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Zakat Calculation Resulting In Double Obligation
I’m a salaried person. I pay 10% zakat on my monthly salary every month for 1 year. After zakat deduction I use the remaining amount for my expenses and also save some amount each month. At end of 1 year, suppose my total saving is about 2 million rupees, which I have in the form of cash. As I understand, I am required to pay 2.5% zakat on my total savings.
Why I need to pay zakat again when I have already paid 10% it when I received my salary?
Won’t it be double obligation upon me?
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11 Replies
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Zakat Calculation Resulting In Double Obligation
updated 2 years, 5 months ago
5 Members
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11
Replies
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There are two major domains of Zakat namely Wealth and Production. For production, zakat applies on gross amount as soon as production happens, while for wealth, zakat applies once a year on a fixed date on all the wealth (excluding exemptions). This is as per established Sunnah of Prophet (SWS) for wealth and Production. When production happens, the zakat becomes due immediately on the gross amount (irrespective of the fact when one actually pays it). After payment of that Zakat, whatever left is one’s wealth. And if that wealth still stays with the person till the year-end i.e. the date fixed for payment of Zakat on wealth, then the whole wealth is subject to Zakat (that production earning as well which has become wealth of a person now). If one spends the same wealth one day before the year-end date, then there is no wealth zakat on that wealth. Both these heads are subject to Zakat only if they reach the set Nisab for Zakat Obligation.
For a detailed law of Zakat and FAQs, please see:
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Dear Umer. I understand your point. But can you explain this sentence “Both these heads are subject to Zakat only if they reach the set Nisab for Zakat Obligation”.
We know that nisab for wealth is 7.5 tola gold equivalent. But what is the nisab for fixed salary? And how do we calculate the nisab for a business e.g. a doctor’s clinic , or a tution centre?
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You can calculate Zakah in the following manner:
1. Fix any one day of the year for the calculation of Zakah. On all subsequent years, Zakah should be calculated on this day.
2. Subtract the value of 642 grams of silver from your total wealth on this particular day which includes all your assets as at that date except items of personal use.
3. 2.5 % of this amount is the Zakah to which you are liable. In case you are a salaried person you should also pay 10 % of your salary every time you receive it. You can deduct the amount the government has fixed as exemption to salaried persons and then pay the said percentage of the remaining amount as Zakah. (In case there is no tax exemption slab available, then one can use amount equivalent to 653 kg of dates as Nisab for Salary earnings.)
Remember, if it is not possible to pay your Zakah money in one go you can pay in installments as well.
4. Since Zakah is the only tax which a government can impose on its citizens, you can deduct other taxes that you have paid from your Zakah amount. If the balance is negative you do not have to pay Zakah.
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Brother Fahad, ask the question why you are saving the money. I believe if you are saving to buy a house to live in, or saving as emergency funds or for retirement or for your children’s education or for children’s wedding, then ask the question again in this forum. If I am not mistaken, in most of these cases there is no Zakat. Zakat is on extra/spare money. Most of the people in the World save money for exactly the same purpose as above, except a few very rich who just collect wealth.
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This is not correct. Zakat is due on all assets above nisab except personal use items or whatever is exempted by the state. In certain situations one can make an ijtihad on a need basis to consider certain wealth as personal use items.
Please refer to the following video to understand the principle:
https://ghamidi.tv/videos/do-we-have-to-pay-zakah-on-savings-to-buy-a-house-1787
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Faisal, that is why I asked Fahad to ask the question again with the mention of specific intent for savings.
By the way, it will be extremely difficult for someone to save for retirement, to buy a house, or save for wedding or children’s education if in all above cases the person is paying taxes on his salary first, then pay Zakat on savings and on top of it loose 5 to 10 or more percent due to inflation.
At least inflation should be offset to Zakat amount. Is there any Ijtihad on that?
As inflation is due to government spending tax money in advance by overspending. It is like taking tax by force in advance.
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Your total zakat is offset by the taxes you have paid. The effective rate of zakat in most cases is negligible, if anything at all. Inflation has nothing to do with zakat.
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What is the nisab for a salaried person?
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The minimum amount below which your state exempts income tax.
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I want to know that if zakat rules apply on savings, savings to buy a house or car or anything or for bad days or savings for future needs.
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In principle, items of personal use are exempt from zakat and this may extend to genuine savings made for personal needs i.e. Gold saved for daughter’s wedding, plot bought or savings made to construct a house for personal use only etc. A Muslim has to decide for himself/herself in all honesty knowing that he/she will be held answerable to God that which of his/her savings are for personal use and which have been kept as wealth.
Please see the following for details:
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