"Let not those who are miserly with what God has given them of His bounty think that this is good for them. Rather, it is bad for them. That which they withhold shall be hung around their necks on the Day of Arising. (Q3:180) One of the most important principles of Islam is that all things belong to God, and that wealth is therefore held by human beings in trust. The word zakat means both 'purification' and 'growth'. Our possessions are purified by setting aside a proportion for those in need, and, like the pruning of plants, this cutting back balances and encourages new growth.
Zakat is one of the major religious duties in Islam. It refers to the purification of a believers' wealth and soul. Wealth purification denotes the mobilization of assets for the purpose of financial growth and justified distribution. Purification of the soul implies freedom from hatred, jealousy, selfishness, uneasiness and greed. Zakat is the amount of money that every mentally stable, free, and financially able Muslim adult, male and female, has to pay to support specific categories people. It is then distributed to prescribed beneficiaries and for the welfare as well as the infrastructure of a society in general. This contribution is made payable by a Muslim once every year.
Zakat is paid on the net balance after a Muslim has spent on basic necessities, family expenses, due credits, donations and taxes. Every Muslim male or female who at the end of the Hijri year is in possession of the equivalent of 85 grams of gold or more in cash or articles of trade, must pay his or her zakat at the minimum rate of 2.5 percent. Zakat has a deep humanitarian and social-political value. This religious act prevents the hoarding of wealth and advocates solidarity with humanity because excessive wealth is distributed amongst the poor. Paying zakat encourages a person to have gratitude towards God's bounties. The obligatory nature of Zakat is firmly established in the Qur'an, the Sunnah, and the consensus of the companions and the Muslim scholars.
Zakat is obligatory when a certain amount of money, called the nisab is reached or exceeded. Zakat is not obligatory if the amount owned is less than this nisab. The nisab (or minimum amount) of gold and golden currency is 20 mithqal, this is approximately 85 grams of pure gold. One mithqal is approximately 4.25 grams. The nisab of silver and silver currency is approximately Nine thousand naira (N9000.00), which is approximately 595 grams of pure silver. The nisab of other kinds of money and currency is to be scaled to that of gold, 85 grams of pure gold. This means that the nisab of money is the price of 85 grams of 999-type (pure) gold, on the day in which Zakat is paid.
When is Zakat Due ?
1. Passage of One Lunar Year: Zakat is obligatory after a time span of one lunar year passes with the money in the control of its owner. Then the owner needs to pay 2.5% (or 1/40) of the money as Zakat. (A lunar year is approximately 355 days).
2. Deduction of Debts: The owner should deduct any amount of money he or she borrowed from others; then check if the rest reaches the necessary nisab, then pays Zakat for it. If the owner had enough money to satisfy the nisab at the beginning of the year, then the money increased (in profits, salaries, inheritance, grants...etc.), the owner needs to add the increase to the nisab amount owned at the beginning of the year; then pay Zakat, 2.5%, of the total at the end of the lunar year(there are small differences in the fiqh schools here).
Each Muslim calculates his or her own Zakat individually. For most purposes, this involves the payment each year of two and a half percent of one's capital. A pious person may also give as much as he or she pleases as sadaqah, or "voluntary charity" and does so preferably in secret. The Prophet said 'even meeting your brother with a cheerful face is charity.' The Prophet said: 'Charity is a necessity for every Muslim. ' He was asked: 'What if a person has nothing?' The Prophet replied: 'He should work with his own hands for his benefit and then give something out of such earnings in charity.' The Companions asked: 'What if he is not able to work?' The Prophet said: 'He should help poor and needy persons.' The Companions further asked 'What if he cannot do even that?' The Prophet said 'He should urge others to do good.' The Companions said 'What if he lacks that also?' The Prophet said 'He should check himself from doing evil. That is also charity.'
Conditions for Zakat Several conditions must be fulfilled before zakat can be paid. These conditions are necessary as zakat can only be applied on those who are of legal age and who own enough assets. These conditions are categorized into two broad categories, namely performer and asset. Every Muslim who is of a certain age and owns enough assets is required to pay zakat. Zakat Asset Full Ownership: A Muslim will only be required to pay zakat if he or she has full and legal ownership of an asset. Zakat is payable only on those assets that are acquired for the purpose of creating or generating wealth. Some examples of this type of assets are livestock or crops that are traded or sold, inventory of goods used for trading, and investments such as gold or securities that have potential for appreciation in value.
However, zakat is not payable in the case of fixed assets such as buildings, if they are not subjected to "capital circulation". Assets that exceed a minimum value Zakat need only be paid on those assets that exceed a minimum value. This minimum value is calculated based on the market price of 85 grams of gold or 595 grams of pure silver. This minimum value is termed Nisab. The Islamic Fiqh and Research Councils, as well as Jumhur (majority) of Ulama' recommend that gold be used as the basis for the calculation of nisab. Beneficiaries of Zakat The Holy Quran classifies the due recipients of zakat under the following eight categories (asnaf) that are mentioned in the Quran in Surah Taubah: "The alms are only for the poor and the needy, and those who collect them, and those whose hearts are to be reconciled, and to free the captives and the debtors, and for the cause of Allah, and (for) the wayfarers; a duty imposed by Allah. Allah is knower, Wise." (Q9v60):
•The poor (Faqir/Fuqara): Those without any means of livelihood and material possessions.
•The needy (Miskeen): Those without sufficient means of livelihood to meet their basic necessities. For instance, those who, although may have a job, a house and a car, but whose income is below the minimum requirement.
•The administrators of zakat (Amil):Those appointed to manage and administer zakat. This category is sub-divided into the following categories: Group of people who go out to the society and determine those who fall Fuqara and Miskeen categories. Those who collect the zakat money. The accountant of the zakat money. The administrator, manager, clerical worker or secretary who puts the files in order. Those who handle zakat distributions. The auditor who audits overall zakat management and administration.
•The sympathizers (Muallaf-at-Quloobuhum) : Those whose hearts are inclined towards or have accepted Islam.
•To free slaves (Riqab): Zakat can also be used to free slaves or captives.
•Those who are in debt (Gharimin): Zakat can be used to pay off the debts of a person who has borrowed to pay for basic necessities so that he/she can lead a normal life. Zakat can also be distributed to those in financial difficulties e.g. bankruptcy due to the loss of employment and heavy debt.
•For the cause of God (Fisabillillah) o Zakat can be used to finance any form of struggle or work for the love of God. The following examples fall under this category, e.g. Da'wah; building & developing society's infrastructure; defending Muslims, who are being oppressed; assisting poor travellers and sponsoring a student's educational expenses.
• Those who are stranded during a journey (Ibnus Sabil): Zakat can also be used to help a traveller facing difficulties in continuing his journey due to reasons such as loss of money or the breakdown of his vehicles, the repair of which he cannot afford. The Prophet said, "If someone gives as charity so much as the equivalent of a single date from honest earnings - and God accepts only what is honest - God takes it in the Right Hand, then makes it increase in multiples.