Zakat is a religious requirement that requires all Muslims who meet the required requirements to devote a certain portion of their wealth to charitable causes each year. Zakat is said to purify annual earnings that are in excess of what is needed to meet a person’s or family’s basic needs.
Who pays zakat:
Zakat is calculated based on one’s income and the value of one’s possessions. The typical qualifying amount is 2.5 percent or 1/40 of a Muslim’s total savings and wealth. Also check related to how to work out zakat
If an individual’s private wealth falls below the Nisab during a lunar year, no zakat is due for that time span.
Wealth or Liable for Zakat:
Zakat is due from the following people:
- The precious metals gold and silver
- Paper money kept in cash or in a bank
- Crops and herded animals are tradable assets held by your company.
Nisab vs. Zakat
Nisab is a word that is often used in conjunction with zakat. It is a criterion, referring to the bare minimum of wealth and status that a Muslim must attain before being required to pay zakat. In other words, if a person’s personal wealth falls below the Nisab during a lunar year, no zakat is due for that time span.To be liability for zakat, one’s wealth must exceed a certain sum known as the “nisab.”
There are two ways to calculate the nisab: gold or silver.
The gold standard defines the nisab as 3 ounces of gold or its cash equivalent. This is roughly $4,780.06 for gold, although it can vary depending on the market value of gold.
Silver: According to the silver standard, a nisab is 21 ounces of silver (612.36 grammes) or its cash equivalent.
Is zakat paid on earnings or savings?
Zakat is payable on any Muslim’s capital, young or old, male or female, that is kept in saving for one calendar year and exceeds the Nisab. Zakat is due on gold, silver, cash, deposits, investments, rent, business merchandise and earnings, shares, bonds, and shares. Zakat is due from the following people:
- The precious metals gold and silver
- Paper money kept in cash or in a bank
- Crops and herded animals are tradable assets held by your company.
You are not required to pay Zakat on any personal or capital assets. Zakat is only levied on excess wealth that exceeds the Nisab for a year or more.
Zakat is to be paid to eight groups of people named in Surah Taubah
- The left homeless,
- The needy,
- Those collecting and distributing Zakat,
- Those whose hearts need softening,
- In manumission,
- In debt repayment,
- In God’s direction,
- And assisting travellers who become stranded
Religious scriptures provide detailed explanations of the minimum sum of zakat that should be provided to those in need. It varies depending on whether the wealth was derived from agricultural goods, horses, business operations, paper money, or precious metals such as gold and silver.
Zakat Pay in case of Debt?
The basic principle is that debts are withdrawn from wealth, and if the remaining amount is greater than the nisab level, zakat is payable; otherwise, it is not. However, if an individual has a heavy mortgage that is being paid off in instalments, such as a mortgage or large credit card debt, only the balance that is actually due can be deducted from one’s wealth.
How to calculate and pay Zakat:
Today, you can measure and pay your Zakat online using Muslim Hands. Your donation will be routed to our Zakat Fund, where it will be distributed to those in need.Alternatively, if you already know how much Zakat you owe, you can pay it directly through our donations system.
Zakah al-Fitr, also known as Sadaqah al-Fitr, is another form of Zakat that is Wajib (obligatory) on Muslims. Fitr means “breaking the fast,” and it derives from the same root word as Futoor, which means “breakfast.” Thus, Zakah al-Fitr is the Islamic name for welfare spread at the end of Ramadan.
The sum of Zakat funds is the same everywhere, regardless of wealth. For each family member, one Saa (two handfuls) of rice, grain, or dried fruit is sufficient. This estimate is based on Ibn Umar’s report that the Prophet (PBUH) made Zakah al-Fitr obligatory and payable in the form of a Saa of dried dates or a Saa of barley.
Conclusion:
Zakat is a pillar of Islam and a way to cleanse your assets for Allah’s will (SWT). It is levied on properties kept for more than a lunar year. It is focused on 2.5 percent of total wealth. Zakat is not levied on wealth that is used to repay debts for mortgage payments such as clothes, food, lodging, transportation, schooling, and so on. Zakat is paid on earning and savings according to Nisab. Zakat is calculated at 2.5 percent of one’s wealth above the nisab.
