What is Zakat?
Zakat is one of the five fundamentals of Islam. According to the Holy Quran’s teachings, paying Zakat is obligatory for a person who is liable to pay Zakat. As it’s stated in the Holy Quran, “You shall observe the Salah and give the (Zakat) compulsory charity, and bow down with those who bow down” (Quran 2:43). It is a mandatory act of giving alms that every Muslim has to pay according to the prescribed ratio or Quorum (Nisaab), which is 2.5% of a Muslim’s annual savings. Zakat is an Arabic word that means “purity or blessing”. Zakat means to make something pure. In Islamic terminology, Zakat is considered as a purifier of the remaining wealth of a Muslim. You can contribute to water well zakat. This will purify your wealth.
The purpose of Zakat
The purpose of Zakat is not only to provide means for the relief of the affected or the encouragement of the financially less regarded sections of the society, but it is also to discourage the storing of money and material things such as gold, silver, and other valuables, and to ensure a rapid circulation of both. This rapid circulation of money, gold, silver, and other valuables will undoubtedly result in a well-established financial adaptation.
The Quorum (Nisaab) of Zakat
According to Islam’s law, every liable Muslim has to pay 2.5% of one’s cash, capital, stock, and tradeable assets, including jewelry in gold and silver, of which one was in possession for one full year, provided that one had more than the assessable limit. It must be remembered that Zakat is entirely different from income tax which is levied on one’s income. But Zakat is imposed on one’s savings and is spent wholly for the poor people’s welfare. Islam has made Zakat lawful on the properties which have the quality of increasing and spreading. Based on this prophetic principle, gold, silver, cash in any shape or form, business stock, goats, sheep, and cattle that feed on their own by grazing are assessable for Zakat. Zakat is not paid on the land, house for personal dwelling, and other goods that are used daily.
A proper scale for assessment has been fixed as, for example, 620 grams of silver and 87 grams of gold are liable for the assessment. Trade and houses that are rented and bring income are assessable after every twelve months. Similarly, the Quorum of Zakat as per livestock is explained in a very detailed manner in Islamic Jurisprudence.
Zakat on monthly salary
This should be bear in mind that Zakat is not imposed on a monthly salary which comes to an end at the end of the month. Zakat is applicable only when you save some money from your income every month, and it reaches the prescribed quorum (Nisaab), and one year passes. In Pakistan, the government sets the Nisaab for Zakat deduction on bank accounts shortly before Ramadan. After that, banks collect 2.5% Zakat from all the accounts that exceed the particular quorum. They set this Nisaab according to the cash value of 87.48 grams of gold and 612 grams of silver. But first, Your Zakat amount should be 2.5% or the 40th part of the money and tradable values you have above the Nisaab, and it is paid after an entire Islamic Year.
Many people think that Zakat can only be given in the month of Ramadan, but it is not correct. Zakat can be paid whenever someone wants to, during a year. The cause of this misconception is that in Pakistan, almost all the banks carry out the deduction of Zakat automatically on the 1st of Ramadan.
Many people work for a handsome salary, so it is crucial to describe how Zakat applies to the salaries. If someone is a salaried person and left with nothing at the end of the month, he is not liable to pay Zakat. Zakat is paid on the savings that reach the required quorum of Nisaab, and then an entire year passes. If a person’s savings vary from month to month and he is unwilling to give charity to anyone, he must note down all the earnings and expenditure with the date, and then he should pay Zakat for every amount separately. On the contrary, if he is generous and willing to give charity, he can pay Zakat at the end of one year if his savings reach the prescribed Nisaab.
Nowadays, many salaried people want to pay Zakat online for different charity organizations that provide them with a Zakat calculator, which helps them find out the monetary value of various types of wealth and then work out 2.5% of the total sum.
Let’s make it simple with a formula. This formula helps you to calculate the payable amount of Zakat. Suppose one year has passed, your savings and profits equal the prescribed Nisaab, so collect all the money and count it. Suppose it is 200000 PKR, calculate your immediate expenditure such as your utility bills, house rent, insurance payment, etc. Let’s assume that adds up to 50000 PKR. Now deduct your immediate expenditure from your current savings and profits, which will be 200000-50000 = 150000 PKR. To calculate your Zakat amount, multiply 2.5% with the remaining amount, 150000 PKR, which will be 150000 × 2.5% = 3750 PKR. So 3750 PKR is the Zakat which is due on you.
Another important thing is that you can also pay Zakat in advance. All you need to do is just estimate the amount that will be due to you as your Zakat payment at the end of the year. You then pay any amount at any time during the year. However, at the end of the year, you’ll have to pay the remaining amount, which will be due to you at the end of the year.