A world where the wealth of the affluent eases the suffering of the poor, where generosity helps balance privilege. This vision is at the core of Zakat, one of the five pillars of Islam that obligates Muslims to give a fixed percentage of their wealth to those in need. By understanding and fulfilling the obligation of Zakat, you cleanse your wealth and empower entities that build bridges within the muslim community.
What is Zakat?
Zakat means "purification" and "growth." It is meant to cleanse one's wealth by distributing a percentage of it to those less fortunate. The main objective of Zakat is that it should act as a social leveler and eliminate the widening disparity between the rich and the poor.
You can donate your Zakat to Al Mustafa Welfare Trust, and we ensure that your Zakat is being spent where it is most needed. Every penny you donate goes directly to those in need, profoundly changing the lives of thousands of families and individuals.
Understanding Zakat Rules
Eligibility for Paying Zakat
Every Muslim who fulfills certain conditions must pay the Zakat as it is compulsory. The individual must be a mature (pubertal) adult and meet the minimum level of wealth (Nisab) for a lunar year (Islamic).
Nisab: The Minimum Threshold
The Nisab is the minimum amount of wealth that a Muslim must possess before being required to pay Zakat. It is equivalent to 87.48 grams of gold or 612.36 grams of silver. Zakat is obligatory for Muslims to be paid once a year when their wealth has attained or exceeded the Nisab, after accounting for remaining property or assets.
Zakat comes in two forms: Zakat ul Mal and Zakat ul Fitr. Both are mandatory, and we shall discuss both forms beginning with Zakat ul Mal.
The Rules of Zakat al-Mal
Following are the 5 Fundamental Zakat ul Mal Rules:
- Every sane adult Muslim must give Zakat from his wealth annually. Certain other conditions, such as being free of debt, must also be met to be able to pay Zakat.
- You pay a constant unit of wealth. Zakat is 2.5% of the excess wealth that you have had for a one-year lunar period.
- A person must own the nisab for one lunar year before he/she is required to pay Zakat on that surplus wealth.
- Zakat must be paid as soon as it becomes due (one lunar year after Chattel acquired Nisab)
- Zakat must be given to the needy, poor, slaves, to those in debt or to the stranded travelers.
The Rules of Zakat al-Fitr
The other kind of Zakat is Zakat al Fitr or Fitrana. It applies each Ramadan before the day of Eid and is obligatory upon those who meet the nisab threshold, irrespective of age or rank.
- Fitrana is obligatory upon a person once a year; it should be given in Ramadan before the day of Eid.
- Every family member is obliged to pay Zakat.
Fitrana is the price of a meal that must be given to a recipient in need before the start of the Islamic year's Shawwal month.
Al Mustafa Welfare Trust is a beacon of trust and accountability in Zakat distribution. Our transparent practices regarding Zakat usage assure donors that their contributions make a real difference.
Your Zakat donation reaches the vulnerable, including children, those affected by war, disease, and climate disasters, and individuals in dire need.
Rules for Paying Zakat on Gold
Zakat is a religious obligation, and it requires Muslims to pay a certain amount of wealth every year to help the needy and deserving ones. When it comes to gold, there are specific rules about how and when Zakat should be paid.
Nisab Threshold
The Nisab for gold is approximately 87.48 grams or 2.75 troy ounces of gold. To determine if you have reached the Nisab, calculate the total weight of all the gold you possess. If it equals or exceeds 85 grams, you are obligated to pay Zakat on it.
Rate of Zakat
The Zakat rate is 2.5% (or 1/40) of the total value of the gold owned.
Types of Gold included to pay for Zakat
Jewelry: Gold jewelry that is owned and regularly worn is subject to Zakat if it reaches the Nisab threshold.
Bullion and Coins: Gold held in the form of bullion or coins, is subject to pay for Zakat.
Mixed Ownership: If the gold is jointly owned, each owner calculates their share individually to see if it meets the Nisab threshold.
Calculation of Zakat on Gold
Step 1: Weigh all the gold you own.
Step 2: Determine the current market value of gold per gram. Step 3: Calculate the total value of your gold by multiplying the weight by the current market value.
Step 4: Pay 2.5% of this total value as Zakat.
Let’s take an Example: Assume you own 100 grams of gold, and it exceeds the 85 grams Nisab. Now if the current market value of gold is $60 per gram, the total value of your gold is 100 grams × $60 = $6000. The Zakat is 2.5% of $60000 which would be $150.
Thus, you need to pay $150 as zakat on gold.
Zakat Rules on Tax
When calculating Zakat, it's essential to understand how taxes impact your wealth and liabilities. Here are the rules regarding Zakat and taxes:
1. Deductible Taxes
Taxes already paid can be deducted from your total wealth when calculating Zakat. This is because paid taxes are considered a settled liability, reducing your zakatable assets.
Taxes that are due and payable, but not yet paid, can also be deducted. This includes income tax, property tax, and other types of taxes owed to the government. Deducting these ensures you pay Zakat only on your actual income and wealth.
2. Non-Deductible Taxes
Taxes you anticipate paying in the future, but are not currently due, should not be deducted when calculating Zakat. Zakat is calculated based on the current status of your wealth and liabilities.
Consumption taxes, such as VAT or sales tax, included in the cost of goods and services you purchase cannot be deducted from your zakatable assets. These are considered part of your general expenditures, not direct liabilities.
3. Types of Zakatable Assets
These include:
Deduct any taxes already paid or due from your total cash and bank balances.
Calculate Zakat on the current value after deducting any related taxes.
Include income from investments such as stocks, bonds, and real estate, deducting any relevant taxes paid or due. Calculate the value of business inventory at current market prices, minus any outstanding business-related taxes.
The value of the Nisab can be calculated in your local currency based on current market rates of gold or silver. Ensure your total zakatable assets exceed this threshold after deducting any due taxes.
Zakat ensures that wealth is purified and distributed to those in need. By paying it, Muslims fulfill their religious duties accurately and responsibly. Donate your Zakat to Al Mustafa Welfare Trust to meet your obligation and make a significant difference in the lives of the underprivileged. Your Zakat will help provide essential supplies and uplift needy communities.
Donate Zakat today and join us in this transformative journey.
