Zakat facts: What is Zakat?
Zakat (zakaat, zakah) is one of the five pillars of Islam and a form of obligatory charity. This means that each Muslim is obliged to pay their Zakat throughout their lifetime, as long as they are eligible to do so.
However, it can be a little difficult to know how to pay Zakat and fulfil this sacred duty without all the right information to hand. This is your one-stop for everything you need to know about how to pay Zakat!
Firstly, there are two forms of Zakat that are required from every Muslim, Zakat and Zakat al-Fitr. This page focuses on facts about Zakat and how to pay it.
To fulfil Zakat as a Muslim, means to give alms to those of the Muslim Ummah who are in need. Zakat is 2.5% of the wealth of each Muslim in the world. It’s paid by every Muslim once a year as ordained by Allah, as a means of ensuring the re-distribution of wealth to those who need it, subhanAllah.
“And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.” [Qur’an 2:110]
What is the difference between Zakat and Zakat al-Fitr?
There are two forms of Zakat, Zakat and Zakat al-Fitr. Both are obligatory forms of charity, and both require Muslims to be eligible based on a set criterion. However, the two forms of Zakat are paid at two different times of the year and have slightly different criteria.
You can find more about Zakat al-Fitr here.
Zakat facts: Who is eligible to pay Zakat?
There are four conditions that one must meet in order to be eligible to pay Zakat:
- A Muslim must have reached the age of puberty (according to the Hanafi madhaab only).
- A Muslim must have ownership of the Nisab (minimum amount of wealth) for one lunar year before paying Zakat on it.
- The wealth a Muslim owns must have the ability to increase.
- The Muslim paying Zakat must be of sound mind.
- A Muslim must only give Zakat to those who are eligible to receive it.
Zakat facts: What is Nisab?
The Nisab is the minimum amount of personal wealth you must be in possession of for one lunar year.
The year starts from the date that you first met or exceeded the minimum amount of wealth (Nisab) and paid once you have maintained it for one lunar year. Once you have met these conditions, you must pay your Zakat.
If you are in debt or fall below the minimum amount throughout the year, you are not eligible to pay Zakat until you meet the Nisab again and maintain it for one lunar year.
The Nisab is set in the currency of gold and silver, as relayed to us by the beloved Prophet Muhammad (peace be upon him). However, as we use local currency in today’s world instead of gold and silver, we use the equivalent of the gold and silver amount that the Prophet (peace be upon him) set for us.
Your Nisab will be the equivalent of 87.5 grams of gold or 612.4 grams of silver.
Today the current equivalent of the Nisab in gold and silver is (as of 02/03/2022):
Using value of silver (612.36 grams) – approximately $496.49
Using the value of 85 grams of 24k gold – approximately $5,300
The Hanafi school of thought (madhhab) uses the value of silver to determine the Nisab, while other madhaabs use gold.
As the value of gold and silver varies on a daily basis, the Nisab equivalent and the zakat payable will look slightly different each year.
Use our free and easy Zakat calculator to work out your Zakat payment this year.
Zakat facts: When to pay Zakat
You pay your Zakat when you have been in possession of the Nisab (the minimum amount of personal wealth) for one lunar year.
If you fall below the Nisab at any point throughout the year, or if you are in debt, you are not required to pay the Zakat until you have met or exceeded the Nisab again and have maintained it for one lunar year.
This means that every Muslim pays their Zakat at different times of the year.
Zakat facts: How to calculate Zakat
So, now you know what the minimum amount of wealth is (Nisab) that you must possess in order to be eligible to pay Zakat, but how do you know how much Zakat to pay?
Zakat is a fixed amount of 2.5% of your personal money and any assets you hold in excess of what is considered your basic necessities.
For example, if your total assets amounted to $10,000, you would pay $250.
Your assets would be a total sum of the following:
- Total value of any gold or silver you own
- Total value of held shares at market value
- Money that is in debt to you that you expect to see returned
- Cash stored anywhere as savings, including specific funds (i.e for hajj or a wedding)
- Total value of any stock you hold or profits from a business you own or run
- Total income from properties that you rent out
Zakat facts: How to pay Zakat
Now, with all the information you need around Zakat at the ready, it’s time to go through how to pay Zakat!
Islamic Relief are proud to provide a free and easy-to-use Zakat calculator to work out how to pay Zakat directly to Islamic Relief’s Zakat fund.
Your Zakat has funded some of our crucial work with people and communities living in disaster and war zones: drought and famine-struck countries across East Africa and communities affected by conflict in Yemen. Your generosity has enabled communities to build sustainable livelihoods in the face of climate change and enabled better lives for vulnerable orphans and families across the globe.
Alhamdulillah, you have the power to transform people’s lives.
Zakat facts: Who is eligible to receive Zakat?
There are eight categories of people who are eligible to receive Zakat.
- The poor
- The needy
- Administrators of Zakat
- Those who have a reconciliation of heart (those who have embraced Islam or are inclined to it).
- Those who have been enslaved
- Those in debt
- In the cause of God
- Travellers (including refugees)
A poor person is someone whose property, in excess of his basic requirements, does not reach the Nisab threshold. The recipient must not belong to your immediate family, therefore; your spouse, children, parents. If you subscribe to the Hanafi and Hanbali madhaab, grandparents are not eligible to receive your Zakat. However, in the Shafi and Maliki madhaabs it is allowed as long as their maintenance is not your responsibility. Other relatives, however, can receive your Zakat.
Zakat facts: Other facts about Zakat
If just the ten richest people in the world paid Zakat – that would be a staggering $10 billion! The power of that money in tackling poverty would be huge!
Is Zakat different from Sadaqah?
Zakat is an obligatory form of charity that Muslims must perform once a year for the sake of Allah, as long as they meet the criteria to do so. Sadaqah, Sadaqah Jariyah and all other forms of charity are not obligatory but are encouraged as highly rewardable deeds to perform in the lifetime of a Muslim.
Charity, obligatory or voluntary is a highly regarded deed in Islam and is said to purify whatever remains of the wealth of a Muslim.
“Whoever pays the Zakat on his wealth will have its evil removed from him” (Ibn Khuzaimah and at-Tabarani)