What is Zakat?

Every year, especially during the month of Ramadan, Muslims in large numbers across the world pay a mandatory financial contribution called Zakat, whose root in Arabic means "purity". Zakat is therefore seen as a way to cleanse and purify income and wealth of what may sometimes be worldly and impure means of acquisition, in order to obtain God's blessing. Being one of the five pillars of Islam, the Quran and the hadiths give detailed instructions on how and when this obligation should be fulfilled by Muslims.

What exactly is zakat?

Zakat is the third pillar of Islam. This is a compulsory alms representing 2,5% of a Muslim's wealth over a year. It is meant to purify our wealth to uplift us spiritually. It purifies our heart against selfishness and guarantees the poor of society protection against hunger and poverty.

One of the popular misconceptions is that Zakat is a kind of tax, but it is actually a spiritual obligation for which we will have to answer. It plays a key role in helping the poorest by providing them with enough to live on and helping them to get out of poverty.

Zakat is paid on certain types of agricultural products, livestock, commercial goods, monetary wealth and other less common categories. It applies to wealth of all kinds, livestock of all kinds and the production of goods and products of all forms. However, means of production, personal items of daily use and a fixed minimum amount called Nisab are exempt from paying Zakat. Zakat becomes obligatory when we reach the Nisab of one of these categories and maintain it for a lunar year.

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Some examples of assets eligible for Zakat include savings, stocks, cash, investment properties, business income, or precious metals, such as gold.

Who has to pay Zakat?

Any Muslim who has more wealth than the Nisab, a minimum amount a Muslim must have before being required to pay Zakat, is liable for paying Zakat. The Nisab is generally considered to be the cash equivalent of 3 ounces (87,48 grams) of gold or 21 ounces (612,36 grams) of silver.

Care should be taken to use the latest gold and silver rates as their rate fluctuates frequently in the market. In some countries, religious authorities set this amount directly in the country's currency.

The person will be obligated to pay Zakat, provided the wealth has been in their possession for at least one lunar year, counting from the day it was first obtained. The Nisab for agricultural products is fixed at 5 wasaqs (about 653 kg) and the Nisab for cattle is fixed at 30 cows and 40 goats.

Zakat rate

Zakat means a tax of 2,5% on wealth, 5% on all items produced by the interaction of labor and capital, 10% on the item produced by a basic factor of production which is labor only or capital only and 20% on money or products the obtaining of which requires neither labor nor capital but is a gift from God. This is how Zakat is levied on livestock:

Cows : One year old calf for thirty cows and one two year old calf for 40.

Goats: From 40 to 120: a goat. From 121 to 200: two goats. From 201 to 300: three goats. Then for 100 more: a goat.

How is Zakat collected?

The traditional way, and the practice at the time of the Prophet, peace be upon him, is that the collection and distribution of Zakat is the responsibility of the person in authority among the Muslims of a community. This, in turn, appoints people who are trusted and who know the regulations of Zakat to collect and distribute it.

Although today, in many places, the said authority does not exist or does not have the competence to collect and distribute it and other institutions and organizations take its place, which is feasible, it is necessary to clarify that, according to Fiqh, the collection and distribution of Zakat is a responsibility of the head of a community because it has an important socio-political component.

How is zakat distributed?

Zakat should be distributed first in the locality where it is collected to one of the categories that can receive it and it is the power of the person in authority or those he delegates to decide which categories are most in need of attention, as long as they are within the stipulated parameters.

People who fall into the categories that can receive Zakat can ask the organizations or people responsible for distributing it to give it to them, and those same organizations and people can distribute it to people in need without their asking.

Who can receive Zakat?

The Quran categorically mentions eight categories of people who can receive Zakat in the following verse:

“Verily, almsgiving is for the poor and the needy, for those who are responsible for collecting it and for those whose hearts it wishes to attract, for free slaves, for the indebted, for the cause of God and for the traveler. It is an obligatory provision coming from God and God knows everything, he is wise”. (9:60). Those who cannot receive Zakat are 

• The rich
• The poor who are strong and able to work, but who don't want to.
• Apostates and disbelievers who actively fight against Islam.
• The family of the Prophet (peace_be_upon_him).
• The descendants of the Zakat giver (children, grandchildren, etc.)
• The ancestors of the person giving it (parents, grandparents, etc.)