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FAQs

Since Ramadan 1424 (November 2003) the Amir and community in Norwich have consistently carried out the collection and distribution of Zakat in accordance with the Sunnah and Shariah using Gold Dinars. As one can expect we have to constantly tackle a variety of issues and make certain key decisions for that particular moment. We list some of them here. However, comments and alternative suggestions are welcomed (please log on) as we realise that this list is in no way comprehensive

Money/Cash & Savings
Traditionally money would be classified as gold and silver. Under current circumstances you should include cash in hand, money in the bank, other savings and any similar liquid assets. The principle we are adopting is to use a given formula to give an Islamic Gold Dinar (IGD) value to all monetary wealth (with of course allowances made for debts as described above).

Income & Salaries
There is no Zakat payable on salaries, wages, commission or other similar income (except possibly in the case of debt repayment over a period of time.).

Debts
If you owe someone money that amount is subtracted from your Zakatable monetary wealth. However, if you have personal assets you could sell to pay all or some of those debts then the value of those assets is first deducted from the debt itself, or cancels it out completely.

If you are owed money by someone then Zakat is paid on that debt as and when it is repaid. So in this instance 2.5% must be set aside from every payment received rather than apportioning the last 2.5% to be paid as Zakat. This is assuming the debt when first assessed reaches the level of the nisab.

Mortgages & Hire Purchase
There are two ways of looking at property on which there is a mortgage. However, before that it should be made clear that if you live in the house it is considered personal property on which there is no Zakat due. However, if you are in the business of buying and selling or renting houses then Zakat of 2.5% is due as soon as the property is sold.

The question we need to address is the debt itself. Either you own the house and thus owe the full balance of the mortgage. In this case your outstanding mortgage balance would be deducted from your Zakatable assets (call it debt relief), unless you have other excess personal possessions you could sell to cover that debt, which could include the property itself. However, the result of this would be that almost nobody with a mortgage would pay Zakat even though they are normally considered some of the most well off in society.

The other position, which is the position we are adopting, is that you only owe what payment is actually currently due at the time, which in most cases will be one month’s rent plus any arrears. The property is then not seen as an item in your possession that could be taken to offset any other debts you have.

Trading Goods & Investments
One type of trading goods is treated as an investment. For example this might be property (real estate), Persian carpets, certain vehicles and anything not subject to constant turnover. They are likely to be quite expensive items that you obviously don’t expect to sell everyday. The Zakat on these is paid ‘as and when’ sold at 2.5%

Turnover stock such as shop goods or things that are regularly sold are valued at the date of assessment and Zakat paid immediately at 2.5%. Unlike conventional accounting where goods are normally valued at cost price, for Zakat purposes goods are valued at the normal selling price.. Cash in hand and current trading debts (for stock already received) should also be taken into account before Zakat is paid. However, the value of assets needed to run the business such as delivery vehicles or shop fittings is not Zakatable and not taken into account.

Businesses & Commercial Enterprises
The conventional formula for valuing a business is Assets – Liabilities = Capital. In this instance Assets comprise Fixed Assets (property,vehicles, fixtures and fitting etc.) and Current Assets ( stock, short term debtors, cash in hand etc.). Similarly Liabilities include those in the Long term (such as long term loans) and Current Liabilities (trade creditors, overdrafts etc.) Therefore if valuing a business for Zakat purposes the Long Term Liabilities and Fixed Assets would be excluded. The other adjustment would be the basis for evaluation of stock if applicable. However, it is likely that each business would have to looked as separately rather than being able to apply a general formulas as most have a mix of circumstances.

Personal Property
There is no Zakat on personal property. The value is only considered against debts one owes to see if by selling excess items t the debt could be repaid or reduced.

Nisab
The nisab of monetary wealth is 200 dirhams (ISD) or 20 dinars (IGD). In this case ISD means Islamic Silver Dirham and IGD means Islamic Gold Dinar, minted according to the specifications of the Islamic Mint. The current value of silver means that if the nisab of dirhams is taken you will be eligible for Zakat at a much earlier/lower value of wealth.

The decision has been taken to use the nisab of 20 Dinars (IGD) and therefore in this instance all Zakat on wealth is payable in Islamic Gold Dinars (equivalent amounts of other gold may be acceptable). The exact conversion rate for the IGD (to the £) will be given on your assessment sheet and will be based on the normal price it is likely to cost you to get a Dinar into your possession based on current prices and trends.

For example if the rate is 1 IGD = £30 then the nisab for paying Zakat on monetary wealth would be equivalent to £600 and if the rate is 1 IGD = £50 the nisab would be the equivalent of £1,000

Dinar/Dirham Exchange Rates
In arriving at the exchange rate the current value of dinars available in and outside the UK will be taken into accounts (eg. http://www.e-dinar.com) and also the value of other gold coins such as the kruggerrand , gold eagle and panda etc (see also http://www.kitco.com). The fact that VAT may be payable on gold imported into the UK and also carriage (transportation costs) will also be a factor.

Livestock & Agricultural Produce
This is a separate category and details can be found at http://zakatpages.com

Assessment

The Amir and the appointed assessors in the case of monetary wealth (unlike livestock) have to rely on the diligence, honesty and integrity of each individual in ensuring they have been assessed correctly. However, the actual Zakat is still payable to the assessor/collector at the appointed time and in the right form. Therefore, if no Zakat is payable this should also be similarly communicated. Just like the other pillars there is a minimum amount of fiqh that everyone should know.

The “amirate” or collecting authority has no need to keep a record of your monetary wealth although certain statistics should be kept such as the number of people assessed and the amount of Zakat (if any) distributed.

If individual cases are of extreme interest in setting a precedent or the Zakat cannot be calculated without further scrutiny by others, then this will be done using reference numbers rather than names in order to keep each person’s financial affairs as private as possible.

The assessors will also be be looking out for identities of people who could be beneficiaries of Zakat

To refuse or decline to be assessed can be seen as tantamount to refusing to pay Zakat. So if anyone has a valid reason for not participating in the process then it should be brought directly to the attention of the Amir.
NB. Zakat is also payable on the wealth of minors

A Note on Zakat al-Fitr

The Zakat which is the topic of the above is the Zakat the middle of the five Pillars of the deen and is not to be confused with Zakat al-Fitr which is paid at the end of Ramadan. The amount payable per person is one sa’a which is approximately two litres. It is payable in kind (staple food of the area) and can be paid directly to deserving people or, in our own case, left at the Mosque the evening the eid is announced for distribution by the Amir before the eid prayer.

Zakat - Raising a Fallen Pillar
Click Here to read the book review or order this book

29 Responses

  1. Assalamu Alaykum,

    Its a good website. It educates the entire Muslim ummah not only the Muslims in Norwich. Im impressed, Thank you for the good work and may Allah reward you with Jannatul Firdaus. Amin

  2. Is there a maximum limit a person can receive the amount of zakah. ?

  3. i have yet to see anything pointing to a limit on what one can receive. However, one suspects that the person in charge will want to establish a balance betwen giving people enough to have a real and significant impact on their stae on the one hand, while on the other hand trying to benefit as many people as ossible who fit the categories.

    For example if someone receives Zakat because of a debt he/she owes then the limit would probably be the size of the debt. Likewise being poor (fuqara) and also the destitute (miskin) have their legal definitions so I would suspect that a natural limit would be enough to take them out of these positions.

    Hopefully a future posting will shed more light

  4. Zakat is quite specific, so the general answer as far as I know would likely be NO, but no doubt under some VERYspecific circumstances there may well be an exception.

    However, there i s nothing wrong with giving as much sadaqa as one likes to one’s family. The problem is when people say that giving money for example to a Muslim charity to send to Palestine discharges our Zakat then they are denying Muslims the benefits of enjoying the secrets of what Allah has put in Zakat when done according to the sunnah. Not to mention denying one of the fundamental characteristics of Zakat in that it be discharged locally

  5. Al-Salam Alaikum,
    I Need to know the Islamic Ruling about what Zakat to be paid on Investments like:
    1. Shares.
    2. Money Market Funds.
    3. Bonds.
    4. Unit Trust.
    5. International Shares Funds.
    Known that such Investment were bought to earn Income not for Short Term Trading, Mudharabah.
    Jazaka Allah Khairan

  6. Good website. I understand it is permissable to give zakat to Islamic organisations that engage in dawah, but what about non Islamic organisations that work with muslims and are spreading information that can be construed as dawah because it is good for the ummah?

    • Absolutely NOT. Zakat CANNOT be3 given to such organisations. Suraj Tawba, Ayat 70 clearly stayes who can receive Zakat and Islamic organisations are not included, no matter how great their work. Similarly Zakat cannot be used to build mosques or many other normally noble actions. These things can be done with normal sadaqa which must be encouraged. It is this giving Zakat to Islamic organisations to these Muslim charities which is one of the main problems on so many counts.
      1. It is an individual leader and not an organisation that must be empowered to Take Zakat
      2. They collect and distribute in paper money, rather than make any effort at implementing the use of gold and silver Dinars and Dirhams on which Zakat is based
      3.They often distribute funds abroad, rather than the priority for Zakat which is local distribution.
      4. They often give “Zakat” for other charitable purposes outside of those Allah says Zakat is for.
      I hope this offers some clarity. The Zakat presentationposted in the next post is also worth watching or listening to.

  7. In response to Amal Abdalhakim-Douglas’ post. I could not agree more sir. Very well said!

  8. what are the problems in the delivery of zakat?

  9. Assalamu Alaikum Muhammad Yusuf

    What secrets are in the proper payment, collection and distribution of Zakat is only known by Allah, but outwardly we can see the eight categories of people that can receive Zakat which include both the poor and the destitute. As far as I am aware there are no limits on how much someone may receive. This would mean that there is obviously great potential and likelihood that people will be removed from destitution or poverty, particularly through receiving livestock (eg a cow that may breed) or money (gold or silver)

    there are two main problems that spring to mind at this time.
    1. This is the way that Muslim led charities purport to get involved with the collection and distribution of Zakat in such a way that distorts the very nature of Zakat.

    2. The way that historically Zakat has been dismantled by the kuffar and relegated to a voluntary act of sadaqa disconnected from proper .Muslim leadership. The worst thing is that this is a position unfortunately widely accepted by Muslims across the world today.

    Of course there will also be the inevitable logistical hurdles to overcome as one would expect.

  10. my question is that my husband is jobless and we have some amount of saving which we are using at the mooment and do have some gold jewelry but have to support 3 kids if we give zakat on the jewelry we will be left with very little to survive till he gets a job. while he did have job during the year he genrousely gave away uncalculated zakat …..please guide…
    also my friend is an orphan and father doesnt support her she has some gold inhereted and earns less than 300 us dollars….she is living with realtives is saving for marriage is zakat obligatory on her ???

    • There is a famous hadith which talks about Aisha reporting to the Messenger of Allah, peace be upon him, that she had given away so much of a sheep that only a shoulder remained. He replied that ALL of the sheep remained except the shoulder.

      Zakat is not like other sadaqa. Firstly, if you do not have the equivalent of 20 dinars (probably over £2,000 value today) saved and untouched for over a lunar year then you don’t have to pay zakat anyway. it does not matter what your salary is, it only matters what you have saved and untouched for over a year (if we are talking about savings).

      Hope this helps and Allah makes the way easy for you.

  11. In response to Amal Abdalhakim-Douglas’ post. I could not agree more. Very well said!

  12. Salam to all friends, can any body tell me is there any zakat on websites? if there is then how to calculate zakat on websites?

  13. In terms of Zakat on Websites. I first of all thought you meant is there a website that helps you calculate your zakat, but on reflection it seems you are saying that you own a number of commercial websites.

    Traders (who buy and sell) should take a stock check and then add the value of any business cash in hand and pay 2.5% or 1/40th as zakat but I don’t think your websites are in that category.

    If you consider them as investments (that you will sell when the price is right) then I believe you have to pay the zakat on the selling price when finally sold.

    Perhaps someone out there knows better!

  14. Assalamalaikum
    Would like to know if you have an investment(property) which is underconstruction, What is the amount of zakat due?

  15. assalamalaikum

    An investment in property does not attract zakat if intention for self use, rent or of not reselling, even if it is vacant?
    Also, if the property is sold does the value of the proceeds attract zakat once or for all the years it was in possession?

  16. Is there any hadis or verses of quran which will give clear indications of the zakat applied to different types of property held by an individual.

  17. Can you clarify if someone who is paying a mortgage on their property in which they are living in and pays for eg £5k over a one year period towards the mortgage, However his yearly income saved has only been less than £5k – would the person be liable to pay zakat on the money he has ?

    So a yearly deduction of £5k towards the mortgage in comparison to an income in the account of under £5k.

    Thankyou.

  18. You are so cool! I don’t think I’ve read anything like that
    before. So great to discover another person with original thoughts on
    this issue. Seriously.. thanks for starting this up. This website is
    something that’s needed on the internet, someone with a little originality!

  19. These are really really useful question which people always ask. Thanks for the great share.

  20. Mortgage business, My company gets properties for Mortgage 2-3 years and rents it out for the same period. i know the company is eligible for paying zakat on the rent received but is the company also responsible for paying zakat on the money invested on getting the mortgage?

  21. I have a zakat caculator that calculates zakat at 2.5% on salaries (including bonuses and other allownaces) after deducting weighted nisab and other deductions. The calculator also calculates zakat on cash held in banks etc at 2.5% on the average balance over 12 month hegira period. Given zakat has already been calculated on the salary/bonuses and allowances which are already reflected in the average bank account cash balances, is zakat being duplicated on these amounts?

  22. Assalam aleikum

    I wanted to share with you a Zakat Calculator I have written for wordpress! Please share and support a muslim sister in business!

    http://codingowl.net/zakat-calculator/

    Barakallahu fiikum

  23. Asslamu Walakum!

    Thanks so much for this post and this website! Its very informative and helpful!

    We definitely needed this for our team to read.

    We are an islamic non profit organization in northern virginia

  24. […] FAQs | The Zakat Pages – Since Ramadan 1424 (November 2003) the Amir and community in Norwich have consistently carried out the collection and distribution of Zakat in accordance … […]

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