Zakat:

An investment with returns guaranteed by God

by Dr. M. Haris Z Deen

Those who spend their wealth in the cause of Allah, and follow not up their gift with reminders of their generosity, or with injury, - for them their reward is with their Lord: on them shall be no fear, Nor shall they grieve" (Sura 2: verses 262, 263).

In this holy month of Ramazan, the month of purifying oneself of all physical and mental 'illnesses', Muslims are required also to take advantage of 'an investment' that will not only 'purify' their wealth but also investments which God guarantees with returns manifold.

It is natural for any human being to think twice before parting with any part of their property without the guarantee of a return mainly by way of profit. In this regard Allah (Subhanahuwatha'ala) categorically guarantees 700% profit on an investment a Muslim makes in the name of Allah as follows: "The parable of those who spend their wealth in the way of Allah is that of a grain of corn; it grows seven ears and each ear has a hundred grains. Allah gives manifold increase to whom He pleases: And Allah cares for all and He knows all things.

Those who spend their wealth in the cause of Allah, and follow not up their gift with reminders of their generosity, or with injury, - for them their reward is with their Lord: on them shall be no fear, Nor shall they grieve" (Sura 2: verses 262, 263).

Can any financial advisor or stockbroker give such an unqualified guarantee? the only qualification with Allah is that the wealth should be spent "without following up their gift with reminders of their generosity or with injury". Allah asserts this exception very clearly as follows: "O you who believe, cancel not your charity by reminders of your generosity or by injury - like those who spend their wealth to be seen of men, but believe neither in the Last Day" (Sura 2: verse 264). In the same verse Allah likens such people to "a barren hard rock" as follows: "Thery are in parable: like a hard, barren rock, on which is a little soil: on it falls heavy rain, which leaves it (just) a bare stone. They will be able to do nothing with aught they have earned, and Allah guides not who reject faith".

On whom is Zakath compulsory?

The Prophet (Sal) is reported in a Hadith as having said that "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 unable to work?" The Prophet replied: "He should help poor and needy persons." The companions further asked: "What if he cannot do even that?" The beloved Prophet of Islam said: "He should urge others to do good." The companions insisted "What if he lacks that also?", he calmly said "He should check himself from doing evil. That is also charity."

According to the Shari'ah, Zakat is compulsory on every adult Muslim, mentally stable, free and financially able, male or female who has had savings over a period of one year.

Zakat becomes obligatory when a certain amount of money, (Nisab- minimum amount of saving for payment of Zakat), is reached or exceeded. Zakat is not obligatory if the amount owned is less than the Nisab. The Nisab level is measured in terms of the gold standard. The Nisab of gold and golden currency is 20 mithqal (approximately 85 grams of pure gold, one Mithqal being approximately equivalent to 4.25 grams). The Nisab for silver and silver currency is 200 dirhams, which is approximately 595 grams of pure silver.

The Nisab for other kinds of money and currency that is now in circulation and being used world over must be scaled to that of gold, 85 grams of pure gold. That means that for those who have had savings in a year, in money equivalent to the current market value of 85 grams of pure gold, on the day Zakat becomes compulsory, he or she has to pay 21/2% of that value as Zakat.

This is only in respect of cash wealth. The Nisab level for other wealth is different and people with land and agricultural produce and animal husbandry must check with their Mufti's the level of Zakat they will have to pay on these produce.

It is important for every Muslim to take stock of his or her savings or wealth and pay the Zakat voluntarily, without being compelled to do so.

The obligatory nature of this act of worship is firmly established in the Quran and in the Sunnah of our beloved Prophet (Sal).

Allah warns the believers on this aspect as follows: "O you who believe! There are indeed many among the priests and anchorites, who in falsehood devour the substance of men and hinder (them) from the way of Allah.

And there are those who bury gold and silver and spend it not in the way of Allah. Announce unto them a most grievous penalty - On the Day when heat will be produced out of that (wealth) in the fire of Hell, and with it will be branded their foreheads, their flanks, and their backs.' This is the (treasure) that which you buried for yourselves: taste ye, then, the (treasures) ye buried" (Al Quran :Sura 9 - verses 34 - 35)

Who is entitled to receive Zakat?

The category of people who are entitled to receive Zakat is clearly defined in the Quran, thus:

"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) wayfarers; a duty imposed by Allah. Allah is the Knower, the Wise" (Al Quran: Sura 9 - verse 60).

When does Zakat become due?

Zakat is obligatory after a time span of one lunar year passes with the money in the control of it's owner. Then the owner needs to pay 2.5% (or 1/40) of the money as Zakat.

(A lunar year is approximately 355 days) after deducting amounts of money the person has borrowed from others.

After making such deductions if the possessor's wealth reaches the Nisab level (equivalent value of pure gold as explained earlier), then the person will be required to pay the prescribed Zakat.

Another point that should be taken into account is that if the owner of the wealth had enough money to satisfy the Nisab at the beginning of the year, then if 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.

Muslims must remember also that piety is not restricted to the payment of Zakat only, A pious person may also give as much as he or she pleases as Sadaqa, and does so preferably in secret. Although this word can be translated as 'voluntary charity' it has a wider meaning.

The Prophet (sal) said "even meeting your brother with a cheerful face is charity."

Allah knows best.