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Zakat Exemptions On Salary After Planned Expenditure
Question: I would like to clarify the concept of Zakat on salary and assets according to Ghamidi sahb’s view. I understand that Zakat on Salary (considered a form of production) is 10%, while Zakat on assets is 2.5%.
Suppose I am employed and simultaneously saving money for my education. In this case, I understand that I would be exempted from paying Zakat on my assets. However, does the same exemption apply to my salary? Should I first deduct the 10% Zakat from my salary and then save the remaining amount for my education?
This question also relates to individuals working full-time who find it challenging to support their families amidst the ongoing inflation in Pakistan. How should they approach paying Zakat on their salaries in such circumstances?
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4 Replies
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Zakat Exemptions On Salary After Planned Expenditure
updated 2 years, 2 months ago
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Replies
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Not every salary is liable to pay zakat on it. It should be a taxable salary and all the taxes should be counted as zakat paid off.
However, if a person thinks with all honesty that his genuine necessities can’t meet if he pays 10% zakat on his salary, then he can decide not to pay zakat other than the taxes he pays.
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I have three follow up questions:
Q1: In some countries, freelancers are exempt from paying taxes due to the foreign currency they bring in, such as USD. If a freelancer earns a good income but is not required to pay taxes, are they still obligated to pay Zakat on their salary?
Q2: In a situation where a government requires individuals to pay 5% tax on their salary, should an individual pay an additional 5% to fulfill the 10% Zakat on salary as mentioned by Ghamidi Sahb? Or is it sufficient to pay only the 5% tax required by the government?
Q3: If a person is exempt from paying taxes by their government, such as a freelancer, and they are saving money for their education, are they also exempt from paying the 10% Zakat on their salary (apart from 2.5% on assets)?
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1). Taxation should not be confused as equivalent to Zakat in every matter. Since it is something enforced by the state on its citizens instead of Zakat, therefore some adjustments are done as an ijtihad because of certain commonalities until proper Zakat system is implemented at state level, for instance, adjustment of taxes paid against Zakat obligation and using tax slab for salaried individuals in order to determine Nisab for production Zakat resulting out of Salary or for some other heads of Zakat because the ‘illat‘ for such tax slabs is same as that of Zakat i.e. minumim amount equivalent to basic needs of an individual should not be taxed/subject to Zakat.
Zakat is the right of a society on an individual imposed by Allah on which state has the first right to collect. But if the state does not collect that amount (due to any reason), then the individual should pay his due Zakat himself. Therefore, if the income earned is above Nisab then one should pay Zakat due at an individual level, despite the fact it is tax/zakat exempted.
Secondly, Zakat is applicable only when amounts exceed Nisab threshold (for both production and wealth). However, there can be difference of opinion on whether Zakat percentage should be applied on amount only above Nisab threshold or on the whole amount as soon as it crosses the Nisab threshold. Please see these responses of Ghamidi Sahab in this regard:
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2). The remaining 5% would need to be paid separately by the individual.
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3). In case of Production/Earning, Zakat becomes due immediately on the gross production as soon as the production occurs. Therefore, no deduction of future saving of personal nature can be made out of that earning and complete Zakat would need to be calcuated as per the above mentioned principle. It is only after an item becomes an item of personal nature (in this case after becoming a part of savings) then it will be considered exempt from Zakat. (More details on Zakat: Discussion 58129 • Reply 58137)
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Following video of Ghamidi Sahab addresses first two questions:
Please refer from 18:58 to 24:41
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Thank you so much for the detailed reply. It is all clear now!
Jazak’Allah!
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