Zakat is one of the five pillars of Islam and is an obligation on all adult and able Muslims. The word zakat means to grow, purify, and increase. Muslims pay zakat to purify and cleanse their wealth.
In many instances, a person may not be aware that the property he owns may be mixed up with haram (forbidden) or ambiguous elements. In this case, Zakat is a pristine avenue of purifying one's property and thus, the owner of the property earns the blessings of Allah.
At the micro level, an individual can develop a sense of sympathy towards people in need and eliminates selfishness by paying zakat as Zakat cleanses a Muslim's soul from being stingy, greedy, and proud. At the macro level, zakat helps Muslims to develop the spirit of brotherhood by reducing the divide between the rich and the poor, and to bring peace by reducing the crime rate like robbery and theft in the society.
The 'nisab' of zakat in the contemporary age
Nisab is the minimum Quantity that the Prophet (peace be upon him) established as fixed thresholds at which a Muslim must pay zakat from specific kinds of eligible wealth. At present, persons who are in possession of surplus wealth for a full lunar year, exceeding the Nisab – monetary value of 612.36 grams of silver (currently worth about Tk39,577) or 87.48 grams of gold (Tk594,864) (last updated 29 March 2022, 11:00 am) are liable to pay zakat. We see that the nisab calculated with the silver standard is significantly lower than its gold counterpart. This is because the value of silver has plummeted since the time of the Prophet (peace be upon him).
Many zakat-based charities and a section of Islamic scholars recommend using Silver instead of Gold when calculating nisab. They argue that it will increase the collection of zakat and therefore contribute more to poverty alleviation. In contrast, there are scholars who support using the gold nisab. They say that the gold nisab is closer to the nisab in use at the time of the blessed Prophet (peace be upon him). Moreover, silver has devalued so much over the centuries that even the poor people have to pay zakat if silver is considered for calculating nisab. Hence, there is a scope of ijtihad (independent legal reasoning in Islamic jurisprudence or fiqh) based on the contemporary demand of the time.
Eligibility of wealth for zakat
Besides nisab, there are five conditions relating to a Muslim's wealth that determine whether he should pay Zakat on it. These are: Absolute ownership; Growth; Abundance above need; Solvency (freedom from Debt); And lapse of a lunar year (or time of harvest)
Absolute ownership means that Allah is the real owner of all things, and He has given man the right to own and control property privately. Any material asset of wealth from which a person pays zakat must be transferred into the exclusive possession of the individual zakat recipient.
Growth of a person's property can be described in two ways: (i) an asset which provides profit or material benefit to its owner, or (ii) an asset which is itself produced by growth, either as a gain or by acquisition. One pays Zakat at a fraction of surplus growth, not on the things oneself or one's family personally use. For example, a farmer pays zakat from crops at harvest but not on their remaining yield, even if stored for years.
Abundance above need takes account of the wealth one needs for the basics of life. Some scholars hold that once a 'zakatable' wealth reaches nisab, one pays zakat on it regardless of any other consideration. Other scholars including Shaykh Yusuf Qardawi, the writer of Fiqh al-Zakat, hold that Zakat's very purpose is to alleviate the sufferings of the poor, needful, and deserving. So, any wealth one uses, personally or for dependents, to meet life's essential needs is exempted from paying zakat. In Islam, nisab is used to categorize who is rich and needful. One who has it is wealthy. One who doesn't is poor. Nisab and zakat calculations begin with the wealth that a person accumulates after fulfilling his and his family's basic needs. This is because a person cannot pay zakat "cheerfully" from wealth that is needed to sustain himself and his family. This runs counter to the spirit of zakat, which is to be paid gladly.
Solvency means freedom from debt. Most Muslims today live in the absence of zakat collecting authorities who would normally personally assess one's discernible wealth and determine one's due zakat. Muslims ought to assess their own indebtedness and pay zakat on any remaining wealth after deducting their debts.
The end of a lunar year and harvest as the due date of zakat sets the time duration related to zakat payment. This means that a Muslim pays zakat once a year on the profit (or potential of it) from eligible wealth. There are two types of property categories to reckon: The first is designated growth holdings (Business assets and stores of value including money, precious metals, gems, livestock, etc); and the second kind of property is the gains from the earth (cultivated produce like crops, fruits, and anything extracted from the earth).
For the first kind of wealth, whatever someone earns, profits or gains from his principal wealth during that zakat year, he must add to that principal for the purposes of calculating zakat payment at the principal's original due date. For the second kind of wealth, gains from the earth, one pays zakat upon receipt, at time of harvest or extraction.
A social insurance for modern societies
In the 21st century context, we can consider zakat as a permissible form of social insurance. The person who pays or receives the zakat in a respectable way will gain many benefits including Allah's pleasure, forgiveness, and blessings.
Since zakat is an Islamic duty, a contributor should not seek fame or praise for performing this duty. In fact, he should give the zakat as secretly as possible so that he does not become proud or arrogant, thus his good deeds are annulled.
However, in certain situations, the disclosure of contributions may encourage others to be generous. In order to pay zakat properly, therefore, one must know the nisab and the conditions of wealth that determine whether one should pay zakat on it. The holy month of Ramadan is certainly one of the best times for this purpose.
Foyasal Khan, PhD, is Deputy Executive Secretary (R&D and PA) at the Dhaka Chamber of Commerce & Industry (DCCI). Views expressed in this article are the author's own. He can be reached at firstname.lastname@example.org