Nisab, Rates & Issues Shari’ah Principles on Zakat Calculation: Dr. Mustafa Omar Mohammed

Outline Introduction Zakatable Assets Zakat on livestock 2 Zakat on livestock Zakat on Gold and Silver Zakat on Business Inventory 1 Zakatable Assets 3 Zakat on Agriculture Zakat on labor 4 Issues

Introduction Zakat is multi-dimensional: religious, social, economic, spiritual. Hence the issue of ijtihad In embodies joint rights [Allah, the payer and the beneficiaries] Inculcates giving behavior& and other positive values

Zakatable Assets 1 2 Undivided and absolute right of ownership [Implications: assets without specific owner, assets in public trust-mosques, waqf, unlawful wealth, Zakat on debts, grants and employee savings, etc 3 4 Growing assets Reaching Nisab 5 6 7 Al-Hawl In excess of needs Freedom from debt

Zakat on Livestock The prophet s.a.w provided nisab and rates for sheep, camel and cows Khalifah Umar r.a. added horse to the list, he collected 1 dinar per horse

Zakat calculation on Sheep, camel and cow Must meet the nisab The passage of lunar calendar year Should be pastured naturally [cost-free] Should not be animals used for work

Zakatability of baby animals? Zakat calculation on Sheep, camel and cow Camel 5-9 1 sheep 10-14 2 sheep 15-19 3 sheep 20-24 4 sheep 25-35 1-2 yrs 1 FC ---- Above120 Additional 50, 3-4 yrs FC Additional 40, 2-3 yrs FC Sheep Nisab Rate 1-39 No Zakat 40-120 1 sheep 121-200 2 sheep 201-300 3 sheep Above 300 Additional 100, 1 sheep Zakatability of baby animals?

Ratios: 5 camels: 40 sheep: 30 cows Zakat calculation on Sheep, camel and cow Cow Nisab Rate 1-29 No Zakat 30- Above 120 Additional 30, 1 yr cow Additional 40, 1cow Ratios: 5 camels: 40 sheep: 30 cows

Zakat calculation on Gold and Silver Nisab Rate 85 grams of gold 2.5 % 595 grams of silver Exemptions include: ladies jewelries for personal use not as al-Rahn Men’s uses for medical reasons, e.g., teeth

Zakat calculation on Business Inventories Nisab Rate 85 grams of gold 2.5 % 595 grams of silver Business Inventories include: Final goods and services Financial assets [Securities, shares, unit trusts]

Zakat calculation on Business Inventories Approaches Net Current Asset Net Growing Capital Current Assets less Current Liabilities Adjustment by adding short term debts and reducing long term debts Zakat payable= 2.5% x [Muslim share ownership] Zakat on shares= 2.5% x [Market value per share x quantity of shares] Zakat on Sukuk= 2.5% x [Market value per Sukuk x quantity of Sukuk]

Zakat on Labor Nisab of gold and silver Rate at 2.5% on annual income Deducted at source

Zakat on Labor No Items Amount (RM) 1 Annual gross income 2 Deductions 3 Personal needs 8000 4 Expenditure per wife 3000 5 Expenditure per child 1000 6 Expenditure to Parents 7 Contributions to EPF (11% annually) 8 Contributions to charity organizations 9 Total Deductions 10 Total zakat payable

ISSUES Lack of awareness Lack of effective management Lack of trust Lack of transparency Variations of fiqh opinions

Thank You Wa Allah A’Lam