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All About Zakat And It’s Meaning, Relevance, Eligibility And Facts

The term “zakat” refers to a person’s obligation to donate a certain percentage of their annual wealth to charitable organisations in Islamic finance. Zakat is a requirement for all Muslims in the majority of countries and is seen as a form of prayer. Giving to the less fortunate is thought to purify annual income that exceeds what is required to meet the basic needs of a person and his or her family.

Quran says “And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.” (2:110)

Zakat, one of Islam’s fundamentals, is a sort of compulsory almsgiving that has the potential to alleviate the suffering of millions of people.

Because the literal definition of Zakat is “to cleanse,” Muslims believe that paying it purifies, multiplies, and blesses the remainder of their money.

Purifying your money for Allah’s (SWT) will is to recognise that whatever we own belongs to Him, and it is for Him that we work to end poverty and help our brothers and sisters. Zakat also acts as a spiritual link to the creator.

According to the Hanafi madhab, Zakat is 2.5% of one’s wealth that has been in possession for a lunar year. If one’s wealth falls below a certain threshold known as the nisab, no Zakat is required. Zakat must be paid if one’s wealth exceeds the nisab.

How Zakat Works

Islam is founded on five pillars: a declaration of faith, prayer, Ramadan fasting, the Hajj pilgrimage, and zakat. If a Muslim’s income exceeds a certain threshold, he or she must perform the Zakat ritual. It is not to be confused with Sadaqah, which is the voluntary act of providing charitable offerings out of goodwill or compassion.

Religious texts extensively describe the minimal amount of zakat that should be donated to the less fortunate. It varies depending on whether the income came from agricultural products, animals, commercial endeavours, paper money, or precious metals such as gold and silver.

The calculation of Zakat is based on both income and asset value. The customary minimum for those who qualify is 2.5%, or one-fortieth of a Muslim’s total savings and assets.

Zakat is paid to the following people:

  • The needy and poor
  • converts Muslim who are struggling
  • Enslaved people
  • Individuals in debt
  • Soldiers who are fighting to protect Muslims
  • Those who got lost on their way

Zakat vs. Nisab

Nisab is a word that is usually used in conjunction with zakat. It is a threshold, which means that a Muslim must have a specific amount of wealth and goods before having to pay zakat. In other words, if a person’s personal wealth is less than this minimum, no zakat is required for the lunar year. The nisab is equivalent in value to 612.36 grammes of silver or 87.48 grammes of gold.

Zakat is not typically paid all at once. This is where nisab comes in handy. When an individual exceeds the threshold throughout the course of a full lunar year, they are eligible to pay zakat. As a result, one individual may owing it before another.

Zakat does not have a set deadline. Yet, money is typically distributed at the end of the year when estimations of any remaining wealth are determined. Some Muslims believe that paying zakat during Ramadan brings good luck.

This implies that people inventory their assets and items on a regular basis. You can do this once a week or once a month.

How Is Zakat Determined?

Muslims should keep track of their holdings and products. After they reach nisab, also known as the threshold, which equals 87.48 grammes of gold or 612.36 grammes of silver, they must pay zakat. The entire amount that must be paid is 2.5%, or 1/40 of their total savings and wealth. Muslims can calculate their zakat obligations using one of various online calculators.

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