Frequently Asked Questions
Please find below answers to FAQs. The answers are given to the best of our knowledge. However, Allah knows best.
Question 1: Who is obliged to pay Zakat?
Answer: Zakat must be paid by every Muslim who has a nisab (The Nisab was set by the Prophet Muhammad (SAW) to be equivalent to: 87.48 grams of gold or 612.36 grams of silver), which is the minimum of one's holdings/or its equivalent, liable to Zakat. The nisab is conditioned by the following:
• Zakat should be paid on any amount of money remaining after meeting the expenses
for such necessities as food, clothes, housing, vehicles and trade/craft machines.
• A complete year of Islamic calendar should pass, starting from the very day of the
Question 2: What is Nisab?
Answer: Nisab is the minimum limit of wealth below which Zakat is not payable by the owner of the wealth. However, if it exceeds this minimum level, Zakat is payable. The nisab limit is different for different class of wealth. For example, exemption limit on gold is 7 ½ tolas or 87.48 grams of pure gold, 52 ½ tolas of silver or 612.35 gms of pure silver, 5 camels, 40 goats, 30 cows and 653 kg of agricultural produce. The value of 24 Carat pure gold on 25th April 2019 in Mumbai is Rs. 3210 per gram. Accordingly, nisab level is Rs. 2, 80,808/-.
Question 3: When should Zakat be paid?
Answer: Zakat must be paid for Gold and Silver Jewellery, Money, Merchandise Stock, Animal Stock after completion of one year of possession with the owner. In case of crops and some fruits it has to be paid on harvesting.
Zakat should be paid on the money left after meeting the expenses for such necessities as food, clothes, housing, vehicles and trade/craft machines. A complete year of Islamic calendar should pass, starting from the very day of the nisab's possession.
Question 4: Can Zakat Payment be deferred?
Answer: Deferring payment of Zakat is prohibited, unless the giver has some valid reason and cannot pay it on time. In such a case, he may wait until he is able to pay it.
Question 5: How is Zakat computed on bank notes and bonds?
Answer: Since they are documents with guaranteed credits, banknotes and bonds are subject to Zakat once they attain the minimum of nisab.
Question 6: How is Zakat calculated on the income of a trader?
Answer: The trader should prepare a balance sheet showing the closing balance of stocks and cash/bank balance and outstanding debtors. The outstanding debts should be deducted. On the remaining balance, Zakat should be paid 2.5 %. The stocks should be valued at current prices.
Question 7: What is Ushr?
Answer: Ushr is a kind of due (charity) levied on the produce of the lands. The farmers are required to pay 5% of the total produce of land which is irrigated and 10% of the total produce of land which is not irrigated. This due, again is for needy and poverty-stricken of the society.
Question 8: I have bought some plots of land which are now lying vacant and unproductive. I wish to sell them at a profit at a later date. On one plot, I wish to construct a house and on another plot, I wish to build my shopping complex. Please let me know whether Zakat should be given on this unproductive land.
Answer: Plots of land with the intention of re-sale are items of trade or merchandise items. You need to have a fixed Zakat Due Date for lunar calendar every year. On that date, market value of these plots need to be ascertained and Zakat paid thereon @ 2.50%.
However, Zakat is not payable on that land which is meant for construction of dwelling house. The other plot on which you intend to construct a shopping complex is a commercial commodity. On the day when your Zakat falls due, you should estimate the value of the land and pay Zakat.
Question 9: Is it permissible to pay Zakat each month in advance?
Answer: There is nothing wrong in paying Zakat in advance during the year. Zakat is a right of the poor people and in case you are paying in advance, it is a meritorious deed. It should start with Niyyat (intention) to make the payment. Sum total of these advance payments should be calculated and compared with the actual liability at the end of Zakat period. Deficiency should be made good on the last date when Zakat is due.
Question 10: Should I pay Zakat in money or can I pay in kind? Whether I should tell the receiver that it is Zakat money?
Answer: You should give the Zakat in the form of money because it is easier for the receiver to apply it for his needs as per his priority.
Zakat in kind (food, clothes, etc.) can also be given if the giver is a trader or manufacturer of those items. But it is still recommended to give money with proper advice to the receiver.
It is not necessary to tell the receiver that it is Zakat money. You can simply give the money to that person without stating anything.
Question 11: I have a land planted with rice crop; is Zakat applicable for crop or profit after calculating the expenses? The land is irrigated by modern technology. Zakat is 10% or 5%?
Answer: Zakat on agricultural produce is due on its harvesting day. The minimum amount on which Zakat is liable is five awsuq that equals (653 kilograms). If the crop attains this amount, Zakat is valued according to irrigation method. The land is irrigated by rain and irrigation machine. If the large part is irrigated by rain, Zakat is 10 %. If the large part is irrigated by the owner's effort, Zakat is (5%) and Zakat is taken from this crop i.e. from the total amount of the crop.
Question 12: I have gold of 22 carats. How to convert it to gold of 24 carats and how can I calculate its Zakat?
Answer: Zakat is to be paid on the value of pure gold. Prices of pure gold of 24 Carats are available on websites for major cities. Alternately, weigh the possessed gold then multiply the result in gold carat and after that, divide the outcome by 24. The result will be multiplied to 2.5 %, and the result is gold Zakat.
Question 13: I have an amount of money that increases and decreases along one year, how can I calculate the Zakat?
Answer: You should define the date on which the money reaches the Nisab, then you start account for the year. It is Zakat Due Date. Once the value of possessions achieves Nisab level, Zakat is due from that date. No matter the money increases or decreases, if one complete year passes and the value of your possession remains at or above Nisab level on the Zakat Due Date, you must pay the Zakat which is 2.5% of the whole money.
Question 14: My Zakat Due Date every year is 1st Ramzan. This year I determined my Zakat liability as per the wealth as on 1st Ramzan. However, on 7th Ramzan, I received salary and my bank balance went up by Rs. 50000. Should I pay Zakat on this amount also?
Answer: Subsequent to the Zakat Due Date, if new income is received, it would not be subject to Zakat this year. However, this amount of Rs. 50000 will form part of next year’s Zakat liability.
Question 15: I did not pay Zakat for last 5 years. I would like to know how can I pay my Zakat in this case?
Answer: You should ascertain the value of your wealth as per the market price at the end of each lunar year. Then you should account the total sum and pay 2.5% of the money.
Question 16: I have retained Rs. 5 lakhs towards performance of Haj this year. Do I have to pay Zakat on this amount?
Answer: Yes, Zakat needs to be paid on the total amount in your bank account on Zakat Due Date. You may have earmarked it for Hajj purpose or any other purpose. Zakat is payable.
Question 17: My brother borrowed an amount of money from me. I did not ask for its repayment. He too did not return it. Should I pay Zakat upon this money?
Answer: There is no Zakat due upon loans. If one complete year passes and then your brother pays it back at any time after this year, you have to pay the Zakat for one year only after getting the money.
Question 18: I have inherited Rs. 10 lakhs should I pay Zakat upon it?
Answer: Yes, after one year of inheritance passes by, then you have to pay @ 2.5%.
Question 19: I was supposed to pay my Zakat last Ramzan, but I did not. Now I am traveling to perform Hajj, is it permissible to postpone it till I come back from Hajj, or should I pay it now?
Answer: You have to pay the Zakat immediately and ask Allah to forgive you for the delay.
Question 20: I bought a piece of land and I paid half of its price and I will pay the rest of its price after registration process. The money deposited in the bank passed one year in the bank. Should I pay the Zakat upon the whole money, or should I exclude the money allocated for the purchasing process?
Answer: You have to pay the Zakat upon the whole money.
Question 21: I borrowed an amount of Rs. 5 lakhs to buy a car and the scheme was to deduct a portion of my salary to pay the loan back. After 6 months of deducting I managed to pay back the loan as a whole at once. Should I pay Zakat upon this loan?
Answer: As you mentioned the loan did not complete one year with you. You used it in purchasing the car. No Zakat is payable.
Question 22: I have a land that is leased out to another person. He cultivates it and pays me a lease rental. How can I pay my Zakat?
Answer: Zakat is paid on the rent only when this rent reaches the Nisab and one year passes, then 2.5% should be paid.
Question 23: I have two houses, dwelling in one of them and renting the other. I need to know how to pay Zakat on them.
Answer: No Zakat to be paid upon the house in which you dwell. However, Zakat is payable on rental value @ 2.50%.
Question 24: I buy and sell used cars? Is Zakat payable on the transportation vehicles?
Answer: You have to pay Zakat upon the car trading. At the end of each year, you have to evaluate the value of the cars i.e. your stock-in-trade and calculate its total money value and add to it the cash you have and pay Zakat @ 2.5% of the total value.
However, Zakat is not payable on the car used for personal transportation.
Question 25: I have purchased a plot of land valued @ Rs. 25 lakhs, how much is its due Zakat?
Answer: Zakat depends upon the purpose for which the land is acquired;
• If it is a personal property, no Zakat is to be paid
• If it is for commercial purpose, you have to wait till one year passes, if it is still in your hand, you have to estimate its value in money and pay 2.5% of this value.
• If it is rented out, you have to pay the Zakat upon the rent value.
Question 26: I need to know about the commercial trade Zakat.
Answer: After one complete year passes on your trade, you have to value the closing stock on the date when Zakat is due. After calculating your total money, excluding debts, and other commitments, you have to pay 2.5% of the total money. The following equation can illustrate the Zakat:
Zakat amount = (the value of the goods + cash in hand or bank + loans and advances receivable – loans and advances payable) x 2.5%.
Question 27: I trade in plots of land and real estate, how can I calculate Zakat for the same? Some of these properties passed one year with me.
Answer- After one complete year passes on your trade, you have to evaluate your stock-in-trade as per current sale price. After calculating your total money, exclude debts and then pay Zakat.
Zakat of Shares, Bonds and Properties:
Question 28: I have stocks not for sale or trade; do they have Zakat?
Answer: Investment in shares held not for sale are long term investments for earning profits. Zakat is applicable on the dividends of the shares. If the shares are for trade and subject to market fluctuations, there is Zakat upon shares and profits if they attain Nisab and a year has passed.
Question 29: I was trading in shares, selling and buying, praise be to Allah as I gain from this trade six month ago; is there Zakat upon these shares?
Answer: Zakat has to be paid on items of trade. Since the stock of shares is meant for buying and selling, Zakat should be paid upon the assets of shares besides the profits. Zakat will be 2.5% of the total amount.
Question 30: I have shares in several companies, deposits in banks, real estates taken by installments from many ways. The total value of the real estates is triple the value of the shares; is there Zakat upon shares and deposits?
Answer: As for shares and deposits, they have two divisions:
First: Zakat is applied upon shares for trade according to market price @ 2.5% of the market price on the Zakat Due Date.
Second: On the Bank deposits, Zakat is payable @ 2.5% of the deposit amount.
Thirdly, as for real estates being in your possession, there is Zakat upon real estates. Zakat is upon value of rent if the property is rented out. If the real estates are for sale as you bought them for trade, then Zakat is applied on the market value on the Zakat Due Date. Zakat will be 2.5% of the total amount. If these real estates are personal possessions and not for sale or rent, they are not liable to Zakat.
Question 31: I have shares in cooperative; I was informed that Zakat is applied on the market value of shares besides their profits because they are trade offers but shares of the cooperative are not pertaining to market as well as their value cannot be calculated; how should I pay Zakat? By purchase value or what?
Answer: If the shares of cooperatives are not traded, the amount which is invested for acquiring these shares would be considered as the value of the wealth amounting to Zakat and you should pay Zakat @ 2.5% of this value.
Question 32: I started trade of shares with a capital of Rs. 1 lakh, after that, when I gain money, I buy new shares for speculation. Shall I calculate a new year for the news shares or all the shares are merged in one trade?
Answer: The essence is last year, were you at or above Nisab level and whether this year also you continue to be at or above nisab level. Therefore, the value of all the shares should be summed up on the Zakat Due Date. Zakat is payable @ 2.50 of this value.
Question 33: Annual General Meetings of some companies are held recently where instead of distribution of profits of the last year, they have declared issuance of bonus shares. How can Zakat upon these bonus shares be calculated?
Answer: If the original shares are held for trading purpose, the accrual of bonus shares should be treated as part and parcel of the original shares. The market price on the Zakat Due Date of all shares (including bonus shares) should be considered as Zakatable wealth and accordingly Zakat paid @ 2.50% of market value.
If the shares are held not for sale but as long term investment, the market value of bonus shares on the Zakat Due Date will be forming part of Zakatable wealth and accordingly, Zakat will have to be paid on the value of bonus shares.
Recipients of Zakat
Question 34: I want to know the recipients of Zakat and is it allowed to pay Zakat for brothers and sisters?
Answer: The categories of recipients are mentioned in the Holy Quran. "Zakat expenditures are only for the poor and the needy, for those who collect them, for those whose hearts are to be reconciled, for the freedom of those who are captives and in debt, for the cause of Allah, and for the wayfarers; [it is] a duty imposed by Allah. Allah is the Knower, the Wise", [at-Tawbah 9: 60]. Therefore, recipients of Zakat are eight categories: the poor, the needy, those who collect Zakat, whose hearts are to be reconciled, freeing captives, person in debt, for the cause of Allah and wayfarer. It is allowed to pay Zakat amount to brothers and sisters.
Question 35: I have poor uncle whose salary is not sufficient for his family; is it permissible to pay Zakat to them?
Answer: Yes, it is allowed to pay Zakat to your uncle due to his poverty and you will have two rewards: reward of charity and reward of kinship.
Question 36: Is it allowed to specify a part of my money to be spent on my sister on education, though my father pays money to her but he cannot fulfill her demands. I am living with my sons in my own house?
Answer: It is allowed to pay Zakat to your relatives except parents and sons. In your case, it is permissible to pay Zakat to your sister.
Question 37: I paid a large part of my Zakat money and there is still a small part to be given to certain people; is it allowed to delay Zakat? Or should it be paid in time or before time?
Answer: You should pay Zakat in its specified time and it is not allowed to delay it while giving to its recipients. You may defer it due to some compulsions, however, you should ensure to discharge the obligation at the earliest.
Question 38: Is it allowed to pay Zakat upon money to a poor family of four disable sons and deceased father?
Answer: It is permitted to give them your Zakat as long as they need this money. You also could give them all your Zakat upon money to fulfill their needs.
Question 39: Is it permitted to buy specific things by Zakat money to be given to a person who demands these things?
Answer: It is allowed to replace Zakat money with contributions in kind according to the needs of the poor.
Question 40: I have Zakat money and find that I have a relative who needs money for building a house for his family. In fact, he cannot afford the necessary requirements for building the house and the house will lodge his widow mother and little brothers.
Answer: If he is a relative from the first degree – father, mother, wife, sons, he does not deserve Zakat. Other than those mentioned like brother, sister or uncle deserves Zakat. If he is poor, it is allowed to give him Zakat because house is a basic need.