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Thursday, July 21, 2011

Ramadan: Conditions that make Zakat obligatory

There are two conditions for Zakat to be obligatory on the wealth. Being in possession of Nisab i.e. possessing property in excess of a minimum exemption limit. On completion of one Lunar year on the wealth. According to Hanafi if a person possess wealth equal to or in surplus of Nisab in the beginning and at the end of the lunar year, (even though in between the year, the wealth was less than the Nisab), Zakat is obligatory, but if at the end of the lunar year if the wealth is less than the Nisab(though one had wealth equal to or in surplus during the year) zakat is not obligatory. According to Shafie the passage of one lunar year is a must on the wealth (Nisab) (in Hanbali almost a year).

The zakat is calculated on the day on which a year is completed on that wealth (Nisab). Nisab Zakat is paid on the surplus of wealth which is left over after the passage of a year (Lunar Year). It is thus a payment on the accumulated wealth, leaving our animal and agricultural yield. Zakat is paid at almost a uniform rate of 2 1/2%. The minimum standard of surplus of wealth over which Zakat is charged is known as Nisab. It differs with different kinds of property. In case of silver it is 52 1/2 Tolas (634 grams), in case of gold it is 7 1/2 Tolas (88 grams). The  Nisab for cash is the same as that of gold and silver.

On whom Zakat is obligatory
Zakat is obligatory of every adult free Muslim man and woman provided the above two conditions are fulfilled.  According to Imam Malik, Shafie and Imam Ahmed bin Hanbal, Zakat is obligatory of the wealth of the minor and insane person, and it has to be paid by the guardian. Where as according to Imam Abu Hanafi it is not obligatory. Since Zakat is an act of worship the intention is a must and hence it is not obligatory on the wealth of a minor and the insane person.

Zakat on the woman's Mehr
According to Imam Abu Hanafi and Imam Malik, the wife need not pay Zakat on the Mehr amount still due by her husband. However Zakat will have to be paid on the amount she has claimed  provided it is equivalent to or more than the Nisab and on which one year has been completed. According to Imam Shafie the wife has to pay the Zakat every year (though she herself is not claiming the Mehr, even though it can be claimed). According to Hanbali the Wife has to pay the Zakat for the entire number of years at the time when she gets it.

Zakat on the Business Goods or Stock-in-Trade
All types of goods for sale, whatever may be its form, whether hand made or machine products or fruits or books or jewellery or clothes or cattle or property brought with the intention of buying and selling etc., are liable for zakat. Provided it is in one's possession for one complete lunar year and the rate of zakat applicable is 21/2% on its total value. The prescribed limit on goods is after conversion, in terms of its value, the total amount thus evaluated must be equivalent to the price of 634 grams of silver. If less, then zakat is not obligatory.

Zakat on company or partnership, Silver, Gold, Currency and Shares
If any wealth or property is held jointly by two or more persons, then according to Imam Abu Hanafi and Imam Malik Zakat is not obligatory on any person until each individuals share is equal to the value of the Nisab.

Zakat on Silver, Gold, Currency and Shares.
The minimum prescribed limit on which Zakat becomes obligatory on silver is 52 1/2 Tolas (634 grams), and of gold 7 1/2 Tolas (88 grams) and is known as Nisab. Zakat on silver or gold items is one fortieth of its weight, i.e. 21/2%. Zakat on silver or gold is not calculated on its value but on its weight. However if one possesses some gold and some silver and neither of them is in the prescribed limit, then if their total cost is equal to the price of 634 grams. of silver, Zakat becomes due on it.

Zakat on the Ornaments of a woman
Zakat is due on all the gold and silver ornaments, jewellery, and gold or silver lace woven into cloth, gold thread embroidered dresses for ladies, etc. Hadrath Umm Salmah says that she used to put on (gold) bracelets. When she asked the Holy Prophet whether it was Kanz (Hoarded wealth) he replied.

"When a piece of property reaches up to the prescribed limit and Zakat is duly paid on it, it is not Kanz".(Abu Dawood)

Imam Abu Hanafi, his disciples and some scholars hold the above opinion.

According to Imam Malik, Shafie, Imam Ahmed bin Hanbal and other scholars there is no Zakat on the woman's ornaments. According to some other scholars the Zakat on ornaments is due only once in a lifetime. The difference of opinion among scholars is only on the ornaments in use by the woman, but there is a consensus among all the scholars that Zakat is liable on the excess of the ornaments held in possession as wealth.

Zakat of the Bank Deposit and on Provident Fund
Both these fall under the status of debt. According to Hanafi school of thought: Both of them are liable for Zakat for all the years and it has to be paid when out of it an amount equivalent to the value of 10 1/2 Tolas of silver or more is claimed.

According to Hanbali school of thought also that Zakat is liable on both for all the years. It has to be paid when an amount equivalent to the Nisab or more is claimed.

According to Malliki school of thought the Zakat on Bank deposit is liable for all the years. And it has to paid when the amount is received. On the provident fund, since the person does not have any power to claim it, so Zakat is liable at the time when it is received and it has to be paid for one year only. According to Shafie school of thought the Zakat on the Bank Deposit has to be paid every year. The Zakat on provident fund has to be made for all the years and it has to be paid when he is entitled to receive it, though he may claim it or not in time.

Zakat on Agricultural Produce
The Prophet (Pbuh) said: "On a land irrigated by rain water or by natural water channels or if the land is wet due to a near by water channel Ushr (i.e. one-tenth) is compulsory (as Zakat); and on the land irrigated by the well, half of an Ushr (i.e. one twentieth i.e. 5%) is compulsory (as Zakat on the yield of the land)".

A basic principle has been laid down for the Sadaqa (Zakat) in the agricultural produce. If the land is irrigated by artificial methods, one twentieth part (5%) of the yield is to be paid is irrigated by rainfall, streams, rivers, fountains or by the inner moisture of the earth, i.e., by natural resources of water, then one tenth (Ushr) 10% is to be paid as Zakat. There is some difference of opinion whether Ushr is levied on all types of agricultural yield or on some particular types.

According to Imam Abu Hanafi, Zakat is to be paid on all types of agricultural yield, provided the aim of cultivation is to improve upon the land and make it more useful for growing of crops. Thus only fuel, bamboo, grass and trees which bear no fruits are exempted from Zakat. He considers Zakat to be compulsory even on vegetables and fruits, which according to some Hadith, are exempted from Zakat. The scholars have reconciled the two views saying that the exemption granted in case of vegetables implies that the proceeds of the Zakat are not to be sent to the Bait ul Mal, but the owner may himself distribute it among the poor.

Ushr is to be paid at the time of harvest. Whereas in the other types of Zakat one should be in possession of the wealth for one complete year.

Zakat on Animals
Zakat is obligatory on goats, sheep, cows, buffalos and camels which graze on wild grass, plant leaves and on some feed now and then given by the owner, and on the above animals meant for sale.

The Prophet (Pbuh) said: "By Allah in whose hand my life is, whoever had camels or cows or sheep and did not pay their Zakat, those animals will be brought on the Day of Resurrection far bigger and fatter than before and they will tread him under their hooves, and will butt him with their horns and (those animals will come in circle) when the last does its turn, the first will start again and this punishment will go on till Allah has finished the judgments amongst the people." (Bukhari)

Zakat on Minerals and Buried Wealth/Treasure
Zakat on Minerals and hidden wealth is one twentieth 5%. According to Imam Abu Hanifa, minerals are classified into three groups:

Gold, Silver, Brass, Bronze, Iron etc.

Crude Oil, etc.

Diamonds, precious stones etc.

Zakat on the first group only is Waajib (compulsory) and is to be paid at the time of acquiring. 

Here minimum period of one year in possession does not apply.

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