Wednesday, September 22, 2021

Frequently Asked Questions About Zakat

  Anonymous       Wednesday, September 22, 2021

 What Is Nisab? 

Nisab refers to a specific threshold that you must exceed to be able to pay zakat. There are two ways to determine the nisab: gold or silver. 

Gold: 3 ounces of gold (87.48 grammes) or its cash equivalent, by the gold standard, makes up the nisab. On 16 April 2019, this is $3,560, but this amount will vary with the price of gold.

Silver: A nisab of 21 ounces of silver, in money, or the equivalent in silver, is known as a silver nisab. That's $324.00 in United States dollars on 16 April 2019.


Which Part of My Wealth Becomes Zakat Payable?

Gold and silver: According to the Hanafi school, any gold or silver you own is zakatable, including jewellery, because these two metals have intrinsic monetary value.

Other precious metals and stones are not subject to zakat unless they were acquired for commercial purposes.

Cash or a currency equivalent: When calculating zakat, all cash on hand, bank accounts, savings, money lent to others, saving certificates, bonds, shares, and investment certificates are taken into account.

Stock purchased for trading purposes is included in your zakatable wealth.
 

Which Part of My Wealth Is Zakat-Free? 

Your belongings other than gold and silver (such as house, cars) are exempt from zakat until they are in your possession for non-trading and profit purposes.


Should I Pay Zakat On Pension Fund? 


A pension can be funded in one of two ways:

1) Payments are deducted from a contributor's salary before it is received.

2) The contributor makes payments with money that they have already acquired.

If the contributions are deducted from the contributor's salary at the source, and the money is never in the contributor's possession, no zakat is due on the payments, nor is it due on the amount accumulated in the pension or provident fund.

Zakat becomes due only when the contributor receives and receives money from the fund. If the pension payments are made after the contributor receives the money, zakat is due on the money that accumulates in the fund.


I Have Invested Some Of My Savings In Stock Shares, How Should I Calculate Zakat Amount? 


Do I Pay Zakat On Money Saved For Hajj/Umrah Purpose? 

Yes, zakat is payable on money saved for hajj as long as it is retained for one lunar year and your total wealth exceeds the nisab threshold.

I have Debts To Pay. Should I Pay Zakat Too?

The fundamental principle is that after deducting debts from wealth, if the remainder exceeds the nisab threshold, zakat is payable; otherwise, it is not.

If, on the other hand, a person has a large debt that is being paid off in instalments, such as a mortgage or a large credit card debt, the individual should deduct only the payment that is currently due from his or her assets.

Is Zakat Payable On Work Related Transactions?

Zakat is not payable on money owed for work until the payment is received. Similarly, zakat is not payable on an unpaid dowry or an unpaid inheritance share.

Is Zakat Payable On Money I Have Lent to Other People? 

Yes. You can either pay zakat annually until the loan is repaid, or wait until the loan is repaid and then pay the accumulated zakat in one go.

If the loan is insecure and you are uncertain about the borrower's ability to repay you, it is preferable to postpone the zakat payment until you receive it, at which point the zakat accumulated over the years will become payable. If you never receive your money back, there is no zakat due.

Do I Pay Zakat on Inheritance Share? 

If a share is due and not yet in your possession, you are exempt from Zakat.

I Run My Own Business. Do I Have to Pay Zakat? 

If you own a business, all stock in trade is subject to zakat, including land and real estate purchased for resale.

Zakat is also levied on raw materials and finished goods. Buildings, machinery, and vehicles, among other things, that are necessary for the operation of the business are exempt from zakat.

How Can I Calculate Value of Stock In My Shop? 

The market value of the stock in your shop, not the purchase price, determines its value. This can be calculated by estimating the amount you would receive if you sold the entire stock to a single buyer at once.

Do I Have To Pay Zakat on Dead Stock? 

Yes, zakat would be required on it. Although you would consider the price at which you could sell it when determining its value.

I Have Taken Commericial Loans. Does It Affect My Zakat Calculation? 

A loan used to acquire zakatable assets, such as raw materials or finished goods, may be deducted from your capital. On what remains, you pay zakat.

A loan used to acquire non-zakatable assets, such as furniture, machinery, or real estate, is not deductible.

Can I Pay Zakat In Advance? 

Yes, zakat can be paid in advance prior to the end of the year, but you should ensure that your wealth is equal to or greater than the nisab.

What Can Make My Charity Donations As Zakat Being Paid? 

To qualify as zakat, a donation must be made with a clear intention, either when the zakat money is separated from the rest of your wealth or when the zakat payment is made.

Do I Pay Zakat On Belonging of My Children?

According to the Hanafi school, this is not the case. Even if a child's wealth exceeds the nisab threshold, he or she is not obligated to pay zakat. If the child has wealth in excess of the nisab, the first zakat payment is due twelve lunar months after reaching puberty.

However, according to Imam Shafi' and Imam Malik, a child who has wealth in excess of the nisab value is subject to zakat in the same way as an adult.

What Is Zakat-Al-Fitr?

Each adult Muslim who has food in excess of their needs must pay zakat al-fitr for themselves prior to the Eid al-Fitr prayer at the end of Ramadan. Additionally, the head of household may make payments on behalf of their dependants, which may include children, servants, and elderly relatives.

The head of the household is responsible for paying zakat al-fitr on behalf of all dependants. Zakat al-fitr can be paid during Ramadan, but no later than the day before Eid al-Fitr prayers, to ensure that the poor can enjoy Eid.

The minimum payment is approximately 2 kilogrammes of wheat flour, rice, or other staple foodstuffs for each household member, including children and dependents – even if they do not live in the same house. A conservative estimate is around £5/US$7 per head.

Zakat al-Fitr is distributed to the poor and those in need who are also eligible to receive general zakat. Islamic Relief acts as your charitable agent, purchasing and distributing food on your behalf using your zakat al-fitr.

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