Zakat is the third pillar of Islam and a fundamental act of worship. It represents a prescribed portion of wealth that a Muslim is obligated to give to the poor and other eligible recipients as defined under Shariah.

Zakat is not merely a charitable contribution; it is a compulsory duty that reflects the social responsibility of the affluent toward those in need. The literal meaning of the word Zakat is “to purify” or “to cleanse.” Muslims believe that by paying Zakat, their wealth is purified and they attain the pleasure of Allah (SWT).

Your Zakat has the power to transform lives, uplift communities, and provide hope to those who are struggling.

Nisab is the minimum amount of wealth a Muslim must possess before Zakat becomes obligatory. If a person’s total Zakatable assets reach this threshold and remain Sahib e Nisab on the completion of one lunar year, they are required to pay 2.5% of their eligible wealth as Zakat.

The Nisab was set by Prophet Muhammad (PBUH) at the equivalent of 7.5 tola (87.48 grams) of gold or 52.5 tola (612.36 grams) of silver. If a person owns only gold, then the gold Nisab value should be used to determine whether Zakat is due. However, if a person possesses a combination of assets such as gold, silver, cash, savings, or business stock, then the silver Nisab value should be applied, as it is lower and allows more people to qualify for paying Zakat, thereby benefiting a greater number of those in need.

Zakat brings one closer to Allah SWT. As an obligatory act of charity, it ensures that the poor and needy are protected from deprivation, hunger and financial insecurity. Zakat not only benefits those in need but also brings countless blessings to the ones who pay it. It cleanses our wealth, wipes away minor sins and purifies heart and soul from stinginess.

“……And My mercy extends to everything. So, I shall write it for those who guard themselves against evil, and pay Zakah, and those who do believe in our verses,” – (Quran 7:156)

“The Sadaqat (prescribed alms) are (meant) only to be given to the poor, the needy, to those employed to collect them, to those hearts are to be won, in the cause of the slaves and those encumbered with debt, in the way of Allah and to a wayfarer, this is an obligation prescribed by Allah. Allah is All-Knowing, Wise.” – (Quran 9:60)

Here are the eight categories of recipients of Zakat:

1. The poor (Fuqara)
2. The needy (Masakeen)
3. Collectors of Zakah (Al-‘Aamileen)
4. Friends of the Islamic community and/or revert Muslims (Al-Mu’allafatu-Al- Quloob)
5. The cause of (freeing) the slaves (Ar-Riqaab)
6. Those who encumbered with Debt (Gharimeen)
7. In the way of Allah SWT (fi Sabilillah)
8. Wayfarer (Ibn-us-sabil)

Zakat must be paid by the one who is:

• Muslim
• Major (Baligh)
• Sane
• Sahib-un-nisaab (owner of wealth above the level of nisab)

If all of the above apply, you have to pay 2.5% Zakat on all of your savings i.e. Monetary and other applicable assets.

Zakat is not obligatory on every type of asset. It is only payable on assets that have the potential for growth or increase. These generally include:

1. Trading assets such as shares and business stock;
2. Cash and cash equivalents such as cash in hand, bank balances, prize bonds (Zakat is due on the principal amount, not on any prize money), Sukuk, and traveler’s cheques;
3. Gold and silver in any form or for any purpose;
4. Certain types of livestock including goats, sheep, cows, and camels (which have separate Nisab thresholds);
5. Agricultural produce, on which Zakat is known as Ushr.

Zakat is calculated on the net balance of these Zakatable assets at the end of the lunar year. There is no Zakat on amounts that have been spent during the year; rather, it is payable only on the wealth that remains in one’s ownership on the Zakat due date.

Zakat becomes obligatory only after a full lunar year has passed on the date your wealth first reached the Nisab, provided that the qualifying wealth remains in your ownership on the Zakat due date. Therefore, your Zakat year begins on the date when your wealth initially equaled or exceeded the Nisab, and Zakat should be calculated on that date for each subsequent lunar year.

Although Zakat can be paid at any time of the year, many Muslims choose to give it during the holy month of Ramadan, as the rewards and blessings of giving in this month are considered far greater than at any other time.