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Zakat On Salary After Paying 15% Tax On It
Asalam u alaikum!
I am paying 15 % tax approx (actual rate might be higher as tax is calculated differently) on my salary in UK plus I am also paying around 8% national insurance which is contributing towards State pension.
After paying all that, in the end I don’t have much left to save and sometimes have to rely on credit card to cover for extra expenses. Then pay the card by next month salary.
My question is how I am supposed to pay 10% zakat from my salary if I end up spending all of it? And also if I am paying more than 10% in the form of tax to the govt?
Can you please explain that? As my understanding is zakat is applicable on savings saved for one year.
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1 Reply
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Zakat On Salary After Paying 15% Tax On It
updated 1 year, 6 months ago
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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: (i) items of personal use and (ii) means of production). This is as per established Sunnah of Prophet (SWS) for wealth and Production.
When production occurs, the zakat becomes due immediately on the gross amount (irrespective of the fact when one actually pays it). Salary being a form of Production is an ‘ijtihadi ilhaq‘ done by Ghamidi Sahab with Zakat applicable @10%. However, one can calculate it on yearly gross earning and can pay it in installments as well.
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 once a year for calculation of Zakat on wealth, then the whole wealth is subject to Zakat @2.5% (that production earning as well which has become wealth of a person now). Both these heads are subject to Zakat only if they reach the set Nisab for Zakat Obligation.
Please see for further details and post follow-up questions in case of any confusion:
Discussion 58129 • Reply 58137
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Taxes paid to the government can be adjusted against Zakat obligation. Government taxes include all forms of actual taxes levied by the government including but not limited to, incomes tax, sales tax, property tax, wealth tax etc. (Please see: Discussion 81522 • Reply 81610)
For Example:
You received Salary of $1000 for the year, the zakat due on this is $100 (assuming that it is above Nisab because amount of production/earning/wealth below Nisab is exempt from Zakat). You paid $150 in government taxes.
Now come year-end (which is one date in the year fixed by you for calculation of Zakat on wealth), your Zakat on wealth comes out to be $200. You paid other government taxes of $200 throughout the year.
Your gross Zakat obligation = 100+200 = $300
Total paid in taxes= 150+200 = $350
Net Zakat obligation = 300-350 = negative $50
In this scenario, you have paid more in taxes than your zakat obligation, hence you are not required to pay any Zakat this year. You can carry forward this $50 of more taxes paid this year for adjustment against Zakat obligation of next year.
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