Zakat is an obligatory form of almsgiving in Islam. It’s one of the Five Pillars of Islam and is a fundamental act of worship that involves giving a portion of your wealth to those in need.

Zakat should be paid annually, either on a specific date or on the same lunar date each year.

Zakat is calculated based on the total value of assets minus outstanding debts and liabilities. The Zakat rate is typically 2.5% (1/40) of the net assets.

The early Muslims paid Zakah every day instead of paying in large bulk once a year.

Some scholars have advised that we plan in advance for our Zakah because we might die and our inheritors may not pay the Zakah we owe. Another group of scholars says for businesses, you should pay in advance. The way you would do this is by estimating how much business you will make and paying 2.5 percent.

If you decide to pay Zakah daily, give a specific amount to one of the eight categories, but nobody but you and Allah should know that you are giving, since some will feel it demeaning and insulting.

First of all, the business should be Halal. There are three opinions among the scholars:

3. If a businessman earns a certain amount from his business, whatever he saves after taking care of his family’s needs and his business expenses, he pays Zakat 2.5 percent of what he has saved.
4. A businessman has to pay Zakah for the commodities in his store. This would require evaluating the purchasing power of the commodity and then paying 2.5 percent on this amount.
5. Everything is from Allah and everything goes back to Allah. The more you give on your commodities, the better, and it does not have to be 2.5 percent.

The amounts are the following:

2.5 percent on annual savings that are Zakatable

5 percent of agriculture being taken care of by a farmer who is planting and irrigating with his own money. During harvest time, he pays five percent of the total crop.

10 percent on a farmer’s product if it is being irrigated by rain

20 percent on resources like oil or precious metals (i.e., gold, silver) which you find on a piece of land that you own. This is “your property, no one has the right to nationalize it”. You would pay 20 percent of what you produced in one year.

Muslims who meet or exceed the Nisab threshold are obligated to pay Zakat. Nisab is the minimum amount of wealth a person must have to be eligible for Zakat.

The Quran describes eight categories of people who are to receive Zakah in Surah 9, verse 60. “As-Sadaqat (here it means Zakat) is only for the Fuqara and Al-Masakin and Those employed to collect the (funds); To attract the hearts of those who have been inclined (towards Islam); to free the captives; and for those in debt; and Allah’s Cause,

and for the wayfarer; a duty imposed by Allah. And Allah is All-Knower, All-Wise.”

Here are more explanations on these categories:

3. The poor (Fuqara)- This refers to someone who has no income
4. The needy (Masakin)- This is someone who for instance, may have a job, a house, and a car, but their income is below the minimum requirement.
5. Employees of the Zakah- This category is sub-divided into the following:

The group of people who are social services workers who go into the community to evaluate who is faqeer and miskeen.

Those who collect the Zakah money

The accountant of the Zakah money

Investors who increase their share of the Zakah

The clerical worker or secretary who puts the files in order

Those who will deliver Zakah to the ones who need it

The outside auditor.

4. Sympathizers

These are those people who might enter or who have already entered Islam. Anyone we feel is good friends of ours (non-Muslim or new Muslims) we give them a gift from the Zakah money.

5. To free slaves

Riqab is the term used to describe the group of people who are slaves. The Zakah money is used to free the slaves. Sakr stresses that Islam did not invent slavery, but it gradually abolished it.

6. For the Gharimeen-those who are in debt

Zakah money is used to pay off debts but these people are not living in luxury, they are living a normal life. For example, someone who has gone bankrupt because of job loss and is overloaded with debt.

7. Fee Sabeelillah (for the Cause of Allah)

This can be anything for the love of Allah. Sakr gave the following examples:

For the employment of a Daiyah, Imam, or religious teachers to do Dawa.

Building Islamic schools Building

Muslim clinics and hospitals

Providing money to young men who want to marry but cannot afford Mahr.

To assist poor travelers

To establish water springs on streets for those walking or travelers

(Please note, that these last three things were done by Khalifa Umar ibn Abdul Aziz)

To defend Muslims who are under attack

For television, radio, or newspaper projects aimed at doing Dawa

To help someone publish a book for Dawa

To pay for the studies of a student.

8. Ibn as Sabeel

This refers to a traveler, for instance, who has lost his wallet and has to get back to his home.

Note: This has to be verified to see if this person is telling the truth since there has been at least one case of a man claiming to be a lost traveler in North America who has stolen thousands from Muslims claiming to be a traveler of this type.

Zakat is primarily intended for specific categories of recipients, including the poor, the needy, those in debt, those working to collect and distribute Zakat, new converts, and those stranded during travel. Consult a qualified religious authority for guidance.

No, as long as you have one house, whether you have paid it off or not. If you have a second house for investment purposes, this is Zakatable. You would pay 2.5 percent of the total saved from the house. This excludes what is spent on maintenance or property taxes and insurance. It’s the same thing for a car. If you are renting a car to someone, this is considered a business entity, therefore, it is also Zakatable at 2.5 percent.

Most Muslims prefer to give their Zakah in Ramadan because there are more rewards for doing so, but it is not necessary to pay Zakah in this blessed month. Muslims are in need throughout the year, not just during Ramadan, so we can benefit Muslims by paying for other times of the year as well.

Failing to pay Zakat when eligible is considered a sin in Islam. It’s important to fulfill this religious obligation, as well as seek forgiveness for any missed payments.

Assets typically include cash, gold, silver, business assets, investments, savings, and valuable possessions.

Yes, using a Zakat calculator can be a helpful way to estimate your Zakat obligation based on your financial situation. However, it’s important to consult with a knowledgeable religious authority or scholar for precise calculations and guidance.

Zakat is typically intended for Muslims in need. However, there are other forms of charitable giving in Islam, such as Sadaqah, which can be given for non-religious or humanitarian purposes.

Zakat can be given directly to eligible recipients or through reputable charitable organizations like RUPSA, which can help ensure your Zakat is distributed effectively to those in need.

Remember that Zakat is an important religious obligation in Islam, and it is crucial to seek guidance from qualified religious authorities or scholars to ensure that you calculate and distribute it correctly according to Islamic principles and the specific rules in your country or community.