Zakaat – What do we pay zakaat on?

[cs_content][cs_element_section _id=”1″ ][cs_element_layout_row _id=”2″ ][cs_element_layout_column _id=”3″ ][cs_element_headline _id=”4″ ][/cs_element_layout_column][cs_element_layout_column _id=”5″ ][cs_element_headline _id=”6″ ][/cs_element_layout_column][cs_element_layout_column _id=”7″ ][cs_element_headline _id=”8″ ][/cs_element_layout_column][/cs_element_layout_row][/cs_element_section][cs_element_section _id=”9″ ][cs_element_layout_row _id=”10″ ][cs_element_layout_column _id=”11″ ][cs_element_image _id=”12″ ][cs_element_layout_row_2 _id=”13″ ][cs_element_layout_column_2 _id=”14″ ][cs_element_headline _id=”15″ ][cs_element_text _id=”16″ ][/cs_element_layout_column_2][/cs_element_layout_row_2][/cs_element_layout_column][/cs_element_layout_row][/cs_element_section][cs_element_section _id=”17″ ][cs_element_layout_row _id=”18″ ][cs_element_layout_column _id=”19″ ][cs_element_text _id=”20″ ][cs_element_text _id=”21″ ][/cs_element_layout_column][/cs_element_layout_row][cs_element_layout_row _id=”22″ ][cs_element_layout_column _id=”23″ ][cs_element_text _id=”24″ ][cs_element_text _id=”25″ ][/cs_element_layout_column][/cs_element_layout_row][cs_element_layout_row _id=”26″ ][cs_element_layout_column _id=”27″ ][cs_element_text _id=”28″ ][/cs_element_layout_column][cs_element_layout_column _id=”29″ ][cs_element_image _id=”30″ ][/cs_element_layout_column][/cs_element_layout_row][cs_element_layout_row _id=”31″ ][cs_element_layout_column _id=”32″ ][cs_element_text _id=”33″ ][/cs_element_layout_column][cs_element_layout_column _id=”34″ ][cs_element_image _id=”35″ ][/cs_element_layout_column][/cs_element_layout_row][/cs_element_section][cs_element_section _id=”36″ ][cs_element_layout_row _id=”37″ ][cs_element_layout_column _id=”38″ ][cs_element_headline _id=”39″ ][cs_element_text _id=”40″ ][cs_element_image _id=”41″ ][cs_element_text _id=”42″ ][cs_element_text _id=”43″ ][cs_element_text _id=”44″ ][cs_element_line _id=”45″ ][cs_element_headline _id=”46″ ][cs_element_text _id=”47″ ][/cs_element_layout_column][/cs_element_layout_row][/cs_element_section][/cs_content][cs_content_seo] وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ ۚ وَمَا تُقَدِّمُوا لِأَنْفُسِكُمْ مِنْ خَيْرٍ تَجِدُوهُ عِنْدَ اللَّهِ ۗ إِنَّ اللَّهَ بِمَا تَعْمَلُونَ بَصِيرٌ

Wa .aQeeMuS-SaLaaTa Wa .aaTuZ-ZaKaaTa Wa MaaTuQaD-DiMoo Li.aN-FuSiKuM Min KhayRin TaJiDooHu ‘iN-DaL-LaHi .iN-NaL-LaaHa BiMaa Ta’MaLooNa BaSeeR

And be steadfast in prayer and regular in charity: And whatever good you send forth for your souls before you, you shall find it with Allah, for Allah sees well all that you do.
(Surah Al-Baqara, 110)

What is Zakaat?

Zakaat is the giving of a set amount (2.5%) of your wealth to charity.
Muslims must pay Zakaat to fulfil the commandment of Allah and to take care of needy people around the world.
The Arabic word ‘Zakaat’ literally means ‘to cleanse’ or ‘to purifiy’ and by fulfilling this religious duty, Muslims ensure that their wealth has been purified.

Who has to pay it?

Every Muslim who has reached puberty, is of sound mind, and has above the minimum required amount of wealth (Nisaab) is required to perform Zakat.

What is the minimum required amount of wealth (Nisaab – نِصاب)?

The Nisaab was set by the Prophet Muhammad (ﷺ) at a rate equivalent to: 85 grams of pure gold and 595 grams of silver.
In today’s day and age we do not use silver or gold as money so when calculating the Zakaat, we need to find out the equivalent of the rates the Prophet (ﷺ) set but in our local currency – for us this is pounds (£), or using our global internet currency such as Bitcoin.
This can be done by checking the market rate of gold and silver and see how much they are worth in pound (£), or Bitcoin.
In our time the gold nisaab is closer to the nisaab in use at the time of the blessed Prophet (ﷺ) and this should be the nisaab that we use. The price of a sheep then in gold is the same as today.

What do we need to pay Zakaat on?

Zakat is compulsory on four types of wealth; 

Money – Money includes financial assets such as Bitcoin, paper cash, gold, silver, savings, and funds received.
Stock – Item purchased to sell or things we prepare for trade.
Agricultural products – Produce through farming.
Animals – Cattles, Camels, Sheeps, Goats.

You don’t have to pay Zakat on:

The home you live in.
A car you own for personal use.
Any jewellery that doesn’t contain gold or silver.
Furniture and household goods for personal use (things that you’re not planning to sell).

When do you pay Zakaat?

When you reach the nisaab and you count a year on from then (in Hijri lunar calendar).
If your wealth goes below that limit (nisaab) then you don’t need to pay zakaat and you start counting again from the moment it goes back up to the nisaab.
For example you have £4,000 tomorrow and has more than the nisaab and next month you spent it all. In this case you won’t pay Zakaat until you reach the nisaab again.

Examples:  85 grams of gold is equals to £4,000 ← The Nisaab
Scenario 1
On the 5th of Rajab 1440 you receive £1,000,000
On the 3rd of Rajab 1441 you only have £100 left
On the 5th of Rajab 1441 you got another £1,000,000
Do you have to pay Zakaat?
No, because it was not one complete year. On the 3rd of Rajab he has less than the nisaab.

Scenario 2
On the 4th of Ramadhaan 1440 you have £5,000
On the 3rd of Ramadhaan 1441 you got another £1,000,000
What you pay Zakaat on the £5,000 that you had through out the year on you pay Zakaat on £1,005,000?
Answer: £1,005,000

Scenario 3
On the 10th of Saffar 1440 you receive your first wage of £4,000
And every month you receive £4,000 for a year
However every month you spent most of the money on living.
Do you have to pay Zakaat on the 10th of Saffar 1441?

Benefits of Zakaat

As Muslims, we have nothing to lose when paying out Zakaat. We will be under the mercy of Allah in this world and hereafter.
The Prophet (ﷺ) swore an oath that: “Charity does not decrease wealth.” (Muslim, 2588).
In fact zakaat is a means of increasing wealth, bringing barakah (blessing) to it and warding off harm from it. A person who pays out Zakat justly and consistently is increased in more wealth and sustenance by Allah.[/cs_content_seo]