How to Pay Zakat

How to Pay Zakat with Imam Zaid Shakir

Opening Prayers and Greetings

In the name of Allah, the most Gracious, the most Merciful. All praise is due to Allah, the Lord of the worlds.

And peace and blessings be upon the Master of the Messengers, our Master Muhammad, and upon his family and companions.

And peace and blessings be upon you. Our Lord, all praise is due to You, as it should be for the glory of Your Face, and for the greatness of Your Sovereignty. Exalted are You, we are not ashamed of You, as You have honored Yourself.

O Allah, peace and blessings be upon our Master Muhammad, and upon his family and companions. And peace and blessings be upon you. As-salamu alaykum wa rahmatullahi wa barakatuhu.

Introduction and Preparation for Ramadan

This is Imam Zaid Shakir coming to you from the premises of beautiful Zaytuna College, your Muslim college. Praying that all of you are preparing to have a wonderful month of Ramadan. Prepare now, fast voluntarily.

Start to spend. Start to engage the Qur'an. Don't wait till Ramadan, get a running start.

As one of our scholars mentioned, Abu Bakr al-Warraq al-Balkhi, he said, may Allah have mercy on him, Rajab is the time to plant the seeds. Sha'ban is the month for irrigating, and cultivating, nurturing the crop. Ramadan is the month to harvest the crop.

Ramadan is the time to harvest the crop. And so don't wait for Ramadan to plant, brothers and sisters. Start planting now.

Start irrigating, and weeding, and cultivating now. And in Ramadan you'll have an abundant harvest of reward. Meaning, start reading the Qur'an now.

If you haven't been reading it throughout the year, regularly start that practice now. Start praying your extra prayers now. If you're not in the habit of regularly praying your qiyam al-layl or your tahajjud, start now, brothers and sisters.

Start being charitable now. And then when Ramadan comes, you'll enter the month with much, much spiritual momentum, insha'Allah.

Zakat and Ramadan

Today we'd like to talk about zakat. A lot of people like to spend their zakat in the month of Ramadan. They should be wary though if they're possessing something, and what we'll talk about, how the lunar year passes over it, that they might by spending in Ramadan be paying their zakat early.

So you should consult your local imams and scholars concerning the rulings associated with paying your zakat early, before the actual lunar year passes over that wealth that the zakat is due on.

The Linguistic Meaning of Zakat

Zakat, in the Arabic language, means to grow or to increase, literally. Zakat. Something experienced zakat, that is to say it increased and it grew.

By paying zakat, our wealth grows and our wealth is increased. It increases for us in tangible and intangible ways. We might have less, but there's more barakah in what remains.

And it is an increase for those who receive the zakat. They had less than what they will have after they receive the zakat.

Zakat as Purification

It also means tahara. It also means purity. And so zakat purifies our wealth. It purifies it by bringing it into accords with those provisions and strictures that are pleasing to our Lord.

It purifies our wealth by reminding us, associated with the first point, that the wealth we give in zakat is not in reality our wealth. The original amount is the wealth of our Lord. Our Lord tells us, Allah Almighty God tells us:

"Give them from the wealth of Almighty God that He has given to you."

So in that sense, it's not ours. Once the lunar year, which we mentioned, passes over it, and its value is above the designated amount, and we'll come back to these particular issues, it's no longer our wealth. It's the wealth of those who are due to receive it.

Those eight categories of recipients who we will also come to, insha'Allah ta'ala. And if we retain it, we're actually guilty of theft. And so therefore, the person who doesn't pay their zakat is a sinner, athim.

Technical Definition of Zakat

So zakat means to grow, increase. Zakat means to be pure. And so by paying our zakat, we purify it from the sin that accrues to one who holds on unlawfully to the wealth that is no longer theirs.

In the language, technical terminology of the divine law, zakat means to spend, to convey a designated portion of wealth to specific categories of recipients when certain conditions prevail. So a designated portion of wealth, and again we'll talk about the specifics related to that, to specific categories of recipients, and we'll talk about those also, once certain conditions prevail over the wealth.

The Wisdom of Zakat

Circulation of Wealth in Society

So the conditions or the wisdom before that, the wisdom of the zakat, number one, is to circulate wealth in the society. So when we pay our zakat, a portion of the wealth that might be deprived from people in the eight categories we mentioned, but generally right now we'll say to the poor and needy people, that wealth is given and conveyed to them. And so the wealth doesn't remain the strict possession of those who are wealthy, but rather it's given to those who are less fortunate, and therefore wealth circulates in society.

Reminder that Wealth Belongs to Allah

Another wisdom is it reminds us, as I mentioned earlier, that the wealth is not ours, the wealth is our Lord's. This is very, very important, because when a society reaches a point where people consider wealth to be theirs, then the selfishness on the one hand that prevails, and then the envy that that selfishness generates, become very destructive forces in society. And so one of the wisdoms of zakat is to avoid the prevalence of those destructive forces.

Undermining Envy Among the Poor

Another wisdom of the zakat, and we just alluded to it, is to undermine envy on the part of the poor. So the poor become susceptible to ideologies of usurpation, when there's envy, and the envy is stimulated by a lack of sharing and a lack of caring, and a lack of compassion. So zakat generates that spirit of sharing, that spirit of cooperation, that spirit of brotherhood and sisterhood, that we're connected together, and because we're connected together in one vast human family, we share that which nominally belongs to us.

And by sharing it, we undermine those destructive forces that can actually tear apart a society and destabilize it to its root. So this is another wisdom of the zakat. And there are many, many others, but in the interest of time we'll limit ourselves to those particular ones.

The Obligatory Nature of Zakat

The zakat is mandatory, obligatory. The zakat is obligatory, and here we'll mention the three basic conditions for every Muslim. Even a child or an insane person or a person who's an elderly person suffering from dementia or Alzheimer's or some other debilitating affliction that would impair their judgment so they couldn't undertake their affairs directly.

In those cases the zakat is the responsibility of the guardians of those children or those insane people or the elderly people who've lost full control of their mental faculties. The guardians must pay the zakat on their behalf. So Muslims, zakat is not due on non-Muslims. It is due on Muslims, the Muslim community.

Conditions for Zakat

The Nisab (Minimum Threshold)

Secondly, that the wealth in the various categories, and for our purposes we'll limit ourselves to gold, silver, cash, and cash investments, so stocks and bonds. So, the nisab or the limit is approximately 87 grams of gold

and 600 grams of silver.

So if one has in their possession in those various categories, gold, cash, silver, and also trade goods, so it's called 'urud al-tijara, trade goods, that the value of which are above 87 grams of gold, 600 grams of silver, and you can find what that actual value is today because it changes on a daily basis, that is when zakat is due on those categories of property.

Passing of One Lunar Year

One has to be above that in the categories of cash, cash investments for a period of one lunar year. So you possess that and throughout the year it's above that threshold, 87 grams of gold, 600 grams of silver for an entire lunar year.

In terms of trade goods it might dip below because at the end of the lunar year once one acquires those trade goods, the value might dip below but it's assessed at the end of the year. So at the end of that lunar year when one assesses the value of their trade goods, if it's above that limit, 87 grams of gold, approximately 600 grams of silver, approximately again, then the zakat is due on those trade goods.

Special Ruling on Property Acquired for Personal Use

Another aspect of trade goods we can mention here is that if you acquired property for your personal use or for non-business usages and you subsequently use it for business, there's no zakat due on it.

So for example, you buy an apartment and you intend to live in it and then you live in it but it's a second property. You stay in the city to avoid the commute during the days of your work or you work in a distant place, you fly in, you stay in that apartment, subsequently your situation changes and you decide to rent that property out. That property was not originally acquired for trade, therefore there's no zakat due on that particular commodity.

Evidence from Quran and Sunnah

To continue, those three conditions, when they prevail, the zakat is due. And it's obligatory as we said, obligatory nature of zakat. In 32 instances in the Qur'an this phrase occurs:

"Establish the prayer and pay the zakat."

This is in order, it's an imperative verb. Establish regular prayer and pay the zakat. So this is a commandment from Allah, it's unambiguous and so it's an obligation.

In the sunnah of our Prophet (peace be upon him) there are many hadiths that establish the obligatory nature of zakat. The most commonly referenced:

بُنِيَ الْإِسْلَامُ عَلَى خَمْسٍ شَهَادَةِ أَنْ لَا إِلَهَ إِلَّى اللَّهِ وَأَنَّ مُحَمَّدًا رَسُولُ اللَّهِ وَإِقَامِ الصَّلَاةِ وَإِيتَاءِ الزَّكَاةِ وَحَجَ الْبَيْتِ وَصَوْمِ رَمَضَانَ

"Islam is built on five pillars: to testify that there is no deity except Allah and that Muhammad is the Messenger of Allah, to establish regular prayers, to pay the zakat, to make the pilgrimage to the sacred house in Mecca,

and to fast the month of Ramadan." (Sahih Bukhari 8, Sahih Muslim 16)

So amongst these five pillars وَإِيتَاءِ الزَّكَاةِ is zakat paying the zakat. So zakat is mandatory.

The Eight Categories of Zakat Recipients

Now, who receives the zakat? The zakat is received by eight categories of recipients:

إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِّنَ اللَّهِ وَاللَّهُ عَلِيمٌ حَكِيمٌ

"Zakat expenditures are only for the poor and for the needy and for those employed to collect [zakat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler - an obligation [imposed] by Allah. And Allah is Knowing and Wise." (Quran 9:60)

الصَّدَقَاتُ specifically in this ayah means zakat. إِنَّمَا الصَّدَقَاتُ أَي الزَّكَاةُ - Zakat is due to:

1. Al-Fuqara )الفُقَرَاء( - The Poor

The poor, and there's a difference between some schools between الفُقَرَاء and المَسَاكِين. Who has barely anything, has absolutely nothing or very very little.

2. Al-Masakin )المَسَاكِين( - The Indigent

The the poor, so the indigent, the poor. The poor are those who have something but not enough to meet their needs. Say if they need five gold coins for their monthly expenses, and they only have three or four, so they're they need a little more. So the poor, those who need a lot of help, the مِسْكِين those who need a little bit of help, so the indigent, or vice versa. So some schools say the poor are those who need a little help, and the مِسْكِين are those or مَسَاكِين who need a lot of help.

3. Al-'Amilin 'Alayha )العَامِلِينَ عَلَيْهَا( - Those Who Collect Zakat

Those who work to collect and gather the zakat.

4. Al-Mu'allafatu Qulubuhum )المُؤَلَّفَةِ قُلُوبُهُمْ( - Those Whose Hearts Are to Be Reconciled

Those whose hearts are reconfirmed in Islam. So some of the schools in Islam, they say even those can be non-Muslim people, those people who if they had a favorable opinion of Islam, they would be amenable to entering into the fold of the believers. Those people who might be very antagonistic but the charity and generosity they might receive from the Muslim community would alleviate their animosity towards the Muslim community and their possible violence towards the community. So various categories of those whose hearts are to be confirmed.

5. Fi al-Riqab )فِي الرِّقَابِ( - For Freeing Slaves

And those who are, Allah said, for the liberation of slaves. And so the zakat money can be spent and given to those who are enslaved, those Muslims who are enslaved, to buy and purchase their freedom.

6. Al-Gharimin )الغَارِمِينَ( - Those in Debt

Those who are in debt. And there are different details related to that, so not anyone in debt. So an affluent person who's in debt because of extravagant consumerist spending, that person would not be eligible for zakat. But those who are legitimately in debt and that debt can lead to either a personal danger, financial disaster, those are the people in debt who can be recipients of zakat.

7. Fi Sabilillah )فِي سَبِيلِ اللَّهِ - In the Path of Allah

In the Shafi'i school, which is my particular school, that category is limited to those who are actually defending the faith. So they're defending the faith against active aggression from transgressing parties, those are the ones who are going forth فِي سَبِيلِ اللَّهِ

Other schools though expand that category to include those who might be calling to Allah, those who might be working in various institutions that are serving the communities in ways that lead to the defense of the community. So in this day and time there are organizations that are working to combat anti-Muslim hatred and bigotry. Those sort of organizations under this category فِي سَبِيلِ اللَّهِ would be eligible for zakat according to the opinion of many contemporary scholars.

8. Ibn al-Sabil )ابْنِ السَّبِيلِ( - The Wayfarer

So that's فِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ . Only religion that encourages spending both voluntarily and obligatorily for travelers and wayfarers. So those people are passing through our towns and communities and they need assistance, they need assistance in our day and time in repairing their cars, they need assistance with food and lodging, they need assistance in various ways. Those people can be given zakat money even if in the place of their destination they have adequate provisions.

And so those are the eight categories of people who are eligible for and can be recipients of the zakat.

Types of Zakatable Wealth

So this is an incredible system. We mentioned and we'll mention this finally then we'll open up for questions and queries, insha'Allah ta'ala, and that is the types of wealth. So we mentioned two categories, there are others but these two are most relevant for us. Very few of us have livestock, very few of us are engaged, actively engaged in farming other than backyard gardening where we have an excess of dried goods or goods that can be stored such as dates or rice or grains and therefore there will be zakat due on them. Very few of us will find a buried treasure and there's zakat due on that buried treasure.

So for that reason as I mentioned, we'll confine ourselves to cash, gold, silver, cash and cash investments. And that category, two and a half percent is due on those holdings after one comes in possession of any of those and a lunar year passes, and after a lunar year they have consistently stayed above that minimum of 600 grams of silver, 87 grams of gold approximately. Then the zakat is due, two and a half percent of the value of that gold, cash, stocks, bonds. Two and a half percent is due on that.

Special Rulings for Trade Goods

In terms of trade goods as we said, when one comes into possession of it, after the passing of a lunar year, even if, so if in the first category, if that value dips beyond the nisab, zakat is not due until it comes above that limit, that limit of value, and a lunar year passes. Then it's due.

Whereas trade goods, if trade goods dip below the nisab, so they dip below the nisab and then they come above the nisab again, the limit, that's irrelevant. We still go to the end of the year and then we assess at the end of the year. And so at the end of the year if those commodities are above the limit, which is called the nisab, then zakat is due on them.

Whereas cash, cash investments during that year before we reach the end of the year, they dip below, then we start a new reckoning in terms of a new year passing when they come above it again, if they come above it.

So those are some basic introductory remarks we can make about zakat and we'll open up the floor now for questions, the virtual floor of course, because none of you are sitting here around me, so we'll open up the virtual floor for any questions or comments that we might have from the audience.

Questions and Answers

Question about Trade Goods and Buildings

Great, thank you so much Imam Zaid. I'm just going to jump in with some questions from Facebook and Instagram. We have several starting with Facebook. Ardy Tikouma says, I'm from Ghana in West Africa, my dad is a businessman, before he pays his zakat he goes around to take the worth of his stock goods and even the worth of his buildings before paying. Isn't zakat just supposed to be on your savings alone?

Answer: No, as we said, trade goods are zakat commodities and so your father is doing the right thing. If those properties were purchased for rental income, if his supplies were all purchased for business, at the end of the lunar year after he's gained possession of those various commodities he assesses, and if they're above that limit that we mentioned, approximately 87 grams of gold and 600 grams of silver, then zakat is due on them. So zakat is not just due on cash and cash investments, so your father is doing the right thing.

Question about Zakat for Orphans and Disabled

Zakat going for orphans or disabled, those orphans and those disabled people being either poor or indigent, that zakat is their personal property. And so ideally they have to be consulted before one can go forth with that project. In other words, once the zakat is due, it's no longer the possession, I see the question I think we'll clarify, but once the zakat is due, it's no longer the possession of the giver.

So the giver cannot say to the poor and the orphans do this, build an orphanage with this money we're giving you. They could say I'm going to go into business, which is one of the ideal wisdoms I forgot to mention of the zakat. The zakat is to expand the number of people who actually are paying zakat. So they should be given enough to enable them to be financially independent. This is one of the goals of zakat.

So those recipients who now own that money will have to be consulted in terms of an organization. That organization ideally should consult the orphans or whoever is going to be the beneficiaries of that project as to get their permission to use this money which is theirs for that particular project. Allah knows best.

Important Clarification on Distribution

Jazakumullahu khayran. Here, because I should have mentioned, in the Shafi'i school, my particular school, all eight of those categories are equal recipients of the wealth. In other words, if we have all eight of those categories - the poor, the indigent, those who work to collect it, those whose hearts are to be strengthened and confirmed, those slaves to be liberated, those who are in debt, those who are working in the way of the religion and the travelers and wayfarers - the money, the available funds and resources are distributed equally across those eight.

If there's only six then it's distributed equally across the six. If there are two or three it's distributed equally across the two or three. Other schools differ in that particular ruling, so I just wanted to interject that. Jazakumullahu khayran.

Another Important Interjection on Local Distribution

Another interjection: Zakat, as long as someone in those eight categories exists in the land where the Zakat is being collected, it is forbidden in the Shafi'i school to send that money to another area, another land. It's forbidden. Other schools have different rulings with some laxitude, but generally speaking, Zakat should be distributed amongst the eligible recipients in the land, the area, the region that it's been collected in.

So we shouldn't immediately send our Zakat overseas for example, if we have connections to communities in other countries, before we make sure that all of the needy people in our area have received the Zakat. Barakallahu feekum.

Question about Missed Years of Zakat

Next question we have from Facebook is from HomeComfort who asks, do I have to pay Zakat for the period I did not know is mandatory, for the period I did not know is mandatory, or have I to pay from the moment I understood the importance of Zakat?

Answer: As long as you possessed that commodity or that money or that Zakatable wealth, you have to pay for the years that you might have missed. So if that was in your possession, once you learn of the ruling, you have to pay for the years that you missed, the two and a half percent. Barakallahu feekum.

Question about Why 2.5%

So the next related question which comes from Ruqayya on Instagram: Why 2.5%, how did this number come about?

Answer: The number is established by textual evidence. So we are instructed by the Prophet (peace be upon him) to pay a quarter of a tenth so رُبْعُ الْعُشْرِ so a quarter of a tenth is 2.5%, or a quarter of 10 parts so رُبْعُ الْعُشْرِ So that quarter is 2.5%, 2.5, 2.5, 2.5, 7.5, 2.5, 10.

Question about Jewelry

Back on Facebook we have Suad who asked to clarify about calculating, how do you calculate Zakat due on jewelry?

Answer: That's an excellent question. I should have mentioned that. So Zakat is only due on gold or silver jewelry, those are Zakatable categories mentioned: gold, silver and cash, cash and cash investments.

So in the Shafi'i school, Zakat is due on the amount of jewelry that would be declared to be excessive. And so if a woman had so much jewelry that it would be deemed to be excessive and extravagant then Zakat would be due on that part that was excessive and extravagant. But if it's what's normal for a person of that particular society and within realistic limits then there's no Zakat due on jewelry, gold or silver jewelry.

Follow-up Question about 401K Access

Jackson actually had a follow up to his earlier question about 401k and he mentions: We don't have access to the 401k though, does that have any bearing?

Answer: You will have access but you will have to pay a penalty. And so if you subtract the penalty from what you could liquefy, then the Zakat would be due on the balance if it's above the limit. Allah knows best.

Closing Remarks

Okay Imam Zaid, if you have any concluding remarks. I think that's sufficient for questions. We thank everyone for your patience and for very, very excellent questions. I think all of the questions helped to fill out the initial presentation and to fill in some of the gaps.

So may Allah Ta'ala bless all of you and we encourage you on those issues where I mentioned consulting your local scholars, please follow up with your local scholars on those particular issues. May Allah bless you all.

May Allah's mercy and blessings be upon you.