Zakat (Islamic Taxation)

7/26/2019 Zakat (Islamic Taxation)

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Zakat (Islamic Taxation)

ear Brothers & Sister

Alhamdulillah, the month of Ramadhan has been bestowed upon us by Allah. ZAKAT is onef the five fundamental pillars of Islam, mandatory on all muslims who are of eligiblewealth.akat is due from and payable by a person on his wealth (and not his income), which hasemained with him/her for one Islamic year.is difficult to calculate the completion of one year on each item of wealth, because purchaseates may vary. To overcome this difficulty, a practical method is to fix a date (e.g. 1st of

Ramadhan), compute your total wealth on that date and calculate Zakat, thereon.

he attached spreadsheet is a humble attempt at making the calculation process simple andonsolidated, for all brothers and sisters who are fortunate to be worthy of paying Zakat. If here are any errors, its purely due to my incomprehension and may be brought to my noticemmdtly by email at [email protected]. This is also available online atttp://zakat.110mb.com/. Please remember me in your supplications and may Allah give usll the rewards of both worlds. Aameen.

A lot of brothers have asked me what Madhab do I belong and whether this covers Shias,arelvis, Jaffris, Bohras and other sects. All I can say here is that let us rise above all theseovert little shells we have built around us. We are Muslims first and if one is sincere, he willse above all this secterianism, read the Quran himself and get the facts firsthand. Theractical life of our Prophet SAS is there to be followed and practiced. And pray to Allah thate show us and keep us on the right path. Aaameen.

ours Brother in Islam, Arif Jameel.

Details of Each Section to be used in conjunction with the Calculation Spreadsheet.

akat on Pure Gold and Gold Jewellery

akat should be calculated at 2.5% of the market value as on the date of valuation (In our ase we consider 1st of Ramadhan). Most Ulema favour the Market Value prevailing as onhe date of Calculation and not the purchase price.

akat on Precious and Semi-Precious Stones

here is considerable contention on whether these are to be considered for valuation. In myumble opinion i f they have a value, then they calculate towards your wealth, and it is on the

wealth that Zakat is mandatory. However please consult with Ulema, before acting on thisection. Most Ulema contend that a diamond is a piece of carbon and its value varies, unlikehat of gold or silver.

One may calculate the Saleable Value of Items-at-hand on the date of Zakat Calculation.

akat on Silver.

akat is to be paid on Silver in Pure form or Jewellery, Utensils, Decorative items and allousehold items including crockery, cutlery made of silver at 2.5% of the prevailing market

ates.

akat on Cash and Bank Balances

akat should be paid at 2.5% on all cash balance and bank balances in your savings, currentr FD accounts. The amount technically should be in the bank for one year. Usually itappens that the balance keeps on changing as per personal requirements.

ou may make your best judgement and the best way is to pay on remaining amount on theay of calculation

muhsmmad

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akat on Loans Given, Funds, etc

akat is payable by you on loans you have given to your friends and relatives. It should beeated as Cash in Hand. You may deduct Loans Payable by you to arrive at the nett presentalue of your wealth. However, if you are in doubt, on the return of your money, then you mayot calculate it as your wealth. You can add it to your wealth, if and when your receive your

money.akat is payable on all Govt Bonds, Public Sector Bond, paid-up Insurance premiums, your aid-up portion of Provident Funds, Govt Bills receivables, etc. Pls remember you need toe aware of what the sharia says about Insurance and other types of investments. It isutside the scope of this Zakath Calculator.

akat on Landed Property

akat is not payable on personal residential House even if you have more than one andmeant for residential purpose only. Also Zakat is not applicable on the value of Propertyiven on rent irrespective of how many. However Zakat is payable on the rental income itself fter deducting the maintenance and other expenses.owever if your intention of holding properties is to sell at a future date for a profit or as an

nvestment, then Zakat is payable on the Market Value of the property. Also, if your intentionf holding properties changes in the current year, i.e. from self use to business then you needo pay Zakat on that Property Value.

akat on Bus iness:

his is for Business Persons only. No matter what business you are into, you've got to payakat on all STOCK-IN-TRADE. The stock must be valued at its Landed Cost Price. If youave any bills receivable (sales given on credit) then you need to add the same towardsalculations.

Deduct the Amounts due to your suppliers and deduct the loans on stock on the date of alculation. Dead Stock should be calculated on scrap value or its saleable value. Damagedtock should also be valued at its scrap value.e honest in the calculations, as ZAKAT is an INSURANCE on your STOCK directly from

ALLAH and who better an insurer than Him.here is no Zakat on Factory Buildings or any kind of machinery, but there is zakat onroducts produced in the factory (i.e. finished goods value). Please refer to competent

lema or a scholar who can shed more light on your specific issues.

akat on Partnership Firms.

akat can be paid EITHER by the firm OR separately by the owners. If the firm is not paying,nd the partner wants to calculate his share, he should take the amount standing to his capitalnd loan account as per the last balance sheet. Add his estimated share of profit till the dateakat is calculated.his can only be estimated as it is difficult to calculate the exact profit or loss between anccounting year.

akat on Agricu ltural Product

akat is payable on all Agricultural produce including fruits, commercially grown flowers,egetables and all types of grains at the harvest time itself. The passing of One year doesot apply for agrultural produce. If there are two or more crops on the same land per year,hen Zakat has to be paid as many times on the crop, irrespective of the time.

he Consensus formula for Zakat calculation on Agriculture is as follows:

On crops dependent purely on rain water it will be 10% of produce, On crops not irrigatedhrough rain water but use Canal Water, Tank Water, Borewell and Open wells, the Zakat is% of the produce. For Crops dependent partly on Rain Water and partly on other water, theakat applicable would be 7.5% of produce.

akat on Animals

On all grazing animals like goats, sheep, camel, cows, broiler chickens, the consensus Zakat

ayable is one animal/bird for every 40 animals owned. However you may wish to give cashn lieu of the animal/bird itself.

lease consult your local Scholar or Maulvi or Imaam who can guide you to the right direction,r refer to books of Fiqh if you would like to have first hand confirmation of the situation.

iabilities Deductions

f you have any pending tax payable to the govt, as of the date of Zakat Calculation, then theame may be deducted before arriving at the net worth. If you have taken any loans from any



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erson or ns u on, an you ave no area y e uc e e same rom any o e a oveections, then you can deduct your Payables over here. Please be truthful, as Zakat is a sure

way of protecting ones wealth if Zakat has been paid on it regularly and fully.OANS taken only for Zakatable-Wealth should be deducted. Cars, Houses, etc are notakatable wealth. So any loan/mortgate taken for these purposes are not to be deductedOOTNOTE: Please note that RIBA in any form is Haram and strictly prohibited. So pleasetay away from taking Loans on Interests AND Collection of Interests from any body or nstitution or other forms of RIBA'.

or those who would like more details you may visit the FAQ section of zakat.110mb.com

COPYRIGHT NOTICE: You are free to distribute this Calculator, by email, by print or by postsver the Internet. My intention in creating this was to make the task of Zakat as simple and

asy as the act of Zakat itself. However if you are making any modifications or changeslease keep me informed.

you need zakat Calculator please click on following link.

tp://www.4shared.com/document/mMz5eI1w/Zakat_Calculator.html

ublished July 14th, 2011

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Zakat (Islamic Taxation)