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A Few Quick Questions About Zakat
1. If my understanding is correct, Quran describes Zakat as charity, an amount in excess of your needs. Then how State can collect Zakat or determine a specific amount?
2. Zakat is Farz in Quran. Then details of Zakat that comes from Sunnah and come to us by Ijmah and twatur becomes Farz too. The Zakat amount that Ghamidi Sahib recommends, does this comes from Sunnah? If yes, then why are there so many differences in Islam on Zakat amount?
3. Normally taxes are on the income once, but why Zakat is on the same assets over and over again every year. Wouldn’t this make it extremely difficult for someone to save for the retirement; especially such high amount of Zakat that Ghamidi Sahib recommends.
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10 Replies
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A Few Quick Questions About Zakat
updated 3 years, 7 months ago
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10
Replies
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Please refer to the text and videos in the following post:
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Faisal, I read through the link. It doesn’t answer the questions. I seek just short answer and I will do further research if necessary.
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Please watch the videos in order to understand the concept from the ground up. Without the concept being clear, these questions are not valid.
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Ok, Faisal, now that I watched couple of hours of videos. My second and third question is still not answered.
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I did my other readings and found out that Zakat percentage comes from Hadith; not authentic Sunnah. So, although Zakat is Farz, the amount can’t be Farz. Traditionally and mostly agreed amount is 2.5% on extra wealth. Beyond this there is lot of controversy.
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2.5% zakat on assets is in the sunnah that has reached us with ijma and tawatur. People mistakenly take the source to be hadith, just like they do with salat and other worship rituals.
20% (khums) and 10% (ushr) on agricultural production also comes to us from the sunnah that has reached us with ijma and tawatur. Since at the time of Prophet SAW, agriculture was the only means of production, Ghamidi sahab has made an ijtihad and has applied it to all other forms of production in the modern day, for example, salaries, wages, etc.
The differences of opinion are in application, however I’m not aware of anyone who has presented different rates of zakat. These rates are the same even in sharias of previous nations as is evident from the Bible.
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Thanks Faisal.
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The following might be crazy thoughts or suggestions for some, but there is no restriction on thinking.
There are many issues with current Zakat recommendations so it seems like the Ijtihad needs a fresh review. It seems like the only consensus is a little more than 2.5% Zakat and the rest is open to interpretation, discussion and Ijtihad. The current Zakat recommendations have many issues.
1. Problem: If Zakat can be offset by taxes to the government, then most people in developed countries pay high enough taxes that they don’t owe any Zakat. Thus, it eliminate the social safety net of Zakat for poor. Also mostly Zakat money is misused or worse, illegally diverted by government officials for personal use. Quran names Zakat as charity and a charity is supposed to go to poor; not for government spending.
Solution: Zakat should not be offset by taxes. Taxes are to run the government or a country; not always to solve poverty and related social issues. Zakat should be assessed on net income after taxes. Zakat should be distributed to poor personally or distributed through a trustworthy institution.
2. Problem: The determination of Nisab is either complicated or inaccurate. The cost of living varies by country, city, neighborhood and even circumstances. A single standard doesn’t suit diverse situation. Currently poor are exempt from the obligation of Zakat. Furthermore, determination of poor seems to be subjective, vague or unfair. The current recommendation sometimes stops Zakat funds from trickling down to the poorest of the poor as those slightly better off can take Zakat first.
Solution: Zakat should be an obligation on all regardless of income. Those who are not at the bottom of poverty should pay Zakat to the one’s worse than them. This cycle should continue until funds reach the poorest of the poor who are struggling for food.
Zakat should go to those struggling to pay for essentials of life in the order of priority…food, clothing, health, shelter, source of income/education, marriage. So, for example, if someone is struggling to save funds for marriage receives Zakat, such person should also pay 2.5% of his due Zakat to someone worse than him. If such funds are paid to someone struggling for a shelter, that person should also pay 2.5% of his due Zakat to someone worse than him, for example, someone need funds for medical treatment, clothing or food.
3. Problem: Currently Zakat is not obligated on personal use home, car, personal use jewelry and other items. This rules unfairly puts more burden of Zakat on those who live modestly and saves for emergencies as opposed to those who prefer to live lavish lifestyle with expensive home, cars and high living expenses. Such lavish living person are currently not obligated to pay Zakat on their personal use assets. Also due to their lavish lifestyle they are always in some sort of debt whether it may be credit card, vehicle, boat, real estate, etc. that further reduced their Zakat obligation.
Solution: Zakat should be based on a person’s yearly living expenses, rather than savings. 2.5% Zakat on savings or investment should be paid when the savings or investment are diverted for personal use or after the death of the owner. Zakat on person’s yearly living expense should be determined by all expenses incurred through the year including, utilities, medical, education, food, entertainment, insurance, etc. Yearly rental cost of personal use property and home (Even if it is paid off). Yearly rental or depreciation amount on personal use depreciable assets, such as, cars, boats, planes, watches, etc.
4. Problem: Zakat seems to be assessed on the same assets year after year. This makes it very difficult for someone to save for emergencies or retirement. Even if emergency or retirement funds do not incur Zakat the issue arises as to how to determine the reasonable amount necessary for emergencies or retirement. For one person a million dollar may be sufficient and for another 5 million may not be sufficient for such purpose.
Furthermore, for an average person making 2.5 percent income on saving is difficult and then on top of it an inflation of 3% to 10% reduces the effective purchase power of the saved money. So (2.5% income on savings minus 2.5% Zakat minus 5% inflation) leaves a person with approximately 5% or more loss on saved cash each year.
Solution: Zakat should be paid only twice in the life of assets. Once on all business and personal assets, equipment and property (No Zakat on raw material or inventory or crops for sale). Once Zakat is paid on these items thereafter Zakat is assessed on the appreciated value. If assets value drops, then zakat will be assessed only when the assets reach higher than the previous highest value.
Secondly 2.5% Zakat is paid upon the death of owner after paying any loan and legal fees. If any immediate family is deserving of Zakat, then it goes to family first. Zakat should go to closest relatives, starting by the person himself and his own immediate family (if they qualify) , parents, siblings, cousins, aunts and uncles, neighbors closer to farther, farther relatives and then others.
5. Problem: Zakat seems to be assessed on business assets, inventory, raw materials and crops.
Solution: Zakat should be on the portion of profits used for personal use (Not if profits are saved for the emergencies, retirement or reinvested in the business)
6. Problem: Current determination of Zakat payable to government and various institutions or Mosques divert the funds away from the true deserving poor people of the society. Reaching Zakat funds to poor is necessary to improve society, quality of living for everyone and eliminate poverty related crimes. It is also necessary for the flow of money from rich down to poorest of the poor to reduce money hoarding by rich. It restarts the money cycle for the benefit of all.
Solution: Funding needs for government, institution and mosques should be met through taxes or other charity funds, rather than Zakat money. Zakat should be distributed by the Payee himself or through trusted institutions who deliver the funds to those struggling to pay for essentials of life in the order of priority…food, clothing, health, shelter, source of income/education, marriage.
7. Problem: Currently there is no Zakat on the assets and estate of deceased.
Solution: Since in the earlier solution, I proposed Zakat payment of 2.5% only once on personal investments, savings and property, then the second time Zakat on the same assets should be due when the owner dies. Upon death of a person, Quran recommends a portion for charity. There should be 2.5% Zakat on assets and estate of deceased. If heirs of such assets are poor enough, then the 2.5 Zakat can go to them first.
NOTE:
• Charity can be paid in any form of value, such as, cash, land, personal property, real estate, free rent, free work, etc.
• Charity goes to closest relatives, starting by the person himself and his own immediate family (if they qualify) , parents, siblings, cousins, aunts and uncles, neighbors closer to farther, farther relatives and then others.
• Charity can only go to those struggling to pay for essentials of life in the order of food, clothing, health, shelter, source of income/education, marriage.
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Nadeem sahab unfortunately religious practices, especially acts of worship which includes zakat are not determined on the basis of opinions.
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I agree Faisal. Call it my rules of minimum charity in addition to Zakat. The word Zakat makes it too formal with no room for subjectivity.
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