Zakat vs taxes

  • View

  • Download

Embed Size (px)


Zakat leads to the healthy growth of the economy and the community. It uplifts the less fortunate members of the society.

Text of Zakat vs taxes


2. DEFINITION OF ZAKAT In Arabic terms, zakat literally means - Purification ( Purify ones heart of Greed) - Growth Zakat in Islamic finance refers to the obligation that an individual has to donate a certain proportion of wealth each year to charitable causes. 3. PILLARS OF ISLAM Zakat is one of the obligation of Islam. It is also one of the Five pillars, and the most important amongst them after the Testimonies of faith and the Prayer Religious Benefits; Prosper in the worldly life and the Hereafter Brings servants closer to his Lord Allah will wipe away the (reward) of usury and increase that of charity. Allah will wipe away minor Sins 4. WHAT IS NISAB? Nisab is the minimum amount of wealth that must be owned by a muslim before he/she is obligated for zakat. -For example, the nisab in Selangor is RM14,065.00 (according to Lembaga Zakat Selangor). So if youre living in Selangor and your zakatable income is more than RM14,065.00, then you have to pay your zakat! In general, the nisab for zakat on wealth is equivalent to the price of 85 grams of gold. 5. WHAT IS HAUL? Cukup Haul or Wealth must be exactly or more than a year old Zakatable income and wealth that is fully owned must be in the payers possession for at least a year -For example, Azmah has just graduated started her first job 5 months ago. Even if yearly income exceeds the nisab amount, only needs to start paying her Zakat Earning after working for a year.** Nisab and Haul are not applicable for Zakat Fitrahand her she on 6. CONDITION OF ZAKAT PAYERS TO BE FULFILLED Sane Adult (Reached puberty) Sahib un Nisab (Owner of Wealth above Nisab Level) Muslim 7. CONDITION OF ZAKAT RECIPIENTS Those categories of people being mentioned in the Holy Quran, Surah al-Taubah (9:60) Primary focuses on the poor and destitute Poor is defined as those people whose net asset (excluding basic necessities) is below the Nisab threshold. A persons poor relative should be given main priority 8. 8 ASNAF OR BENEFICIARIES OF ZAKAT The Poor (Fuqara) The Needy (Masakin) The Zakat collector (Amilun) Muallaf Slaves (Riqab) Those who are in debt (Ghanimun) Way-farer (Ibnu Sabil) For the cause of Allah (Fisabillilah) 9. ZAKAT FITRAH FITR The same as Iftar, breaking a fast and it comes from the same root word as (Futoor) which means breakfast.DEFINITION Zakat al-Fitr is charity given to the poor at the end of the fasting in the Islamic holy ( month of Ramadan). 10. CLASSIFICATION wajib (required) of every Muslim, whether male or female, minor or adult as long as he/she has the means to do so.PURPOSE To provide the poor with a means with which they can celebrate the festival of breaking the fast (`Eid al-Fitr) along with the rest of the Muslims. 1.As a levy on the fasting person. -This is based on the hadith: The Prophet of Allah said, "The fasting of the month of fasting will be hanging between earth and heavens and it will not be raised up to the Divine Presence without paying the Zakat al-Fitr. 2.To purify those who fast from any indecent act or speech and to help the poor and needy. 11. PRODUCTION TIME Staple was released in the month of Ramadan, at least before the people finished performing Salat Eid ( Solat Sunat Aidilfitri ) . If the delivery time is past due then submitted were not included in the category of zakat alms but ordinary ( sedekah biasa ). BENEFITS OF PAYING ZAKAT FITRAH1.2.The purpose of giving them (the poor) enough food during Ramadan. Able to meet the requirements of fasting is to restore man to nature. 12. ZAKAT ON WEALTH (HARTA) The definition of wealth is something that can be owned by the individual. It is something that is paid for the trade income, agriculture, livestock, gold, silver and income. Zakat is paid if it has met Nisab or limit the wealth amount that caused a Muslim has to pay Zakat 13. The wealth must suits these criteria to be obligated for Zakat namely:Owned in full. That is, the property is entirely owned by a person, instead of collectively owned property. Treasure that must be paid as Zakat must be obtained through lawful or permitted by religion. Property is developed or has the potential to be developed Has reached the limit of Nisab . Owned more than 1 year. *Property owners do not currently have debts that exceed the amount of property owned. 14. 8 SUBSIDIARIES OF ZAKAT Zakat on Earning Zakat on Business Zakat on Savings Zakat on Gold & Silver Zakat on Shares Zakat on KWSP / EPF Zakat on Farming Zakat on Livestock 15. ZAKAT ON EARNINGS If you have been working for more than a year and earning an income thats above the Nisab amount, you are obliged to perform your Zakat Pendapatan. Zakat on earning is obviously calculated from your earnings (much like your income tax). 16. ZAKAT ON BUSINESS Means performing zakat based on business earnings. The term business refers to any types of business like Manufacturing, mining, fishing etc. CONDITION OF ZAKAT ON BUSINESS Only Muslim shares is subjected to Zakat Compulsory for Halal Assets only Haul-period terms 17. ZAKAT ON SAVINGS Your savings are zakatable purely because it serves the same purpose as gold and silver (the nisab of Zakat), and holds purchase power. 18. FIXED DEPOSIT Once a fixed deposit account reached exactly one year (cukup haul) and this amount is more than the nisab value, then 2.5% of the total amount must be given as Zakat.-For example, Maisarah (location : Selangor) opened a fixed deposit account on April 2011. By April 2012, her FD account has accumulated RM5,000. In Selangor, the nisab amount for 2012 is RM14,065.00. Therefore, Miasarah doesnt need to pay zakat on her FD. 19. BASIC SAVINGS It is calculated based on the amount of the lowest balance or the end haul each year for savings:Savings in One Account Only If the savings account has reached the year-old age and the lowest balance (after subtracting the amount of interest given in that period) is above the nisab, then one is obliged to pay zakat on savings for that one account.-Example : Wati (location : Selangor) has a Maybank account. After a year, the lowest balance she has in her account is RM15,500 (after substracting the interest given by Maybank). For Selangor, the nisab amount is RM14,065.00. Therefore, she must pay 2.5% of RM15,500 as her zakat (2.5% x RM15,500 = RM387.50). 20. SAVINGS IN SEVERAL ACCOUNTS If a person has set up several savings accounts, then the lowest balance of all the savings accounts must be combined to calculate the zakatable wealth. -For example, Hana (location : Selangor) has two savings accounts, Maybank and CIMB. She has had both accounts for one year. Lowest balance in Maybank : RM40 (after deducting interest) Lowest Balance in CIMB : RM600 (after deducting interest) Total of lowest balance in Maybank and CIMB : RM640 (does not exceed nisab, therefore Hana does not need to pay zakat on her savings accounts). 21. ZAKAT ON GOLD AND SILVERPossession of gold and silver that is over the nisab amount will be subjected to zakat. This zakat also has a different nisab amount. So how to calculate the zakat amount? 22. METHOD FOR CALCULATE ZAKAT ON GOLD AND SILVER Womensgold jewelry The gold that the person purchase or use as an ornament or decoration that over the nisab, they must pay the zakat. The nisab of this gold is about 800 grams. The formula is: (gold weight x current price x 2.5%) 23. OTHER TYPES OF GOLD Thistype of gold refers to gold which is not from the above category It must be in form of: - Currency -Deposits -Mineral The nisab amount of this type is 85grams The calculation is: (gold weight x Current price x 2.5%) 24. SILVER Forsilver, the nisab is 595grams . The nisab value is the same regardless of its usage or otherwise you use as the decoration at your home. So if the silver weights more than that, you must perform the zakat. The calculation is: (weight of silver x price per gram x 2.5%) 25. ZAKAT ON SHARE Theshares that invested in the company must be paid in cash. The zakat rate is 2.5% for the lowest value of shares. The share must be held by the shareholders for one year. 26. THE CALCULATION FOR ZAKAT ON SHARE Example1 : shares owned at the end of one full year. Zakat rate is 2.5% on the lowest cost and the market value The formula is: (unit of shares x lowest price cost x 2.5%) 27. Example2: Shares purchases within a year. The zakat is calculated based on 2.5% on the value of shares after deducting the cost of purchasing new shares The formula is: (the value of shares-the cost of purchasing new shares) 28. ZAKAT ON EPF InMalaysia, zakat on EPF becomes obligatory only when the EPF money becomes fully and wholly owned by a person. The money can withdraw when you reach 55 years or you want to purchase a house perhaps. But when the amount reach the nisab, so it subjected to zakat. The formula is: Zakat value= The sum of the withdrawn Money x 2.5% 29. Forexample: Azman ( locationselangor) want to purchase a house, he withdrawn RM50,000 from EPF saving, so after 1 year the EPF value is above the nisab amount. The nisab in selangor is RM14,065. So how the total zakat that must he pay. Zakat value:( RM50,000 x 2.5%) Total zakat is= RM1250 30. TYPES OF WITHDRAWALS THAT IS ZAKATABLE WithdrawalScheme to purchase ahouse Withdrawal Scheme to redeem housing loan Members children education withdrawal scheme 31. ZAKAT ON FARMING Imposedonly on staple food supplies ( these types of food must be durable and fulfilling when eaten). The item must be -paddy, date , corn and wheat For example in Malaysia our staple food is rice and therefore zakat will be imposed on rice from paddy farming. 32. REQUIREMENT FOR ZAKAT ON FARMING Muslim Fullyowned (i.e owner of paddy field) Nisab ( the nisab measurement is Ausuk or 363 bushel in Malaysia or 1360 kg of rice produced from the far