Zakat, which is also referred to as Zakah, Zakat-ul-mal, and Zakat on wealth, is an Arabic word that means “that which purifies.” It is one of the five pillars of Islam, next only to Shadahah (Profession of Faith) and Salat (Prayer) in importance. In short, Zakat is giving of alms to the underprivileged and needy individuals.
Zakat is a religious obligation or in other words, a tax that is mandatory for all adult Muslims of sound mind as well as means who have wealth above a certain threshold level – Nisab.
To be liable to pay Zakat, one should have wealth exceeding Nisab.
Nisab is determined using either gold or silver. In simple terms, Nisaab is the cash equivalent of 3 ounces of gold (87.48 grammes) and 21 ounces of silver (612.36 grammes). Note that the market value of gold and silver differs with the course of time. Hence, you should take in to account the present values when figuring out whether or not you are eligible to pay Zakat.
Once it has been established that you are eligible to pay Zakat, then you need to calculate how much Zakat you need to pay.
Zakat is 2.5% of your wealth (assists minus short-term liabilities) exceeding Nisab as Zakat on an annual basis.
Your assets include the soft as well as hard cash you have, the money that is owed to you, the market price of the shares you have (either of your own business or in your investment portfolio), the value of gold and silver, and the rental income of the properties that you own.
Your short-term liabilities include the money you owe to others, the short-term bank loans you have acquired, the bills, rent, and business expenses in case you own a business.
You do need to pay Zakat on the value of your home, car(s), and accessories that you may have.
There are eight categories that highlight the individuals whose Zakat Appeal should be answered, and they are as follows:
Note that you are not limited to pay Zakat to only the Muslims in or around your neighbourhood. You can pay to deserving Muslims anywhere in the world. For instance, you can hand out Syria donation to aid the oppressed in Syria even though you reside in the UK or USA.
Zakat is paid not only to purify one’s wealth but also to seek the blessings of Allah. This act of giving a portion of one’s wealth helps Muslims acknowledge the fact that everything they have is provided to them by the Almighty and that their wealth should be used to support the needy as well as poor. While it surely is a foolproof way of remembering Allah and seeking His mercy, it also purifies one’s heart from greed and desire of materialistic things. Plus, Zakat helps Muslims become more honest and self-disciplined.
Note that Zakat is not a charity and in order to pay Zakat in such a way that it’s accepted one must have the intention of paying Zakat. If you think that you pay more than enough charity already and that you don’t need to pay Zakat then think again. This is because the charity cannot be counted as Zakat, given that your intention was not to pay Zakat specifically. In such a case, you’ll have to pay Zakat even if you had already given charity.
So, there you have it – all the information about Zakat in Islam. In case of any confusion, it is recommended that you consult with your local imam or scholars.
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Thanks for sharing the information about Zakat and why it's so important into Islam. The people who're looking details according paying their zakat or zakat ul fitr at the last day of Ramadan before performing eid prayers should follow those content and the guidelines.