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Sunday, 11 May 2014

To Share is to Care

Wealth is viewed as an amanah, or trust, from Allah. Elsa Febiola Aryanti reminds us what it’s all about.
Allah is the ultimate owner of all our worldly possessions. Everything that we have is essentially just a big loan from Allah who has trusted us to use it accordingly. The responsibility of how we earn and spend it falls upon us, and the accountability lies directly between us and the Almighty.
Islam is a religion of balance and it gives us clear guidance on how to earn, manage and spend our wealth. Islam also acknowledges the rights of individuals to use their wealth within the tenets of the Sharia, in which the obligation to share with the needy exists in the form of zakat.
By definition of the word, zakat means ‘grow,’ ‘develop,’ ‘fertile’ and ‘keep on adding,’ as stated in an Imam At-Tirmidzi hadith. Further, according to verse 103 of surah At-Taubah, zakat means to cleanse or to purify. Zakat is one of the principles of Islam, and it is obligatory for all Muslims who fulfil certain conditions, as stated below. Zakat is on the same level with other pillars of Islam like the salat, the hajj, and fasting.
Regulations about zakat—such as its objectives and rightful recipients—are clearly stated in the Qur’an and its hadiths. Socially-speaking, zakat is directly influenced by the welfare of society and it continues to develop according to its progress.
As stated earlier, zakat is mandatory for those who fulfil certain conditions. These conditions require that they be Muslim, have reached puberty (baligh), are able-bodied (aqil) and have, in their possession, an amount of wealth that has already passed the minimum amount of zakatable wealth (nisab).
There are two kinds of zakats: zakat nafs (self), also known as zakat fitrah, and zakat maal (wealth).
Zakat fitrah is paid in the form of a common staple food amounting to 2.5kg. Some examples of zakat fitrah food items are rice, flour, corn, dates and grains. The head of the family should pay for all its members. If he or she can afford it, zakat fitrah may also be paid on behalf of his or her servants.
The payment of zakat fitrah can be done from the very first day of Ramadhan. However, it is a Sunnah—or as practised by Prophet Muhammad (pbuh)—and therefore is encouraged to be paid on the eve of Eid, during the window of time from when the breaking of fast happens on the last day of Ramadhan, signalling the end of Ramadhan, to when the Eid prayers begin the very next morning. After that, any contribution is considered sadaqah, or charity.
The second form of zakat, zakat maal, is applied to a wide array of items, as long as they meet two requirements: they can be possessed, gathered or fully owned; and they benefit their owner. Examples of zakat maal items are houses, vehicles, land, farm animals, gold, silver and cash.
After the above two factors have been established for the zakat maal item, the following conditions are then checked against it:
  • That the item was fully owned and gained according to the Sharia in the first place
  • That the item has either increased in value (like with gold and property) or provided a source of income (like with rents)
  • That the item passes the minimum amount of zakatable value, bearing the analogy of the equivalent of 85g of gold or 672g of silver (nisab)
  • That the wealth owned exceeds the basic needs required
  • That the owner is free from debt. If the owner owes any debt, the amount of debt should then be subtracted from the amount of his or her wealth to determine whether the residual wealth amount passes the minimum amount of zakatable wealth. If what is left does not pass the minimum amount of zakatable wealth, then he or she does not have to pay zakat maal
  • That the item has been in possession for one full Islamic year of 354 days (haul)
Assets that are compulsory zakat maal items include trade merchandise, farm products or produce, mining produce, minerals, buried treasures, income from savings, investments and wages. There are different rates of zakat for each asset class, stated according to its specific circumstances.
In general, a zakat maal contribution is 2.5 per cent of the value of the accumulated wealth, investments and/or annual savings, when both the minimum value (nisab) and a period of one Islamic year are due.
The author is a fund manager at a reputable state-owned pension fund institution in Indonesia as well as a Sharia-based financial planner, writer and trainer. She also volunteers at a zakat organisation in Indonesia.
(Shariah Finance / 19 April 2014)
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