Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Dear Brother,

Assalam Alaikum.

Following are the queries with respect to the paying of Zakat since the month of Ramadhan is approaching. We want to have a complete and clear concept of Zakat applicable on which of the income, assets, FD’s, Jewelry etc.

a) We have couple of shops / houses, which we have rented out. In this case, pls explain how Zakat is applicable.

b) The business premises where we work and house which we live. Is Zakat applicable on these ?

c) Stocks (Shares). Is Zakat applicable on them if we are holding them for less OR more than 01 year.

d) Any amount, which is kept in our bank’s current account, which always keep on changing. Is Zakat applicable on this ?

e) Any amount which is kept in a Fixed Deposit or lying idle for less OR more than a year. Will Zakat be applicable on it ?

f) Is Zakat applicable on Diamonds ? We are aware that it is applicable on Gold & Silver.

Besides the above if there is anything on which we should have some knowledge of OR any point that we have missed in terms of paying Zakat then kindly advise.

Your early reply would be highly appreciated.

Jazak Allah. 

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Zakah calculation

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Allah Says in the Holy Quran Chapter 9 Surah Taubah verse 60:

60 Alms are for the poor, and the needy, and those employed to administer the (funds), for those whose hearts have been (recently) reconciled (to Truth), for those in bondage, and in debt, in the cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom.

In principle, apart from the possessions of regular or normal usage (one’s house one lives in, its furniture and contents, one’s car one drives, etc.) zakah is due on the excess wealth of every believer which has been in his/her possession for a period of one calendar year.

Q-a: We have couple of shops / houses, which we have rented out. In this case, pls explain how Zakat is applicable.

If one owns houses and/or shops which one has leased on rent, they would be considered part of one’s excess wealth and zakah would be liable on these properties.

In the opinion of most jurists in Islam, there are two ways to calculate zakah on such excess property:

1. 2.5% of the current market value of the property, or,
2. if given out on rent, 10% of the rent proceeds.

Q-b: The business premises where we work and house which we live. Is Zakat applicable on these ?

Zakah is not applicable on the one house where one lives, nor on its furniture, fixtures, and contents. There is no zakah applicable on the business premises itself, but the merchandise that one trades from these premises are liable for a 2.5% zakah payment.

Q-c: Stocks (Shares). Is Zakat applicable on them if we are holding them for less OR more than 01 year.

Zakah is not applicable on any wealth which has not been in one’s possession for a period of one full calendar year. If the stocks or shares have been in one’s possession for a period of one full calendar year, then 2.5% of its market value should be paid as zakah.

Q-d: Any amount, which is kept in our bank’s current account, which always keep on changing. Is Zakat applicable on this ?

If one has money stored in a current bank account and the balance is constantly changing, provided the money has been in one’s possession for a period of one calendar year, one must take an average of the balance of twelve months and pay 2.5% of the value as zakah.

Q-e: Any amount which is kept in a Fixed Deposit or lying idle for less OR more than a year. Will Zakat be applicable on it ?

Again, if the amount lying in a ‘fixed deposit’ has not been in one’s possession for a period of one year, no zakah is due on this wealth. At the end of the calendar year, 2.5% of the value of the fixed deposit should be paid as zakah.

Even though we have not been asked, it is our duty as your brothers and well-wishers in faith to remind you that Allah and His Messenger (saws) have declared the concept of ‘riba’ and interest as haraam for the believers. If one has stored one’s money in a conventional interest bearing ‘fixed deposit’, the interest gained from such fixed deposits would be considered absolutely forbidden for the believers to consume.

Q-f: Is Zakat applicable on Diamonds ?

There is a difference of opinion amongst the scholars on the issue of zakah applicability on precious stones like diamonds, rubies, emeralds, etc. A majority of the good jurists are of the opinion that precious stones are part of one’s excess wealth, and the believers must pay 2.5% of its market value as zakah.

Your Question: Besides the above if there is anything on which we should have some knowledge of OR any point that we have missed in terms of paying Zakat then kindly advise.

Beloved brother in Islam, the principle in determining zakah is apart from the possessions one utilizes to live one’s daily life, to evaluate every excess possession which has been in one’s possession for a period of one full calendar year and pay 2.5% of its market value as zakah to purify one’s wealth.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan