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Zakat – A means for eradicating poverty

Literally Zakat means Blessing, purification, increase and goodness.

Source : Justzakat / 31 Dec 2012

What is Zakat?

Translated from Arabic, the word “zakat” means “to purify”; it is the third pillar of Islam. The obligation is to give 2.5% of one’s wealth to those in need. Zakat is essentially an act of worship through which Muslims can purify their wealth, cleanse their souls and benefit themselves as well as others – it is a symbol of Islamic social justice.

Who should pay Zakat?

Every sane, adult Muslim who possesses equal to or more wealth than the Nisab for one lunar year is eligible to pay Zakat. This person is known in Arabic as a “Sahib-un-Nisab” (Translated: “Owner of Wealth” – The word “wealth” in this context refers to the minimum amount of wealth required to be eligible to give Zakat).

“Nisab” is an Arabic word which means the minimum value of wealth that one must own to become eligible to pay Zakat; in its current monetary value is equal to 87.48grams of gold or 612.36grams of silver.

When to pay?

The Zakat year of an individual begins on the day that they first become “Owner of Wealth” for that year.

E.g. If the Nisab on 21st Sha’ban 1433 was £3500 and Abdullah was the owner of this amount of wealth on that day, then his Zakat year would begin from this date. On the 21st of Sha’ban the following year, if Abdullah is still the owner of £3500 worth of wealth or more, then he must pay Zakat upon his wealth immediately.

Zakat can be paid at anytime of the year; it is dependent on the person’s individual circumstances – (different people will become owners of Nisab at different times of the year). Many people choose to pay Zakat during Ramadan for the increased reward, but this is not part of the obligation; the obligation is to pay Zakat as soon as it becomes due. As paying Zakat is an act of duty, it is not permissible to delay it.

Advance payment of Zakat

A Muslim can spread their Zakat throughout the year.

E.g.: If Mrs Khan’s Zakat of £3500 is due to be paid on 15th of Rajab in 1434, then she may choose to begin paying monthly instalments by direct debit from 15th of Rajab 1433. She must however ensure that the total amount of £3500 is reached by the due date, which in this case would be on 15th of Rajab 1434.

Some people choose to spread the payment of their Zakat via direct debit; there is considerable benefit to this, because it means the receiver of Zakat can be supported regularly throughout the whole year. It is beneficial for both the one who gives and the one who receives.

On what types of wealth should I pay my Zakat?


Zakat is due on all jewellery which consists of equal to or more than 50% gold and/or silver. The value of gold and silver change on a daily basis, so it is advisable to find out the value of gold and/or silver at the time of paying Zakat.

Different scholars have varying opinions on this matter. Due to the fact that gold is more expensive than silver, many scholars advise that it is better to calculate Zakat based on the value of silver because this will be more beneficial to those dependent on your support.

In the Asian subcontinent gold is sometimes measured in units of ‘Tola’ as opposed to grams. 1 tola equals 11.66 grams, which means 87.48 grams of gold is equivalent to 7.5 Tola.

Tola is also known as ‘Bhori’ or ‘Vori’.


Zakat is payable on the value of all goods which are intended to be sold; the calculated value should be that of the selling price. It is important to remember that Zakat is due regardless of whether the business is making a profit or not.

E.g.: Imran runs a business and he is due to his pay Zakat, he should use the following formula to calculate how much Zakat needs to paid: 2.5 × (value of trade goods + cash + business loans) – debts payable to others).


Zakat is only due on property that is owned for investment, not the property in which one resides.

Buy to Rent – If one owns a home for rental purposes, then Zakat is payable upon the rent with the deduction of any outgoings in connection with the property.

Buy to Sell – If one owns a second home with the intention of re-selling the property, then Zakat is payable on the value of the property.

Shares, Cash Savings and Pensions

One must pay Zakat on the value of the shares which one owns for the entire Zakat year. Due to the fact that the share market is in constant fluctuation, it is advisable to check the value of shares at the end of the Zakat year.

Zakat is payable on any cash money which is kept at home or deposited in the bank.

A person needs to pay Zakat on their pension which they receive after retirement, provided that they are considered Sahib-un-Nisab (owner of wealth). People, who are currently earning and have a percentage of their salary paid directly into a pension fund by their employer, do not need to pay Zakat for this money yet, as they do not have access to it until after retirement.

Loans given to others

If one is sure that the person who has borrowed money from them will pay the money back, then they must pay Zakat on this loaned money. However, if one thinks that the borrower is not able to return the loan, then they do not need to pay Zakat on that money. If in this instance, the borrower eventually returns the money, then one will become eligible to pay Zakat on that money.

Who is eligible to receive it?

Allah has stated in the Holy Quran (chapter 9, verse 60) the people who have the right to receive Zakat:

1. People who are in complete poverty and have nothing.
2. People who have some wealth, but not enough to meet their basic needs.
3. The people who collect Zakat to distribute to the poor and needy.
4. People who are sympathetic towards Islam or wish to enter to Islam, and are needy.
5. Zakat may be used to free a person from slavery.
6. Zakat can be given to those who are in debt and unable to pay off their debt.
7. The people who work in God’s way and strive to give Dawah.
8. Travellers and/or wayfarers who are needy.


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