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Zakāt (Arabic: زكاة [zæˈkæː], "that which purifies"), is the giving of a fixed portion of one's wealth as a tax, generally to the poor and needy or to the people who collect it. It is one of the Five Pillars of Islam.
The Qur'an talks about the zakat in more than 30 different verses, mainly in the Medinan suras. In the Qur'anic view, zakat is a way to redistribute the wealth, thus increasing the flow of cash in the economy with a particular interest in the poor and the dispossessed Muslims. However, zakat is considered more than taxation - one must give zakat for the sake of one's salvation. Non Muslims are not required to pay zakat but give a tax by a different name called Jizyah tax. Neglecting to give zakat can result in damnation in the afterlife, while those who give zakat can expect reward from God in the afterlife. The giving of the zakat is considered a means of purifying one's wealth and one's soul.
The hadith also admonish those who don't give the zakat. According to the hadith, refusal to pay zakat is a sign of hypocrisy, and God won't accept the prayers of such people. The hadith assert that the poor wouldn't be hungry if the rich gave zakat. But they also state that zakat purifies those who give it. Those who give zakat, God safeguards their property from ruin. On the day of Judgment, those who didn't give the zakat will be held accountable and punished.
Various legal aspects of the zakat are discussed in the hadith: the types of properties that are zakatable, the minimum quantity that is zakatable (the nisab), the rate of zakat and the rule of one-year holding period.
The hadith contains 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 those who take zakat to which they are not eligible to receive (see beneficiaries of zakat) of punishment.
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. Abu Bakr also ensured that each man, woman and child had a minimum standard income of 10 dirhams annually, later increased to 20 dirhams.
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.
Ultimately, the practice of state-administered zakat was short-lived in the early Islamic history. During the reign of Umar bin Abdul Aziz (717–720 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.
|Taxation in the Ottoman Empire|
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 sometimes required to pay the jizyah tax.
The amount of Zakat to be paid by an individual depends on the amount of wealth, 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. The amount of zakat to be 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 separate from the practice khums, where Shi'ites are additionally expected to pay one fifth of their income.
Zakat is only payable on assets continuously owned over one lunar year that are in excess of the nisab, a minimum monetary value. The nisab is calculated after adding the cash value of zakatable assets (gold, silver, cash, stocks, merchandise for business, livestock etc.). Personal assets such as clothing, household furniture, one residence etc. are not considered zakatable assets. The nisab for gold and other money is the value of 85 grams of gold at world prices. Thus, at 2012 prices, the nisab for such assets was USD $ 5,200.
Today, in most Muslim countries, zakat is collected through a decentralized and voluntary system, where eligible Muslims are expected to pay the zakat based on worship and love of God. Under this voluntary system, zakat committees are established, which are tasked with the collection and distribution of zakat funds. In a handful of Muslim countries – including Saudi Arabia, and Pakistan – the zakat is obligatory, and is collected in a centralized manner by the state. In Jordan, Bahrain, Kuwait, Lebanon, and Bangladesh, the zakat is regulated by the state, but contributions are voluntary.
According to the Hadith, the family of the Muhammad should not consume any Zakat. Zakat also should not be given to one's own parents, grandparents, children, grandchildren, or spouses. It is also forbidden to disburse zakat funds into investments instead of being directly given to those who are in need.
Some scholars disagree whether the poor that qualify should include non-Muslims. Some state that Zakat may be paid to non-Muslims, but only after the needs of Muslims have been met.
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 community (ummah) in-general.
Additionally, the zakat funds may be spent on the administration of a centralized zakat collection system.
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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.
Zakat is meant to discourage the hoarding of capital and stimulate investment. Because the individual must pay zakat on the net wealth, wealthy Muslims are compelled to invest in profitable ventures, or otherwise see their wealth slowly erode. Furthermore, means of production, such as equipment, factories, or tools, are exempt from zakat, which further provides the incentive to invest wealth in productive businesses.