Basics of Zakat

'Abd Allah ibn 'Umar (May Allah be pleased with him) reports that the Prophet (peace be upon him) said: "Islam is based on five (principles): To testify that none has the right to be worshiped but Allah and Muhammad is Allah's Apostle, to offer the prayers dutifully and perfectly, to pay Zakat, to perform Hajj and to observe fast during the month of Ramadan." (Bukhari)
As Muslims we hold fast to prayers, recite/read the Qur'an and most people offer charity throughout the year. But perhaps we are unaware of the importance of Zakat as the third pillar of our faith. Most of us are seemingly confused as to the proper significance of this obligatory tax.  

Islamic law dictates that every able Muslim give Zakat in the order of 2.5 percent on their 'excess' property that they have possessed for a full, lunar calendar year. However, Zakat is also obligatory on agricultural products, and livestock. 

To be liable for zakat, one's wealth must amount to more than a threshold figure, termed the 'nisab'. To determine the 'nisab,' there are two basic measures, either gold or silver. For gold, Zakat is payable if it is over seven and a half 'bhori'. The 'nisab' by the silver standard is 21 ounces of silver (52.5 tola) or its equivalent in cash. Thus if someone holds equivalent to 52.5 bhori of silver, in cash, s/he must pay Zakat. The 'nisab' for agricultural products and livestock varies. 

On the day of judgement, while a Muslim will not be questioned about voluntary charity, he or she will be held accounted for the Zakat.

It was in order to alleviate poverty, ensure fair balance of wealth within communities and for spiritual attainment that Zakat was ordained by Allah (SWT). It is possibly best that we collect our Zakat - this can be done at a family level, or through various organisations - so that the needy can be given sufficient amount to become self-reliant. 

Zakat has been noted in the religious texts as something that purifies the soul from sin. As Muslims we should embark upon a journey that will educate us of the extensive topic that is Zakat and seek Allah's blessing by following the right path.
 

1. SO WHAT IS ZAKAT?

Zakat literally means 'to increase' in growth. It also means blessing, purification and commendation. 

Zakat is an obligatory act ordained by Allah to be performed by every able bodied Muslim. It is part of the wealth and property that Muslims must pay annually, to help the poor of their community. 

Zakat is one of the Five Pillars of Islam, mandatory for all Muslims. Zakat is not a charitable contribution, and is considered as a tax.

2. HOW DOES IT BENEFIT US?

3. THE BASIC CONCEPT:

*    Muslim, male and female
*    Posses a certain minimum amount of extra wealth, fully owned by them. 
*    Should have had this minimum amount in possession for a complete lunar year.
*    The wealth should be of a productive nature, from which they can derive profit.
The amount should be free from debt.

4. WHAT MUST BE GIVEN

Zakat is levied on specific assets only, identified by Islamic law as assets having the potential for growth, like: 

5. THE RATE:

Levied at the rate of 2.5 percent of wealth each year. 

6. WHEN IS IT GIVEN?

A complete lunar year should pass, starting from the very day of the minimum ownership possession. 

7. HOW IS ZAKAT GIVEN?

If one gives a deserving person some money as a gift, but makes the intention of Zakat, it will be valid. 

Directly
It is not necessary to reveal (to whom Zakat is given) that the cash or kind which is being given to him is Zakat

Indirectly 
Through an agency

8. WHO WILL RECEIVE IT?

There are specific groups of people on whom Zakat should be spent, as mentioned in the holy Qur'an.