Zakat

Payment of a percentage of a Muslims

income/properties to an authorized zakat
institution through a zakat collector (amil) for
distribution to other needed muslim as
specified in the syariah
One of the 5 pillars of Islam; obligatory
(mandatory)
It is wealth purification, not found in
conventional personal financial planning
Zakat
is defined as a religious obligation of a Muslim
by setting aside a certain sum of money to be
contributed to the receipient
is an act of worship through expenditure of
Muslims wealth with the ultimate objective to
win Allahs pleasure (Yulyadi Arnabim)
paying a sum of money by a Muslim, after
meeting certain condition, to support specific
categories of people
Zakat - Wisdom and significance
zakat is obligatory alms (sadaqah?)
zakat means purification and growth, wealth
purification is fundamental in Islam
God will replace and increase wealth that is
purified through zakat
real owner of wealth is God, we are only trustees
and must manage wealth according to Gods
command where one must set aside for those in
need through zakat or sadaqah
zakat and sadaqah help the poor, feed the
hungry, remove pain from the deprived brothers
those who refused zakat is a subversive and
must be fought or receive capital punishment
Importance of zakat
purifies the wealth and assets of the people
a certain percentage of wealth is distributed
immediately in the right manner, because the
owner no longer has moral or legal possession
of that percentage
if one fails to pay zakat, he is retaining wealth
that does not belong to him this is corruption
the unlawfully retained percentage makes the
whole lot impure and endangered
Zakat payment
Zakat is the amount of money that every adult,
mentally stable, free, and financially able Muslim,
male and female, has to pay to support specific
categories people
Other condition:
a) has met haul ( a time span of one lunar year
passes with the money in owners control)
b) rate of 2.5% (or 1/40)
c) reached the nisab (minimum amount)



Zakat Types and calculation


Zakat on Income
There are 3 ways to calculate zakat on
income:

2.5 % of gross income per year
After deducting basic expenditure
After considering actual expenses to bear

Example:
Sources of Income:
Salary
X
Allowance
X
Bonus
X
Others
X
Total Income (A)
XX
Allowable Deductions:
Self
Y
Spouse
Y
Children (RM1,000 X 3 (example) )
Y
Contribution to parents
Y
Contribution to EPF (11% of gross income)
Y
Deduction to LTH
Y
Total Deductions (B)
YY
Net Income for Zakat payment: (C) (take A B) ZZ
Amount exceeded the nisab of RM 6,400 (example)
Zakat payable (C x 2.5%)

Zakat on Savings


Savings is defined as amount of money saved
in the savings account, fixed deposits
(investment account), current account, ASB
and any other types of savings in a bank or
other savings institutions.

Zakat payable is based on the lowest balance
for a period of one year. The balance amount
must met the haul and exceeded the nisab
after deducting the interest/dividend except al
wadiah account

Example:
Date Debit (RM) Credit (RM) Balance (RM)
5 Jan 2010 10,000 10,000
25 Apr 2010 1,500 8,500
7 Jun 2010 900 7,600
30 Jun 2010 300 (Interest) 7,900
15 Aug 2010 700 7,200
30 Sept 2010 1,000 8,200
10 Nov 2010 500 8,700
15 Dec 2010 1,000 7,700
The lowest balance in the statement is RM 7,200 and has exceeded the nisab of RM
6,400 for a full one year period. The haul period taken here is from 1
st
Jan to 31 Dec
2010.
Therefore, zakat calculation as follows:
Lowest balance = RM 7,200 300 (Interest)* = M 6,900
Zakat payable = RM 6,900 x 2.5% = RM 172.50
* any income from conventional account has to be deducted

The zakat on savings calculation if
depositor has more than one savings
account


If an individual has more than one account, he
has to add up all the lowest balance of each
account. Zakat is payable if the total amount
exceeded the nisab amount.

For example:

The lowest balances for the haul period for 3
accounts are as follows:

Example:
The lowest balances for the haul period for 3 accounts are as follows:
Account 1: RM 3,000
Account 2: RM 5,500
Account 3: RM 2,500
Total amount = RM 11,000

Zakat payable = RM 11,000 x 2.5% = RM 275

# If savings are made in a fixed depository type of accounts, the zakat is
payable on the principal amount only.
For example: If principal amount in the Investment Account is RM 15,000,
then the zakat payable = RM 15,000 x 2.5% = RM 375


Zakat on Business

Two ways of calculating zakat for business
income:
Growth Model (Kaedah Model Berkembang)

Based on owners equity on the business
entity, sources of financing and profit or losses

Example:
Owners equity xxx
Long-term liabilities xxx xxxx

Less: Fixed assets xxx
Current assets xxx xxxx
xxxx
Add/less: Profit/loss xx
Business wealth that is subjected
to zakat payabale
XX
Working Capital (Kaedah Model Modal Kerja)
Based on the value of current assets minus short-term obligations plus
adjustments

Zakat on Gold

Gold and silver are metals that are subjected to zakat. The obligation to pay zakat on
these two items is justified by the command stated in at-taubah verse 34-35.

Conditions of calculation for zakat on gold:
Determine the uruf (nisab minimum amount that is subject to zakat).
Find the current price of gold per gram.

The zakat payable for gold is divided into two situations:

Gold owned as women accessories/adornments/decorations
This is a situation where gold is purchased by women and used as accessories on
them. Thus zakat is payable if the amount of gold has exceeded the uruf (nisab
amount for gold if it is for decorations). If the amount of gold is less than the uruf
amount, then the individual is NOT obligated to pay zakat. The uruf is the customary
usage in an area and for the state of (example) Selangor the uruf is 800 gram. (For
some states the uruf amount can be in ringgit amount). If the amount worn by a
woman is more than the uruf than one has to pay zakat.

Example:
Zakat payable = total amount of gold owned x current price of gold per
gram x 2.5%
Illustration:
Zainab is wearing gold accessories in the amount of 1000 gram. The value
of gold is currently RM 120 per gram. In this situation she owns gold
amount that is exceeding the minimum amount (uruf) of 800 gram.

Therefore, the zakat payable = 1000 gram x RM 120 x 2.5% = RM 3,000

Gold owned as savings
This is a situation where gold is owned or used other than as accessories
such as owning gold in the form of currencies, savings, house accessories,
minerals. The nisab amount is 85 gram.

Zakat payable = total amount of gold owned x current value of gold per
gram x 2.5%




Zakat on Silver


Zakat on silver is obligated to be paid regardless
of whether it is worn for accessories or kept as
decorations at home, the calculation is based on
the total value of silver owned. The nisab for silver
is 595 gram.


Zakat payable = total amount of silver owned x
current value of silver per gram x 2.5%




Zakat on share/investment


Zakat on shares or investment is divided into 2:
If shares are owned until the end of the haul period
and met the nisab, it will be 2.5% of the lowest value.

Zakat payable = no. of shares owned x (current price
or purchased price, whichever is lower) x 2.5 %

If shares are traded during the haul period (and met
the nisab), it will be 2.5% of the capital gain.
Zakat payable = 2.5% x capital gain
(Capital gain = selling price purchase price

Zakat on Employees Provident Fund
(EPF) (KWSP)


Amount of money kept at EPF is subject to zakat
because of the concept is similar to savings but
the withdrawal is not as easy as the banks
savings account. Zakat on EPF, however, is only
imposed upon complete ownership which when
the owner make a withdrawal from EPF. Thus, the
zakat payable is based on the amount withdrawn
from EPF.

Zakat payable = Amount withdrawn x 2.5 %



Methods to pay Zakat

The payment of zakat nowadays is made simple with the advance on technology. One may not
necessary to go to see the amil to deliver the cash but there many options of zakat payment
mode as follows:
Salary deductions
Salary deductions can be made by giving instruction to employer to deduct a percentage of your
salary monthly (a monthly deduction table is available) and send contribution to the selected
collection centre.
At specified collection counters
Payment can be made at (i) Post Office counters and (ii) Bank counters at the appointed banks
Electronic-banking
Various e-banking methods are available such as:
Internet banking
Banks ATMs
Using credit cards the acceptable card of selected banks
Short Messages Service (SMS)
Financial Process Exchange FPX of selected banks
Phone banking
Others - Through the mosque system Kiosk Maju Masjid