VIRTUES OF ZAKAT:
Allah says in the Quran: "The parable of those who spend their wealth in the way of Allah is that of a grain of corn. It grows seven ears and each ear has hundred grains. Allah increases manifold to whom He pleases." (Quran 2:261) It is stated in the Hadith that by giving Zakat the following benefits are derived:
- Gain the pleasure of Allah.
- Increase in wealth and protection from losses.
- Allah's forgiveness and blessings.
- Protection from the wrath of Allah and from a bad death.
- A shelter on the Day of Judgment;
- Security from seventy misfortunes.
Zakat: How to Calculate
Zakat is due on a yearly basis when a morally-responsible Muslim possesses the minimal zakatable-amount (nisab) above and beyond his debts and immediate expenses, and a complete lunar year passes over it. In calculating one’s Zakat one calculates all his zakatable assets together. “Zakatable assets” include:
(a) Cash - whether in currency form or in the bank,
(b) Gold and Silver,
(c) Money lent out,
(d) Trade goods,
(e) Stocks, and
(f) Agricultural produce.
After one calculates the above, one deducts:
(a) Debts, and
(b) Immediate expenses.
Some Illustrated Examples
It should be known that anyone who possesses a zakatable-minimum (nisab) the obligation to pay Zakat will commence. As soon as one possesses this amount, one’s Zakat year will start, and he will be obligated to actually pay Zakat once a whole year has passed if he still possesses an amount equal or more than the zakatable-minimum. The zakatable-minimum is equivalent to the value of 87 grams of gold.
Example 1:The zakatable-minimum is $2000. One possess $1000 of cash, $1500 of gold and silver, and $2500 in trade goods then his total zakatable assets amount to $5000 (supposing he has no money lent out, stocks, or agricultural produce). However, he also has a debt of $500 and his immediate monthly expense amounts to $500 also, which will be subtracted. Thus, his total zakatable wealth is $4000. This is above the zakatable-minimum, so the obligation to pay Zakat will commence.
If one possessed this amount on the 1st of Rabi` al-Awwal then this is when his Zakat year starts. If then, for example, he possesses $2500 on the 2nd of Rabi` al-Awwal of the next year, he will have to pay 2.5% of $2500. Thus, what is taken into consideration is the amount one possesses above the zakatable-minimum at the end of one’s Zakat year. This is the amount Zakat is due upon.
Fluctuations during the middle of the year are of no consequence, unless one’s zakatable amount reaches zero. Only the beginning and end of the year are taken into account. One has to possess a zakatable-minimal both at the beginning and at the end of one’s Zakat year for one to pay Zakat.
Example 2:The zakatable-minimum is $2000. One’s zakatable assets amount to $3000. However, one also has $500 of immediate expenses and a debt amounting to $2000. Thus, his total zakatable wealth is $500. This does not reach the zakatable-minimum and so no Zakat is due upon him. In such a case, one’s zakat year does not even commence because one never possessed a zakatable-minimum to begin with.
Example 3:The zakatable-minimum is $2000. One’s zakatable assets amount to $4000. One has immediate expenses of $500 and a debt amounting to $1000. Thus, one subtracts this, and is left with a total zakatable wealth of $2500. He possesses this amount on the 1st of Muharram. Since it is over the zakatable-minimum, his Zakat year starts on this date. On the 2nd of Muharram the following year his total zakatable wealth amounts to $1500, having decreased. Since this is not equal to or more than the zakatable-minimum, no Zakat will be due upon him.
