Fatawa >Zakat

 

Chapter one:What things are liable for payment of zakat?

General Guidelines

Zakat is obligatory in three of assets, (a) livestock, namely camel, cattle, and sheep, (b) crops, namely wheat, barley, dates, and raisins; however it should, as a matter of obligatory precaution, be obligatory in all kinds of grains, such as lentils, beans, and sesame, and (c) gold and silver, modern banknotes are treated likewise, as a matter of obligatory precaution.

However, for payment of zakat to become obligatory, few matters have to be considered:

a. & b. Adulthood and sound mental capacity, in that neither an under age boy nor an insane person is required to pay any zakat on their possessions, even though insanity may be transient. However, where gold and silver and livestock are involved, the requirement of the passing of one full year has to be fulfilled. So, if insanity strikes a person, or the boy becomes adult during the year, i.e. before the anniversary, no tax should be paid that year.

b. if the property is of the third type, i.e. crops, both adulthood and sanity have to be present, at a certain stage prior to the produce becoming ready for harvest. That is, if the produce did become ready for harvest where payment of zakat becomes due, yet neither did the boy attain adulthood nor did the insane recover, no zakat should be payable in that season.

However, it is mustahab(recommended) for the guardian of the boy or the insane person to pay zakat on the funds which he used in trading. Temporary loss of sanity as a result of drunkenness or unconsciousness should not constitute a barrier to zakat becoming obligatory.

c. Ownership; which basically means that you have to assume absolute ownership of the property all year round in non-crops, and before the maturity date of drops. That is, should you own gold or silver without actually getting hold of it, or you were promised some livestock at the beginning on the year, but did not receive same only after two months, you are not liable for zakat. So, ownership does not materialize, unless you actually get possession of the property. The same applies to borrowed money, but you yet received, and inheritance money before the death of the testator, and so on.

1. The mukallaf may borrow a quantity of gold/silver, or crops and actually get possession of it. Retaining if for a year, and provided all other conditions have been fulfilled, the borrower not the lender should become liable to pay zakat. That is, unless the lender pays zakat for the borrowed amount on behalf of the borrower, or there should be a clause in the agreement stipulating that the lender be responsible for the payment of zakat.

2. Waqf (religious endowment) could take one of tow forms, general or specific. If it is of the first band, where the beneficiaries are, say, the poor or the uelma in general, no zakat shall be payable. That is, even if the waqf was possessed by way of ownership.

If it is of the second type, where the beneficiaries are specified, such as the testator making provisions that the waqf be for his own offspring, or some of them, or the students of a named seminary and so on, there are two issues to consider:

a. The waqf could take the form of benefiting the beneficiaries of the proceeds of the waqf, but without them actually owing it. The beneficiaries of the revenue of such a waqf do not have to worry about paying zakat.

b. The covenant of waqf could have been made by way of ownership to the beneficiaries. Zakat should become payable to the recipient, if his share in the property reaches the minimum liable to payment of zakat tax (nisab).

3. Where the capital assets (ain), for which payment of zakat tax becomes due, is jointly owned, each partner's share must reach the minimum amount to become liable for zakat. Should this not be the case and all partners' shares could meet the minimum required amount liable to payment of zakat, none shall incur any zakat, neither collectively nor individually.

d. The right of disposal of the property. The owner should have unrestricted right of disposal in any way the deems fit. Thus, no zakat shall be due such property. Included in this is pawned, endowed, stolen, forgotten property, and debt due to the owner, even if it is within his ability to retrieve it.

4. Should zakat become due on the property, yet it either got damaged or stolen, the obligation to pay zakat shall not be waived, in which case he should pay it after having restored his stolen or missing property. If he does not succeed in retrieving same, he should stand to pay zakat on it, should he be a fault of causing the loss. The same applies to damage befalling the property resulting from transgression or carelessness. Otherwise, no zakat tax shall be payable.

e. The minimum number or amount (nisab) liable to payment of zakat tax. This is the threshold that should be reached to pay tax. We will elaborate this point later.

f. Niyyah. Since zakat is an act of worship there must exist the niyyah to pay to seek proximity to Allah, the Most High, so that it will be deemed valid. If zakat was paid without the niyyah and perchance it was still undamaged with the owner of the property, he should hasten to make niyyah of qurbah.

Should the recipient take possession of a damaged zakat property, with not fault of his, the payer should bear the responsibility of making amends, i.e. by making a second payment of an undamaged property. If the recipient was to stand guarantor, it will become debt on him for the owner. The latter will be justified in taking into account what he owes as zakat without loosing sight of the niyyah of qurbah.

1. Zakat on livestock

We have already mentioned that Zakat becomes payable on livestock which include camel, cattle (including buffalo), and sheep (including goat). Male and female of these animals are treated the same. However, such animals have to be among the domesticated ones, in that zakat shall not be due on wild cattle and goat, even if it becomes possible to possess same, and they may fulfill the requirements before they become domesticated.

Zakat is not payable on other domestic animals. However, it is mustahab in she-horses. Furthermore, zakat will not become due unless certain requirements, besides the general ones, are met. These are:

First: Nisab (the minimum number taxable)

This is a juridical term meaning that property has to reach a certain threshold to be liable for payment of zakat tax. Beside other conditions, it varies in rate between livestock, crops, and gold and silver, insofar as livestock is concerned, it consists of nineteen bands among the three categories as follows:

1. Camel. There are twelve bands (a) for every five camels, the zakat is one sheep, (b) two sheep for ten camels, (c) three sheep for fifteen, (d) four sheep for twenty, (e) five sheep for twenty five, (f) one one-year-old she camel for twenty six camels, (g) on two-year-old she camel for thirty six, (h) one three-year-old camel for forty six, (i) one four-year-old for sixty one, (j) two two-year-old camels for seventy six camels, (k) two three-year-old camels for ninety one, (1) When the number of camels reaches one hundred and twenty and over without a ceiling, zakat is charged at one three-year-old camel for every fifty camels, two-year-old for every forty.

Examples: Should the number be hundred and sixty such that it accepts division by forty the result of the division is three: if it was a hundred and fifty, i.e. accepting the division by fifty, the result is three. Should be number be two hundred, which accepts the division by both, i.e. forty and fifty, the mukallaf is free to choose either of the two numbers. Should the number be two hundred and sixty, which accepts division by the total of both the figures, the calculation of the amount of zakat should be reached by dividing by two fifties and four forties. Thus, only numbers below ten are exempt.

4. In case no two -year-old she camel was available for band (f), i.e. twenty six camels, a three-year-old he camel will do. If this was not feasible from within his property, he is free to buy either sex to pay it for zakat. The taxpayer in any other category should stick to age limit of she camels, to be paid in zakat, described therein. That is, irrespective of the sex of camels, be they all male or all female, or mixed.

ii. Cattle. There are two bands of zakat for cattle. (a) One-year-old heifer for thirty heads of cattle; a she heifer of the same age would not do, as a matter of ihtiyat, (b) a two-year-old heifer for froty. Any number over and above these two should be treated as the double of these two numbers, i.e. sixty, forty, and so on. Likewise, if it be the total of both the bands, i.e. seventy. If the total be one hundred and twenty which accepts division by both the bands of thirty and forty, the zakat taxpayer has the choice of either. The remainder in excess of forty to seventy is exempt, and so is any number below thirty. Any odd number up to nine in excess of any band is also exempt.

iii. Sheep. There are five bands of zakat for sheep. (a) one ewe for forty sheep, (b) two ewes for one hundred and twenty one, (c) three ewes for two hundred and one, (d) four ewes for three hundred and one, and (e) four hundred sheep or more are charged at one ewe for every hundred without a ceiling. No zakat is levied if the number of sheep owned falls short of the first threshold, neither is it levied on the excess between any two bands.

5.When calculating the amount of zakat the figure should include male and female; sleep and goat should be treated as one species; the same goes for cattle and buffalo; camels with one hump or two humps are the same.

6. Although we talked about "ewe", it is permissible to pay male or female sheep in zakat for some of the bands of camel and all the bands of sheep. Whether the band included all male or all female or mixed sheep is immaterial. Immaterial too is whether all herds were those of sheep alone, goat alone, or mixed. However, as for the age of the animals paid in zakat for sheep bands, they have to be one year old, entering into its second year for sheep, and two-year-old, entering into its third year for goat.

7. What is paid in zakat for livestock has to be young not old, perfect not injured, and healthy not sick. That is, if the entire herd was thus. However, as a matter of ihtiyat, it could be tolerated, if the herd contained good and bad ones. Should the entire herd be bad, old, unsound, or sick, it is permissible to pay in zakat from what is available. That is, the zakat taxpayer should not be made to buy good quality animals to pay them in zakat.

8. What is paid in zakat can be of the same livestock, being taxed, or from an outside source in the same town or brought from another. Permissible also is the payment of the equivalent cost of zakat in gold, silver, banknotes, and metal coins. The same applies, if the price of the animal is bartered for, say, grain of fabric. However, in all circumstances, payment in kind is both superior and as a matter of ihtiyat.

9. Should the mukallaf opt for paying the price for the animal paid in zakat, the deciding factor in determining the price is the date of payment, not the date when the zakat became due. As for the variation of price from one place to the other, the price of the animal in the place where the zakat is going to be paid must be taken into account, not the price prevalent in the place where the animals, being taxed, or any other place.

That said, on the basis of voluntary precaution, it is recommended that the higher of the two prices be paid, regardless of the source.

10. Should the livestock owned by one person be dispersed over a number of places (towns), it should be treated as one for the purpose of determining the bands and eventually calculating the zakat.

11. The mukallaf could have the minimum number required for the last band. Should he opt for paying zakat from outside sources, it is obligatory on him to pay zakat every year, unless the number drops below the minimum. If he decided to pay zakat from his own herd, or he was not paying zakat for a number of years of the bare minimum, he is required to pay zakat for one year only.

Should the number be in excess of forty, which is the minimum taxable for zakat of sheep, payment of zakat should be the norm in each and every year until the total number drops below forty. If the mukallaf defaulted for a number of years, he must clear backlog, until the total number decreases to below forty.

Second: Livestock should not be stall-fed

For zakat to become operative in livestock, the latter should, all year round, be grazing freely, regardless whether on free or owned land; being stall-fed for between one and three days in immaterial.

Should such livestock be fed either buying animal feed, growing it in special land, or by bringing naturally grown grass for the animals to feed own, no zakat becomes due. That is, irrespective of whether the mukallaf opted for the artificial way of feeding the animals by choice or coercion. Immaterial too is whether the mukallf spent from his own money or from other people's pockets, with his permission or without. In short, any eventuality that might render all the animals, or part thereof, stall-fed is bound to make the obligation of zakat tax redundant.

Third: The animals should not be working ones:

It is widely the view (between jurists) that the animals, being taxed, should not be used for tilling the land, transport, etc. all year round. Should not be used for work in any way fro any period, albeit short, during the year, no zakat tax shall become due. However, it may be said that this condition is not of consequence on its own merits, but due to the fact that most of working livestock are stall-fed. Should they be freely grazing, it is obligatory to pay zakat on them, as a matter if ihtiyat.

Foruth: The lapse of one year

Without losing sight of all the conditions, special and general, livestock have to be in the possession of the owner for one full year.

12. It is enough to witness the first day of the twelfth month for the year to be recognized as complete. There and then zakat becomes due, provided all parameters remain unchanged. Even if any of the conditions is breached after the advent of the twelfth month, this is not going to alter in any way the obligation to pay azakat.

However, the new year does not begin until the last day of the twelfth month of the previous year has come to a close and the first day of the following month has dawned.

13. Q. It is a known fact that livestock may increase in number throughout the tax year. This could be the result of a variety of reasons, such as the birth of new offspring or by buying more heads. How should the owner go about dealing with the increase insofar as determining the start of tax year?

A. There may be four possible assumptions/answers:

i. The increase could be equivalent to the extra amount between two bands. For example, the mukallaf could originally own forty sheeop and has come to posses an extra forty; in this case, he is not required to pay any extra zakat for the new forty sheep, i.e. zakat tax shall remain due on the original forty sheep.

ii. The increase could form a new independent band. For example, the mukallf could originally have five camels, only to increase by another five ones; in this case, the new increase has to be treated separately, i.e. a new tax year has to be computed from the moment he took ownership of the new stock.

iii. The new arrivals may form a new band in their own right as well as complementing an already existing band to take it to new plateau. For example, the mukallaf may originally have twenty camels, only to increase to twenty six as a result of new offspring. The twenty six is an independent new band on the one hand, and it complements the band which follows the twenty five, i.e. by virtue of the extra one. Thus, there for the twenty old stock.

iv. The new stock could be complementary to another band. For example, the mukallaf may have thirty heads of cattle, only to increase by eleven new stock to take the total to forty one. Thus, the new stock has completed the second band, i.e. forty with an extra one in hand. In this case, one has to wait until the anniversary of the first band whereby a new tax year for both old and new stock should be taken on board.

However, there should be no problem in considering those four assumptions and their ascribed rules to whether the increase was as a result of new births. There should also be no problem in applying the rules to the new stock, although it be in infancy stage, which normally makes the rule of it being "freely fed" redundant so long as it not able to feed on it own. That is so because as soon the new stock is born it is treated the same as the mother insofar as the computation of zakat is concerned. Accordingly, the tax year for the new arrivals starts with their birth, irrespective of whether the mother was freely fed or stall-fed.

14. The original owner remains liable for any outstanding payment of zakat on the livestock he sold. The new owner does not have the right of disposal of the amount of zakat, before he sets it aside. Should the original owner cater for the payment from the livestock being taxed or from any other source and pay same to the new owner, then be it. Conversely, the new owner should set the amount of zakat tax aside and claim reimbursement from the seller. Should both fail to pay, the Margji' (al-hakimsh shari'i) can ask the new owner to pay who in turn can claim what he paid from the seller.

15. Since the obligation to pay zakat is tied up to the fulfillment of requirements, it is not difficult to circumvent them in order to avoid paying any zakat due. This thought is lawful, although not nice from the believer who aspires for Allah's grace and pleasure. That said, obeying the injunctions and sticking by them is far superior to avoiding them, albeit without committing that which is haraam, especially when one aspires to covet the great reward (thawab) in store.

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