“And keep up prayer and pay zakat and whatever good you send before for yourselves, you shall find it with Allah; surely Allah sees what you do,” (al-Baqarah: 110)
What is Zakat
Zakat, or Zakat al-Mal, means obligatory “alms” or “alms upon wealth.” It stands as the Third Pillar of Islam, coming immediately after Salat, or the daily Ritual Prayer. Every Muslim possessing the designated minimal amount of wealth (called nisab) for a full cycle of a lunar year must, as a matter of worship, satisfy the duty of the Zakat-Charity.
What Is Zakât Payable On?
As stated in Chapter 5, Zakât is payable on five types of material wealth (see table, p. 43):
1. Personal wealth and assets
2. Trade goods and exploited assets
3. Agricultural Produce
5. Treasure Troves
Also, there are three major conditions for Zakât on these types of wealth:
1. Sole, exclusive ownership
2. Growth (actually or potentially)
3. Agricultural Produce
4. Passage of a Zakât-year
What Zakât Is Due on Personal Wealth?
The most common zakatable wealth is cash on hand and in banks, stocks, and retirement and savings funds. The amount of Zakât due on this wealth is 2.5 percent of its combined total value as of the annual Zakât due date.
Is Zakât Due on Earned Income?
Yes. Earned income is the primary category of personal wealth today. It includes salaries and professional fees that result from labor and specialized tasks. Whatever of it is spent on personal and family expenses prior to the end of the Zakât-year is not subject to Zakât. But whatever portion of salaries and/or professional fees remains at the end of the Zakât-year is subject to Zakât— whether or not a full Zakat-year has elapsed over the portion in hand. On the date the Zakât falls due, whatever portion of the salary or the professional fees are in hand—even if it is a check received that day, within the Zakât-year— Zakât must be paid on it—so long as the total yearly salary and/or fees exceed the nisâb, the monetary equivalent of 3 US OZ. of pure gold. This is because those salaries and fees through the year are tabulated cumulatively.
Many modern Muslim jurists and scholars consider net earned income to be zakatable, including ‘Abd Al-Rahmân Hasan, Muhammad Abû Zahrâ, ‘Abd Al-Wahhâb Khallâf, Muhammad Al-Ghazali, Monzer Kahf, and Mahmûd Abû Sa’ûd (Kahf, The Calculation of Zakah, 5; Abû Sa’ûd. About the Fiqh of Zakât, 20). Hence, Muslim physicians, lawyers, employees, etc.—all are subject to Zakât on the income they hold on the Zakât due date without the passage of a Zakât-year. Again, the nisâb threshold is that of money (85 grams of gold). The zakatable amount is the residual money left over from earnings at the end of one fiscal year. This does not mean Zakât is due on the flow of income itself during the year. It is applied to whatever remains of one’s annual income at the end of the year (i.e., after taxes and expenses, and in all its forms and places of deposit collectively) (Fiqh az-Zakât, 310, 325).
Shaykh Yusuf Al-Qardawi summarized this issue in an opinion published by Islamonline.com. He holds that those on salaries can be classified into three groups:
Those earning salaries that barely meet their needs, who are not obliged to pay Zakât, unless they save the value of nisâb (or greater) for one year.
Those whose earnings exceed their needs, and who save the surplus beyond their living expenses, who pay Zakât on all that remains (whatever its form or place of deposit) on the Zakât due date, irrespective of whether a year has lapsed on all the funds or not. That is, it is considered as a collective amount for the year, parceled out through the year. Thus it all comes due on an established annual fiscal date.
Those earning in excess of their needs—who neither save nor invest their surplus, but spend it, or part of it, instead on unnecessary items and luxuries—whose Zakât remains due in full on the annual Zakât due date for the portion of their annual salaries that exceeded their basic needs during the Zakât-year.
Source: http://www.zakat.org/zakat_in_islam/faqs/category/zakat_assessment/ (Zakat foundation of America)
Attention: Please note that this article is belong to Zakat Foundation of America. For calculation purpose (technical matter), please refer to LZS method. TQ – Editor.