Zakat

Zakāt (Arabic: زكاة‎ [zæˈkæːt], "that which purifies") is the taxation of income and wealth of a Muslim. It is a form of obligatory alms giving, and the collected amount is paid to poor Muslims, to zakat collectors, to new converts to Islam, as income to its clergy, and others.

Zakat is mandatory for all Muslims, on their income and wealth above a minimum amount called nisab. However, there are disagreements among Islamic scholars on nisab and various aspects of zakat. Sharia mandates it as a requirement and evidence of being a Muslim. The payment and disputes on zakat have played a major role in the history of Islam, such as the Ridda wars that fueled the conflict between the Sunni and Shia sects of Islam.

The practice is one of the Five Pillars of Islam, and it is the only pillar which enjoins Muslims to submit to Islamic statism.

Etymology

Zakat, literally means "that which purifies". Zakat is a way to purify one's income and wealth from sometimes worldly, impure way of acquisition. The word connotes a sacrifice that cleanses the means of gaining wealth by giving a part of it to the ummah (community). Murata and Chittick state, "Just as ablutions purify the body and salāt purifies the soul (in Islam), so zakat purifies possessions and makes them pleasing to God."

Qur'an

Qur'an discusses charity in many verses, some of which relate to zakat. The word zakat, with the meaning used in Islam now, is found in suras: 7:156, 19:31, 19:55, 21:72, 23:4, 27:3, 30:39, 31:3 and 41:7. Zakat is found in the early Medinan suras. In the quranic view, zakat is obligatory, but considered more than taxation. One must give zakat for the sake of one's salvation: while those who give zakat can expect reward from God in the afterlife, neglecting to give zakat can result in damnation. The giving of the zakat is considered a means of purifying one's wealth and soul. Zakat is part of the covenant between God and a Muslim. Non-Muslims are not required to pay zakat, but must pay a tax called Jizyah tax with different characteristics.

Qur'an makes zakat as one of three prerequisites as to when a pagan becomes a Muslim, through verse 9.5: "but if they repent, establish prayers, and practice zakat they are your brethren in faith".

The Qur'an lists the beneficiaries of zakat (discussed below).

Hadith

Each of the most trusted hadiths in Islam have a book dedicated to zakat. Sahih Bukhari's Book 24, Sahih Muslim's Book 5, and Sunan Abu-Dawud Book 9 discuss various aspects of zakat, including who must pay, how much, when and what. The 2.5% rate is also recited in the hadiths.

The hadiths admonish those who do not give the zakat. According to the hadith, refusal to pay or mockery of those who pay zakat is a sign of hypocrisy, and God will not accept the prayers of such people. The sunna also describe God's punishment for those who refuse or fail to pay zakat. On the day of Judgment, those who didn't give the zakat will be held accountable and punished.

The hadith contain advice on the state-authorized collection of the zakat. The collectors are required not to take more than what is due, and those who are paying the zakat are asked not to evade payment. The hadith also warn of punishment to those who take zakat when they are not eligible to receive it (see beneficiaries of zakat).

History

Zakat, an Islamic practice initiated by the Islamic prophet Muhammad, has played an important role throughout its history. Schact suggests that the idea of zakat may have entered Islam from Judaism, with roots in the Hebrew and Aramaic word zakut. However, some Islamic scholars disagree that the Qur'anic verses on zakat (or zakah) have roots in Judaism.

The caliph Abū Bakr, believed by Sunni Muslims to be Muhammad's successor, was the first to institute a statutory zakat system. Abu Bakr established the principle that the zakat must be paid to the legitimate representative of the Prophet's authority, himself. Other Muslims disagreed and refused to pay zakat to Abu Bakr, leading to accusations of apostasy, the Ridda wars, and fueling the conflict between Sunni and Shia Muslims.

The second and third caliphs, Umar ibn Al-Khattab and Uthman ibn Affan, continued Abu Bakr's codification of the zakat. Uthman also modified the zakat collection protocol by decreeing that only "apparent" wealth was taxable, which had the effect of limiting zakat to mostly being paid on agricultural land and produce. During the reign of Ali ibn Abu Talib, the issue of zakat was tied to legitimacy of his government. After Ali, his supporters refused to pay the zakat to Muawiyah I, as they did not recognize his legitimacy.

The practice of Islamic state-administered zakat was short-lived in Medina. During the reign of Umar bin Abdul Aziz (717â€"720 A.D.), it is reported that no one in Medina needed the zakat. After him, zakat came to be considered more of an individual responsibility. This view changed over Islamic history. Sunni Muslims and rulers, for example, considered collection and disbursement of zakat as one of the functions of an Islamic state; this view has continued in modern Islamic countries.

Practice

Zakat is one of the five pillars of Islam, and is expected to be paid by all practicing Muslims who have the financial means (nisab). In addition to their zakat obligations, Muslims are encouraged to make voluntary contributions (sadaqat). The zakat is not collected from non-Muslims, although they are required to pay the jizyah tax.

Amount

The amount of Zakat to be paid by an individual depends on the amount of money and the type of assets the individual possesses. The Quran does not provide specific guidelines on which types of wealth are taxable under the zakat, nor does it specify percentages to be given. But the customary practice is that the amount of zakat paid on capital assets (e.g. money) is 2.5% (1/40). Zakat is additionally payable on agricultural goods, precious metals, minerals, and livestock at a rate varying between 2.5 (1/40) and 20 percent, depending on the type of goods.

Zakat is usually payable on assets continuously owned over one lunar year that are in excess of the nisab, a minimum monetary value. However, Islamic scholars have disagreed with each other on zakat and nisab. For example, Abū Ḥanīfa, did not regard nisab limit to be a pre-requisite for zakat, in the case of land crops, fruits and minerals. Other differences between Islamic scholars on zakat and nisab is acknowledged as follows by Yusuf al-Qaradawi,

Unlike prayers, we observe that even the ratio, the exemption, the kinds of wealth that are zakatable are subject to differences among scholars. Such differences have serious implications for muslims at large when it comes to their application of the Islamic obligation of zakah. For example, some scholars consider the wealth of children and insane individals zakatable, others don't. Some scholars consider all agricultural products zakatable, others restrict zakah to specific kinds only. Some consider debts zakatable, others don't. Similar differences exist for business assets and women's jewelry. Some require certain minimum (nisab) for zakatability, some don't. etc. The same kind of differences also exist about the disbursement of zakat.
â€" Shiekh Mahmud Shaltut

Collection

Today, in most Muslim countries, zakat is at the discretion of Muslims over how and whether to pay, typically enforced by peer pressure, fear of God, and an individual's personal feelings. Among the Sunni Muslims, zakat committees are established, linked to a religious cause or local mosque, which collect zakat. Among the Shia Muslims, deputies on behalf of Imams collect the zakat.

In a handful of Muslim countries including Saudi Arabia, Malaysia and Pakistan, the zakat is obligatory and is collected by the state. In Jordan, Bahrain, Kuwait, Lebanon, and Bangladesh, the zakat is regulated by the state, but contributions are voluntary.

In discretion-based systems of collection, studies suggest zakat is collected from and paid only by a fraction of Muslim population who can pay.

In obligatory systems of zakat tax collection, such as Malaysia and Pakistan, evasion is very common and the alms tax is regressive. The state collects from the poorest, a larger fraction of their income, as well as the largest share of zakat is collected for lowest income groups every year. In one study from Malaysia, for example, 93% of zakat collected came from poor rice farmers. In Pakistan, property is exempt from the zakat calculation basis, and the compulsory zakat is primarily collected from the agriculture sector.

Failure to pay

Traditional Islamic scholars and some rulers such as Abu Bakr have held the view that any Muslim who consciously refuses to pay zakat, is an apostate. Failure to pay zakat is a form of apostasy in Islam and the defaulter is subject to punishment. Additionally, those who fail to pay the zakat must face God's punishment in the afterlife and the day of Judgment foretold in Islam.

The consequence of failure to pay zakat is a controversial subject, particularly when a Muslim is willing to pay zakat but refuses to pay it to a certain group or the state. Some Muslim scholars do not consider such individuals as apostates.

Recipients

According to the Quran's Surah Al-Tawba, there are eight categories of people (asnaf) who qualify to benefit from zakat funds.

“Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom.”

â€" Qur'an, Sura 9 (Al-Tawba), ayat 60

Scholars have interpreted this verse as identifying the following eight categories of Muslim causes to be the proper recipients of zakat:

1. Those living without means of livelihood (Al-Fugharā'), the poor
2. Those who cannot meet their basic needs (Al-Masākīn), the needy
3. To zakat collectors (Al-Āmilīyn 'Alihā)
4. To persuade those sympathetic to or expected to convert to Islam (Al-Mu'allafatu Qulūbuhum), recent converts to Islam and potential allies in the cause of Islam
5. To free from slavery or servitude (Fir-Riqāb), slaves of Muslims who have or intend to free from their master by means of a kitabah contract
6. Those who have incurred overwhelming debts while attempting to satisfy their basic needs (Al-Ghārimīn), debtors who in pursuit of a worthy goal incurred a debt
7. Those fighting for religious cause or cause of God (Fī Sabīlillāh), Islamic warriors who fight against the unbelievers but are not part of salaried soldiers
8. Wayfarers, stranded travellers (Ibnu Al-Sabīl), travellers who are traveling on an Islamic goal but cannot reach their destination without financial assistance

Zakat should not be given to one's own parents, grandparents, children, grandchildren, or spouses. Also, it is forbidden to disburse zakat funds into investments instead of being given to one of the above eight categories of recipients.

Muslim scholars disagree whether zakat recipients can include Non-Muslims. Islamic scholarship, historically, has taught that only Muslims can be recipients of zakat. In recent times, some state that zakat may be paid to non-Muslims, but only after the needs of Muslims have been met.

Neither the Quran nor the Hadiths specify the relative division of zakat into the above eight categories. This led to one group becoming prominent category of claimant for most of the zakat while other seven receiving insignificant portion of the zakat collected. Depending on the region, the dominant portion of zakat went typically to Amil (the zakat collectors) or Sabīlillāh (those fighting for religious cause, the caretaker of local mosque, or those working in the cause of God such as proselytizing non-Muslims to convert to Islam). These primary sources of sharia also do not specify to whom the zakat should be paid - to zakat collectors claiming to represent one class of zakat beneficiary (for example, poor), collectors who were representing religious bodies, or collectors representing the Islamic state. This has caused significant conflicts and allegations of zakat abuse within the Islamic community, both historically and in modern times.

Fi Sabillillah is the most prominent asnaf in Southeast Asian Muslim societies, where it broadly construed to include funding missionary work, Quranic schools and anything else that serves the Islamic community (ummah) in general. Zakat can be used to finance a Jihad effort in the path of Allah. Zakat money should be used provided the effort is to raise the banner of Islam.

Additionally, the zakat funds may be spent on the administration of a centralized zakat collection system. There is an ongoing controversy as to whether those claiming to be fighting a war on behalf of an Islamic country or for Islam can be a rightful recipient to zakat funds from Muslim community.

Role in society

In theory

The zakat is considered by Muslims to be an act of piety through which one expresses concern for the well-being of fellow Muslims, as well as preserving social harmony between the wealthy and the poor. Zakat promotes a more equitable redistribution of wealth and fosters a sense of solidarity amongst members of the Ummah.

In practice

In 2012, Islamic financial analysts estimated annual zakat spending exceeded $200 billion per year, which is estimated to be 15 times global humanitarian aid contributions. Islamic scholars and development workers state that much of this zakat practice is mismanaged, wasted or ineffective. About a quarter of the Muslim world continues to live on $1.25 a day or less, according to the 2012 report.

In a 2014 study, Nasim Shirazi states widespread poverty persists in Islamic world despite zakat collections every year. Over 70% of the Muslim population in most Muslim countries is impoverished and lives on less than $2 per day. In over 10 Muslim-majority countries, over 50% of the population lived on less than $1.25 per day income, states Shiraz. In Indonesia - the world's most populous and predominantly Muslim country â€" 50% of Muslims live on less than $2 per day. This suggest large scale waste and mismanagement by those who collect and spend zakat funds. Given the widespread poverty among Muslim-majority countries, the impact of zakat in practice, despite the theoretical intent and its use for centuries, has been questioned by scholars. Zakat has so far failed to relieve large scale absolute poverty among Muslims in most Muslim countries.

Comparative charity practice

In the United Kingdom, according to a self-reported poll of 4000 people, three out of ten U.K. Muslims gave to charity. British Muslims, on average, gave $567, compared to $412 for Jews, $308 for Protestants, $272 for Catholics and $177 for atheists in Britain.

Related terms

Zakat tax is required of Muslims only. For non-Muslims living in an Islamic state, sharia mandates jizya (poll tax). Other forms of taxation on Muslims or non-Muslims, that have been used in Islamic history, include kharaj (land tax), khums (tax on booty and loot seized from non-Muslims, sudden wealth), ushur (tax at state border, sea port, and each city border on goods movement, customs), kari (house tax) and chari (sometimes called maara, pasture tax).

There are differences in the interpretation and scope of zakat and other related taxes in various sects of Islam. For example, khums is interpreted differently by Sunnis and Shi'ites, with Shia expected to pay one fifth of their excess income after expenses as khums, and Sunni don't. At least a tenth part of zakat and khums every year, among Shi'ites, after its collection by Imam and his religious deputies under its doctrine of niyaba, goes as income for its hierarchical system of Shia clergy. Among Ismaili sub-sect of Shias, the mandatory taxes which includes zakat, is called dasond, and 20% of thus collected amount from its Muslim faithfuls, is set aside as income for the Imams. Some branches of Shia Islam treat the right to lead as Imam and right to receive 20% of collected zakat and other alms as a hereditary right of its clergy.

Sadaqah is another related term for charity, but not mandatory for Muslims.