On retirement, I received from my company a lump sum in lieu of my service. As I do not know how to start a business, I invested a certain amount in a government saving scheme that gives fixed profits every six months. The rest I invested in a fund that matures after 10 years, although it can be surrendered at any time. Could you please explain what Zakah I should pay on these two types of investments
For the first type, which pays profits or dividends, the Zakah you pay is 10% of the amount you receive in profits, and it is payable on receipt of the money. You do not have to wait until your Zakah date. This is payable straightaway.
The second type is payable on maturity, once only, on the original outlay and the profits you receive, at the rate of 2.5%. When we say once only, this covers the duration of the investment. However, when you have paid its Zakah on receipt, the money you now hold is treated as part of your money and it is subject to Zakah in subsequent years, together with what you may have of money that is liable to Zakah.
Could you please explain whether Zakah is payable on all assets every year, except what is needed for personal and dependents‚ living. If so, does that not discourage saving to look after one’s children? If one is to pay 2.5% of one’s savings every year, then the whole amount will disappear in less than 50 years. I am told that Zakah is payable only once, which means that if your savings this year are SR 10,000 and you pay Zakah for this amount, then next year you add to your savings a sum of SR 2,000, then you pay Zakah on this added amount only. This is because you have already paid Zakah for the first amount. If this is correct, then it sounds more encouraging to saving. Please comment.
Zakah is an act of worship required of every Muslim, male or female, who owns more than the threshold of Zakah, which is equivalent to 85 grams of gold, in excess of what he needs for his own and his dependents‚ living. It is imposed on every type of property that is liable to growth. Thus, it is not imposed on a person’s own accommodation, or on the tools of his trade, even though these may be costly.
Thus, no Zakah is payable on the value of your shop if you run a trade, or on your taxi if you are a taxi driver, etc. But it is payable on capital and profit, every year, at the rate of 2.5 percent for most types of money or property, although the rate may be different in some situations. An important aspect is the liability of the property to grow. Thus, if you have a farmland, your Zakah is applicable to your produce; and if you have an animal farm, Zakah is payable on your animals, be they sheep, cows, camels, etc.
It is not true that Zakah is payable once only. It is payable every year. If you have some savings and you keep them for five years, you pay Zakah for them every year of these five. Does this inhibit savings? Certainly not, because Islam does not like money to remain idle, unused. It should be invested. The Prophet, peace be upon him, has warned against leaving money idle, saying that it would be eaten up by Zakah. A person who has more than enough for his needs should express his gratitude to God by paying his Zakah to help other members of the community who are less fortunate than he is. It is only a person who keeps his savings unused that suffers reduction through Zakah. Anyone who invests his savings is likely to increase his savings even though he has to pay Zakah.
I am a housewife. Can I give my Zakah amount to my own brothers and sister? None of them is my dependent. My brothers want to do some business but they don‚t have the necessary capital. My sister is married with two children but her husband’s income is insufficient for their needs.
Yes, it is permissible for you to give your Zakah to your sister and your brothers who are in need of the money for their living, or to set up some means of earning an income. The only relatives who may not benefit by our Zakah are those whom it is our duty to look after, such as our children or our parents.
Is it permissible to pay Zakat-ul-Fitr in cash instead of food grain if the country or the part of it where the payer lives has abundance of grains? In such conditions, the recipients, as you will appreciate, are in need of money to meet other expenses of day-to-day life. Please clarify.
Zakat-ul-Fitr is a duty, which is applicable to every person or head of a family who has more than enough food for him and his family for the last day of Ramadhan. It is payable toward the end of Ramadhan. The Prophet, peace be upon him, emphasizes its importance by stating that the acceptance by God of our fasting in the month of Ramadhan is made conditional on the payment of this Zakah. It is a small amount. But the fact that it is payable for every person in the family, including the youngest of children, even one born immediately before sunrise on the day of Eid, makes its total sum very large. This is built to relieve the poor of their needs at least for the day of the Eid.
Many scholars argue that Zakat-ul-Fitr must be paid in kind, choosing the staple diet of the local community of the payer. Again the purpose here is to satisfy the needs of the poor. The majority of scholars prefer that it be paid in the form of grains, such as wheat, barley or corn. Dates and other staple diet types of food are also acceptable.
However, many contemporary scholars argue that this is not a rigid ruling. They say that in communities where the food is scarce or hard to get, Zakat-ul-Fitr must be paid in kind. It is not acceptable to pay a poor person the price of whatever quantity of grain the payer must give. On the other hand, in a community where grains and agriculture produce are available in abundance, there is no need to insist on paying Zakat-ul-Fitr in kind. Cash may be much better for the poor. They further point out that in our modern times, homes are not equipped to make use of food grains in order to make bread or something similar. It has been noticed in many communities that the poor who receive a sizeable quantity of such food grains or flour in communities which enjoy abundance of them find no alternative but to try to sell what they receive, or most of it. When they do that, there is plenty of extra amounts of such grains, which will result inevitably in drop in prices. This will affect the poor adversely. Therefore, giving them money to cater for their own needs as they please may be much better for them. Hence, it is acceptable to pay Zakat-ul-Fitr in cash. The criterion, however, is availability of food, especially staple diet, in abundance. ~