminate the fear in between? The Hanafis feel that this category was only relevant during the time of the Prophet and since the time of Umar (ra), this category has been abrogated.
The Malikis argue that, zakat will be given if the need arises again, when Islam and Muslims become weak, as a mean of protection.
The Shafi’is are in favour of giving zakat as a mean of reconciling the hearts of Muslims who are weak in their iman (faith). For example, those who feel the need to leave Islam because of the impact of Islamophobia.
The Hanbalis are of the opinion that zakat can be given to a Non Muslim if there is hope that this will bring him closer to Islam.
Sheikh Qardawi is of the opinion that zakat can be given to a Non-Muslim if someone cannot find an eligible Muslim recipient.
Why non-Muslims don’t receive Zakat?
Imam Zufar among the Hanafis was of the opinion that zakat can be given to poor Non-Muslims.
His argument was that the Quran did not make a distinction between poor Muslims/Non Muslims when it comes to distributing Zakat.
However, the majority of the scholars are of the opinion that zakat is indeed restricted to the Muslims only. As zakat has very specific rules that set it aside from the normal form of sadaqah (charity).
For example, only Rich Muslims must pay zakat, zakat can only be given towards eight avenues, zakat i.e. zakat cannot be given to feed animals or to build a mosque for God.
Hence, zakat is also restricted to poor Muslims recipients only. However, sadaqah does not have any of these restrictions, sadaqah can be given by poor and rich Muslims, sadaqah is spent on animals, on mosques, on building schools, on non-Muslims.
In fact, some local scholars encourage Muslims to use their sadaqah for all other avenues that zakat cannot be used towards, such as on Non Muslims.
Zakat vs Tax
Although zakat is considered to be a tax on Muslim wealth which is then distributed for the welfare of the community. We must not allow ourselves to think that paying other forms of taxes will make us absolved from paying zakat. Here are some of the reasons as to why zakat and tax are different:
- Zakat is an act of worship first and foremost. Tax is not an act of worship.
- We pay zakat to obey God. We pay taxes to obey man made law.
- Zakat amount is fixed by shariah and can never change. Hence, scholars argue that a Muslim leader could not amend the zakat rate. Tax can be increased and decreased according to the need.
- If a Muslim leader was to impose a parallel tax system on the Muslims, their obligations towards paying zakat would still not be fulfilled by paying another tax.
- For its validity, Zakat must be given within the eight category framework which God mentioned. Whether by paying tax, there is no guarantee that your tax will be given to any of these 8 categories.
Unfortunately, there are unscrupulous people that will go to any length to avoid paying zakat purposely by using valid stratagems.
For example, zakat is not payable on personal diamonds, there are people who will sell their gold and buy diamonds instead, to avoid/reduce their zakat liabilities. Some people transfer part, or all their wealth to a spouse a day before zakat becomes due, to avoid paying it.
What happens if someone does this purposely?
According to the majority of scholars, it is impermissible (haram) to purposely avoid or reduce zakat payment. The person who does it will still be liable to pay the zakat. This is the opinion of the Malikis, Hanbalis, the Shafi’is in one opinion.
According to the Hanafis, there will be no need to pay zakat. However, the person will not be sinful according to the Hanafi scholar Al Tahtawi. In any case, the person will still have to answer to God on the Day of Judgement.
Zakat in the UK context
For many of us living in the West, we are blessed to have access to social welfare. However, the reality is that, the economic condition of the Muslim community is far from perfect with Muslims among the poorest in society.
There are accounts of some Muslims (men and women) being homeless, some even living on the streets or under the bridges. And yes, we are talking about born and bred British Muslims too – and not just refugees coming into the UK.
Since the scholars are all in agreement that local areas must be prioritised when giving zakat, it is therefore imperative that Muslims rethink how they should redistribute their zakat. The preference should be to send sadaqah abroad and spend zakat here in the UK.
Role of Zakat in the Sustainable Development Goals (SDGs)
As of 2018, we need between USD 3.3-4.5 trillion per year to achieve the 2030 Agenda for Sustainable Development.
Although there is no correct figure on how much zakat is collected, the Islamic Development Bank has estimated that around $500 billion is given in zakat each year globally. This tells us the potential that zakat itself can have in developing a better world and a better future for our children.
In total, there are 17 SDGs, and zakat is highly aligned with them. For example, by collecting and distributing zakat efficiently we can achieve the following: SDG 1( no poverty), SDG 2 (zero hunger), SDG 3 (good Health & wellbeing), SDG 4(quality education), SDG 6 (clean water and sanitation), SDG 10 (reduced inequalities).
How to calculate Zakat
If you need to calculate your zakat you should check out our comprehensive zakat calculator.