ZAKAT VS TAXES

NAME: HUDZAIFAH BIN SUHAIMI

(DBA113018)

MOHAMAD IZHAR BIN MOHD KASIM

(DBA112009)

MOHD RIDZWAN BIN MALIK (DBA112008)

DEFINITION OF ZAKAT
In Arabic terms, zakat literally means
- Purification ( Purify ones heart of Greed)
- Growth
Zakat in Islamic finance refers to the obligation
that an individual has to donate a certain
proportion of wealth each year to charitable
causes.

PILLARS OF ISLAM

Zakat is one of the obligation of Islam. It is also

one of the Five pillars, and the most important
amongst them after the Testimonies of faith and
the Prayer
Religious Benefits;
Prosper in the worldly life and the Hereafter
Brings servants closer to his Lord
Allah will wipe away the (reward) of usury and
increase that of charity.
Allah will wipe away minor Sins

WHAT IS NISAB?

Nisab is the minimum amount of wealth that must be

owned by a muslim before he/she is obligated for zakat.
- For example, the nisab in Selangor is
RM14,065.00 (according to Lembaga Zakat
Selangor).
So if youre living in Selangor and your
zakatable
income is more than RM14,065.00, then you have to
pay your zakat!

In general, the nisab for zakat on wealth is equivalent

to the price of 85 grams of gold.

WHAT IS HAUL?
Cukup Haul or Wealth must be exactly or
more than a year old
Zakatable income and wealth that is fully owned
must be in the payers possession for at least a year

- For example, Azmah has just graduated and

started her first job 5 months ago. Even if her
yearly income exceeds the nisab amount, she only
needs to start paying her Zakat on Earning after
working for a year.
** Nisab and Haul are not applicable for Zakat Fitrah

CONDITION OF ZAKAT PAYERS TO

BE FULFILLED
Sane
Adult (Reached puberty)
Sahib un Nisab (Owner of Wealth above Nisab
Level)
Muslim

CONDITION OF ZAKAT RECIPIENTS

Those categories of people being mentioned in the
Holy Quran, Surah al-Taubah (9:60)
Primary focuses on the poor and destitute
- Poor is defined as those people whose net
asset (excluding basic necessities) is below the
Nisab threshold.
A persons poor relative should be given main
priority

8 ASNAF OR BENEFICIARIES OF
ZAKAT
The Poor (Fuqara)
The Needy (Masakin)
The Zakat collector (Amilun)
Muallaf
Slaves (Riqab)
Those who are in debt (Ghanimun)
Way-farer (Ibnu Sabil)
For the cause of Allah (Fisabillilah)

ZAKAT FITRAH
FITR

The same as Iftar, breaking a fast and it comes from

the same root word as (Futoor) which means breakfast.

DEFINITION

Zakat al-Fitr is charity given to the poor at the end of

the fasting in the Islamic holy ( month of

Ramadan ) .

CLASSIFICATION
wajib

(required) of every Muslim, whether male or

female, minor or adult as long as he/she has the means
to do so.

PURPOSE
To provide the poor with a means with which they can celebrate the festival
of breaking the fast (`Eid al-Fitr) along with the rest of the Muslims.
1.As a levy on the fasting person.
-This is based on the hadith: The Prophet of Allah said, "The fasting of the month of
fasting will be hanging between earth and heavens and it will not be raised up to the
Divine Presence without paying the Zakat al-Fitr.

2.To purify those who fast from any indecent act or speech and to help the poor and
needy.

PRODUCTION TIME

Staple was released in the month of Ramadan, at

least before the people finished performing Salat
Eid ( Solat Sunat Aidilfitri ) . If the delivery time is
past due then submitted were not included in the
category of zakat alms but ordinary ( sedekah
biasa ).
BENEFITS OF PAYING ZAKAT FITRAH

1.
2.

The purpose of giving them (the poor) enough food

during Ramadan.
Able to meet the requirements of fasting is to
restore man to nature.

ZAKAT ON WEALTH (HARTA)

The definition of wealth is something that can be
owned by the individual.
It is something that is paid for the trade income,
agriculture, livestock, gold, silver and income.
Zakat is paid if it has met Nisab or limit the
wealth amount that caused a Muslim has to pay
Zakat

The wealth must suits these criteria to be obligated

for Zakat namely:
Owned in full. That is, the property is entirely owned by
a person, instead of collectively owned property.
Treasure that must be paid as Zakat must be obtained
through lawful or permitted by religion.
Property is developed or has the potential to be
developed
Has reached the limit of Nisab .
Owned more than 1 year.

*Property owners do not currently have debts that exceed

the amount of property owned.

8 SUBSIDIARIES OF ZAKAT
Zakat on Earning
Zakat on Business
Zakat on Savings
Zakat on Gold & Silver
Zakat on Shares
Zakat on KWSP / EPF
Zakat on Farming
Zakat on Livestock

ZAKAT ON EARNINGS
If you have been working for more than a year
and earning an income thats above the Nisab
amount, you are obliged to perform your Zakat
Pendapatan.
Zakat on earning is obviously calculated from
your earnings (much like your income tax).

ZAKAT ON BUSINESS
Means performing zakat based on business
earnings. The term business refers to any types
of business like Manufacturing, mining, fishing
etc.
CONDITION OF ZAKAT ON BUSINESS
Only Muslim shares is subjected to Zakat
Compulsory for Halal Assets only
Haul-period terms

ZAKAT ON SAVINGS

Your savings are zakatable purely because it

serves the same purpose as gold and silver (the
nisab of Zakat), and holds purchase power.

FIXED DEPOSIT

Once a fixed deposit account reached exactly one

year (cukup haul) and this amount is more than
the nisab value, then 2.5% of the total amount
must be given as Zakat.
- For example, Maisarah (location : Selangor)
opened a fixed deposit account on April 2011.
By April 2012, her FD account has accumulated
RM5,000. In Selangor, the nisab amount for
2012 is RM14,065.00. Therefore, Miasarah
doesnt need to pay zakat on her FD.

BASIC SAVINGS

It is calculated based on the amount of the lowest balance

or the end haul each year for savings:

Savings in One Account Only

If the savings account has reached the year-old age and the
lowest balance (aftersubtractingthe amount of interest
given in that period) is above the nisab, then one is obliged
to pay zakat on savings for that one account.

- Example : Wati (location : Selangor) has a Maybank

account. After a year, the lowest balance she has in her
account is RM15,500 (after substracting the interest
given by Maybank). For Selangor, the nisab amount is
RM14,065.00. Therefore, she must pay 2.5% of RM15,500
as her zakat (2.5% x RM15,500 = RM387.50).

SAVINGS IN SEVERAL ACCOUNTS

If a person has set up several savings accounts, then

the lowest balance of all the savings accounts must be
combined to calculate the zakatable wealth.
- For example, Hana (location : Selangor) has two
savings accounts, Maybank and CIMB. She has
had both accounts for one year. Lowest balance in
Maybank : RM40 (after deducting interest)
Lowest Balance in CIMB : RM600 (after
deducting interest) Total of lowest balance in
Maybank
and CIMB : RM640 (does not exceed
nisab, therefore
Hana does not need to pay zakat on
her savings accounts).

ZAKAT ON GOLD AND SILVER

Possession of gold and silver that is

over the nisab amount will be
subjected to zakat. This zakat also
has a different nisab amount.
So how to calculate the zakat
amount?

METHOD FOR CALCULATE ZAKAT

ON GOLD AND SILVER
Womens

gold jewelry
The gold that the person purchase or
use as an ornament or decoration
that over the nisab, they must pay
the zakat.
The nisab of this gold is about 800
grams.
The formula is:
(gold weight x current price x 2.5%)

OTHER TYPES OF GOLD

This

type of gold refers to gold which is

not from the above category
It must be in form of:
- Currency
-Deposits
-Mineral
The nisab amount of this type is 85grams
The calculation is:
(gold weight x Current price x 2.5%)

SILVER
For

silver, the nisab is 595grams . The

nisab value is the same regardless of its
usage or otherwise you use as the
decoration at your home. So if the silver
weights more than that, you must perform
the zakat.
The calculation is:
(weight of silver x price per gram x 2.5%)

ZAKAT ON SHARE
The

shares that invested in the

company must be paid in cash.
The zakat rate is 2.5% for the
lowest value of shares.
The share must be held by the
shareholders for one year.

THE CALCULATION FOR ZAKAT ON

SHARE
Example

1 : shares owned at
the end of one full year. Zakat
rate is 2.5% on the lowest cost
and the market value
The formula is: (unit of shares
x lowest price cost x 2.5%)

Example

2: Shares purchases
within a year. The zakat is
calculated based on 2.5% on the
value of shares after deducting
the cost of purchasing new
shares
The formula is: (the value of
shares-the cost of purchasing
new shares)

ZAKAT ON EPF
In

Malaysia, zakat on EPF becomes

obligatory only when the EPF money
becomes fully and wholly owned by a person.
The money can withdraw when you reach 55
years or you want to purchase a house
perhaps. But when the amount reach the
nisab, so it subjected to zakat.
The formula is: Zakat value= The sum of
the withdrawn Money x 2.5%

 For

example: Azman ( locationselangor) want to purchase a house,

he withdrawn RM50,000 from EPF
saving, so after 1 year the EPF value
is above the nisab amount. The nisab
in selangor is RM14,065. So how the
total zakat that must he pay.
Zakat value:( RM50,000 x 2.5%)
Total zakat is= RM1250

TYPES OF WITHDRAWALS THAT IS

ZAKATABLE
Withdrawal

Scheme to purchase a

house
Withdrawal Scheme to redeem
housing loan
Members children education
withdrawal scheme

ZAKAT ON FARMING
Imposed

only on staple food supplies

( these types of food must be durable
and fulfilling when eaten).
The item must be
-paddy, date , corn and wheat
For example in Malaysia our staple
food is rice and therefore zakat will be
imposed on rice from paddy farming.

REQUIREMENT FOR ZAKAT ON

FARMING
Muslim
Fully

owned (i.e owner of paddy

field)
Nisab ( the nisab measurement is
Ausuk or 363 bushel in Malaysia or
1360 kg of rice produced from the
farming of paddy)
Staple food must be planted by
human

Farming

of non-staple
food like coconut, palm oil,
rubber tree, black pepper,
cane, cocoa and others that
are grown for business
purposes will be imposed
with business zakat.

ZAKAT ON LIVESTOCK
Zakat

on live stock is a type of zakat

that must be imposed owners of
these livestock such as:
-Goat, sheep, cow, buffalo and camel.
But these livestock must reached the
nisab age which is 1 year and must
be in a good condition.

Total
number of
cow

Number of
cow for
zakat

age

30
40
60

1 calf
1 cow
2 calves

1 year
2 year
1 year

70

A cow & a
calf

1 year or 2
year

BENEFITS OF ZAKAT
It stated in the Hadith that by giving zakat the
following benefits are derived;

Gaining the pleasure of Allah

Increase in Wealth

Protection from losses

Obtaining Allahs forgiveness and blessings

Protection from the wrath of Allah and from bad

death

Zakat would provide shelter at the day of Judgement

It will serve as a shield from the fires of Jahanams