ZAKAT FAQs

April 16, 2021

We have compiled responses to your frequently asked questions under the supervision of our noble Shari’ah Adviser, Professor Monzer Kahf.

1. What is Zakat?2021-04-26T19:14:37+00:00

Zakat is the third pillar of Islam. It is a form of charity-giving treated in Islam as a religious obligation. It is a religious duty for all Muslims who meet the necessary wealth criteria.

2. Who is liable to pay Zakat?2021-04-26T19:16:05+00:00

A Muslim who possesses the minimum amount of wealth, Nisab. (The Guardian of Muslims below puberty age or insane, who own Nisab, are required to pay Zakah on their behalf).

3. What is the minimum amount of wealth (Nisab) I should have before I am required to give Zakat?2021-05-10T09:59:53+00:00

The Nisab was set by the Prophet Muhammad (peace be upon him) at a rate equivalent to 87.48 grams of gold and or 612.36 grams of silver. The monetary equivalent varies yearly. As at  6 April 2021, it was N1,840,800 as reported by the National Moonsighting Committee Nigeria. Please check the Nisab with your local Islamic organizations or authorities before calculating and paying.

4. How is Zakat calculated?2021-04-26T19:21:09+00:00

Once a person owns Nisab for the first time, then after a lunar year, i.e., 354 days from the day she\he owned Nisab, she\he should add up all owned properties (except things used personally or by the family, also except for obligations that will be paid out of said properties) and multiply by the rate of 2.5%, same is to be repeated every 354 days (lunar year).

For agricultural output and livestock, check with your local Islamic organization for Nisab and rate of Zakat.

5. When is Zakat payable?2021-04-26T17:08:29+00:00

Zakat is payable on the last day of the anniversary of owning Nisab (354th day). So, if that happens on 20th Rajab, your next Zakat will be due 20th Rajab of the following year.

You may change your Zakat due date, to make it in Ramadan or to make it consistent with your business and accounting cycle. This is done by calculating the number of days difference and pay their Zakah separately.

6.Can I use solar (Gregorian) calendar as my base year for Zakat?2021-04-26T19:30:28+00:00

Yes, but you will have to adjust it by 11 days difference between the lunar (Islamic) and solar (Gregorian) calendar for each Zakat period. This adjustment is done by multiplying the rate of Zakah which is 2.5% by 1+ 11/354. The rate then becomes 2.578% for the solar year.

B. Please note however that all Schools of Fiqh agreed that it is preferable to use the Islamic calendar.

7. Do I have to include monies/assets that have not stayed with me up to a lunar year in my Zakat calculations ?2021-04-26T19:32:41+00:00

Yes, on a Zakat due date, you value all your assets including any income or asset you acquired even a day before the Zakat due date and apply 2.5% on their value, this is within the context of the answer of question No. 4 above

8. Is Zakat payable on my bank savings or investments balance?2021-04-26T19:33:46+00:00

Yes, Zakat is payable on your bank savings and investments balance at the anniversary of your Zakat date.

9. I have money I am saving for a project which has not taken off. Is Zakat payable on the savings?2021-04-26T17:08:18+00:00

Yes, the savings is part of your wealth and Zakat is payable on it.

10. I have shares in a number of companies, is Zakat payable on these shares?2021-04-26T19:43:29+00:00

Yes, Zakat is payable on the shares. Obtain the market value of the shares in all the companies on a Zakat day and apply 2.5% on the value.

11.Is Zakat payable on my pension plan, retirement plan, child education plan and similar plans?2021-04-26T19:44:46+00:00

Yes, Zakat is payable on your retirement plan, child education plan and similar savings or investment plans. Obtain your balance on the Zakat day and apply 2.5% on the value. It does not apply, however, on social security whereby deductions made of your salary are gone and treated as taxes (in contrast to savings) by the law.

 

12. I have earned interest on some of my investments. Is Zakat payable on the interest?2021-04-26T19:46:04+00:00
  • Interest earned from investments such as bonds, shares of conventional banks and insurance companies, interest-earning deposits in conventional banks, etc. are not subject to Zakat. However, the principal investments earned from permissible source are subject to Zakat.
  • Such interest (or other Haram) earning should all be given to charity not as Zakat because Allah does not accept non-tayyeb (non-pure) but as purification and expression of repentance from the sin of Riba.
13. Is Zakat payable on salaries and wages?2021-04-26T19:47:23+00:00
  • Yes, Zakat is payable on the saved part of incomes including salaries and wages. There is no condition of passage of a lunar year on that income before Zakat is payable on them. You can either wait till the anniversary of your Zakat period and on the Zakat day apply 2.5% on your savings from the salaries and wages or estimate the amount of periodic savings and pay Zakat periodically subject to adjustment at the anniversary of your Zakat period.
  • Same applies to other professional incomes such as income of lawyers, doctors, musicians, accountants, etc.
14. Is Zakat payable on the money I have given out as loan before repayment?2021-04-26T19:49:10+00:00

Yes, Zakat is payable on monies given out as loan in so far as the loan would be repaid. The loan that you gave still forms a part of your wealth.

15. Do I pay Zakat on my land properties?2021-04-26T19:51:30+00:00
  • If the lands are used for agriculture purposes, they are not subject to Zakat. The produce is subject to Zakat at the rate of 5% or 10% depending on irrigation.
  • If the property or land is acquired for resale or rent or any other investment, they are subject to Zakat at the anniversary of your year at the rate of 2.5% and it is calculated on the market value of the property on the Zakat day.
  • A property you live in or a land acquired to build your residence or residence for your parents is not subject to Zakat even if you did not yet start the construction.
16. How is the net worth of a business calculated for Zakat payment?2021-04-26T20:26:05+00:00

Business assets, whether mobile or fixed, are subject to Zakat on the day 354th – (you should consider the net worth of the business as being what you really own in it. Any debt on it + any payment due on you which will be paid from the existing net worth are either already deducted and paid or deductible from the existing net worth, if not already deducted).

17. Who are the beneficiaries of Zakat?2021-04-26T19:54:05+00:00

Eight categories are mentioned in the Verse 9/60 of the Qur’an, these are the following (Priority should be given to the poor and needy):

  • The poor (Faqir/Fuqara)
  • The needy (Miskeen)
  • The administrators of Zakah (Amil)
  • Those whose hearts have been (recently) reconciled (to Truth)such as recent converts to Islam (Muallaf qulubuhum)
  • To free slaves (Riqab)
  • Those who are in debtbondage (Gharimin)
  • For the cause of Allah (Fisabilillah)
  • Those who are stranded during a journey (IbnusSabil).

when a person distributes own Zakat, the category of administrators does not apply.

18. What are the criteria for selection when there are too many people qualified as needy and poor?2021-04-26T19:28:21+00:00
  • The degree of need.
  • The degree of nearness. Start with the Zakat payer’s relation (family but not direct dependants or parents) then, neighbors and community.
  • The degree of religiosity of the receiver
  • Availability of other sources for a specific poor/needy
19. Do I pay Zakat on personal items such as clothes, cars, jewelries?2021-04-26T19:59:05+00:00

Personal items for everyday use are not subject to Zakat. Jewelries stored as items of wealth are subject to Zakat.

20. How can I calculate my Zakat?2021-04-26T20:04:09+00:00

You can use our Zakat calculator  here.

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