Praise be to Allah the Cherisher and Sustainer of all the worlds who provided us a chance to serve His cause. When we look around, we see financial problems in affluent as well as in the poor countries. If we look deep enough we can easily see that these problems are an indication of the crises in economic and political aspects of life which is the outcome of ideals, values and institutions of the modern civilization based on selfishness. Values have become the things of the past.

The only way to set the house in order is to call for a basic change in our approach through a thorough understanding of socio-economic situation which has given rise to capitalism, socialism, fascism, communism, and so on but all these approaches have been unable to solve these problems and mankind is still in the socio-economic mess. The problem is not the lack of natural resources as compared to population which is suggested by the European economists but the actual problem is the inequitable distribution of wealth. Islam provides a solution through putting back one element which is missing in all these philosophies, and that is Allah (God) who is the ultimate provider and Sustainer of the world, Who has directed through His Prophets such as Abraham, Moses, Jesus and Muhammad (may peace be upon them all) to establish the System of Az-Zakah for the distribution of wealth. That's why Zakah have been obligatory in the Shari'ah (Laws) of all these Prophets.

System of Az-Zakah requires every well-to-do Muslim to help his poor brethren as an obligatory act of worship. His wealth is not to be spent solely for his own comfort and luxury but also for the needs of the rightful claimants from his wealth, and they are the community's widows and orphans, the poor and the invalid; those who have the ability but lack the means to get useful employment and those who have the talent but not the money to acquire knowledge and become useful members of the community.

Those who do not recognize the call on their wealth of such members of their own community are indeed cruel. For there could be no greater cruelty than to fill one's own coffers while others die of hunger or suffer the agonies of unemployment. Islam is a sworn enemy of selfishness, greed and acquisitiveness. Disbelievers, devoid of sentiments of universal love, know only how to grab wealth and increase it through lending it out on interest. Islamic teachings are the antithesis of this attitude. Islam requires that one shares one's wealth with others and helps them stand on their own feet to become productive members of the society.

Our research and study of the problem in the Muslim world and world at large indicate that the system of Az-Zakah, directed by Allah Himself - the third main pillar of Islamic faith, is the most neglected one. It will not be a misstatement to say that this pillar of Islam has not been established at all, neither on the state level nor on the community level. Zakah is the main and only pillar as far as socio-economic life of this world is concerned. How a building of this worldly life can stand when the main and the only pillar is missing?

For this humble servant of Allah being a Ph.D, a post graduate in Economics, a post graduate in Business Administration with major in accounting, a graduate of Law with special emphasis in Islamic Law (Shari'ah) and working as an educator for 3 years and auditor for 18 years, it became incumbent to fulfill the task of presenting the Islamic solution to the socio-economic problem facing the world today. We tried to acquire as much written material on the subject of Zakah as possible but unfortunately, with the exception of a few, such as Allama Yousuf Islahi, most of the writers on the subject have completely missed the very basic principles of `Al-Zakah'. While most writers of Indo-Pak Subcontinent and Middle East have dealt Zakah as the action of collecting from the rich and distributing to the poor and appears to have neglected the rest of the categories ordained by Allah in Al-Qur'an; the writers of the North America and Europe have dealt Zakah as Income and property tax, so much so that, even the exemptions are calculated exactly similar to the Internal Revenue Service such as Br. Monzer Kahf and Br. Mahmoud Abu-Saud. The truth of the matter is that both of these approaches are extremes and do not represent the Institutions of Al-Zakah. This "Al-Zakah" manual is aimed to present the real balanced and moderate system of Al-Zakah based on Islamic Shari'ah.

The knowledgeable readers, whom Allah has given Islamic as well as economic and accounting knowledge are strongly urged to revise those portions of this manual which needs to be upgraded and we will Insha-Allah revise the new addition accordingly. We are fully aware that our rendering does not and could not do justice to all the aspects of Divine scheme of this pillar of Islam. However, to reach the destination, one has to take the first step. To accomplish the System of Al-Zakah on the community level in accordance with the Divine Commandment `Zakat-ul-Mall' Agency is being established. To facilitate Zakah calculation, Short and Detailed Zakah Return and sample forms for Zakah Collection, Zakah Pledge and Application for the poor and needy are developed and made a part of this manual. Sample calculation models for the two accounting approaches stated in this manual are also made a part of the manual for professional accountants and major businesses. After calculating the Zakah, funds should be forwarded to the Zakah collecting agency, which is established for this purpose to direct your funds according to Islamic Shari'ah as if you yourself would have done if you were to do that job, at your local community or forward the funds to ‘Zakat-ul-Mall Inc.’, supervised by reputable ulema for compliance with Shari’ah. Its address appears on the last page of this manual. All such payments are tax deductible in North America for IRS purposes.

This Manual has been reviewed by two CPA's, over nine Ulema and reputable universities , such as, Jam-e-Al-Azhar, located in Cairo - Egypt, to verify the accuracy of calculation, terminology and Shari'ah requirements. We are very grateful to them for their contribution. May Allah Almighty give them a generous reward and may Allah help us all to work hard for the cause of Islam and His pleasure.

A' meen

Muhammad Farooq-i-Azam Malik

Ramadan-ul-Mubarak 1, 1413 A.H

February 23, 1993.

Revised on: Ramadan-ul-Mubarak 27, 1425 A.H.

(November 11, 2004.)

2 - INTRODUCTION

For a long time there has been a need of a brief composition of juristic work regarding the third pillar of Islam, Zakat-ul-Mall, in a simple language identifying the various aspects of this system from Shari'ah as well as from modern complicated economic systems point of view, providing step by step work-sheets in the shape of schedules and Zakah Return similar to the Tax return for easy calculation of Zakah, the Islamic financial responsibility - a source of Social Security in the Muslim Ummah. So that the Muslims may take an advantage of this research work to uphold this act of worship. As you may realize this pillar of Islam has been the most neglected one. As a result Muslim Ummah is facing financial hardships inspite of possessing the richest natural resources of the world.

Zakah is not an income tax or a property tax and it should not be considered like one as it appears from the write-up of Br. Monzer Kahf "The Calculation of Zakah". The main basic principle underlying this Third Pillar of Islam is to encourage the Muslims to put their wealth in circulation and not hold it depriving the others from its benefits of changing hands through business and trade. If any one holds the wealth from circulation for one full year, he should pay Zakah equal to the minimum benefit it would have yielded to the poor, needy, in the way of Allah and so on. This minimum benefit assigned by Prophet Muhammad (peace be upon him) is its 1/40th or 2.5%. That's why merchandise inventory change over of several times during the year has no effect on the Zakah calculation, Zakah is only on the ending physical inventory at the end of the fiscal year. That's why assets which are used in business to generate funds are exempt from Zakah because those assets are responsible for putting the wealth in circulation. Furthermore Zakat-ul-Mall is based on the principle of paying thanks to Allah for His grace and bounty in gaining wealth without efforts in the cases of windfall profits, unexpected fortune, finding a treasure etc., that's why the rate of Zakah on such items is 1 /5th or 20%. While paying thanks to Allah for His grace and bounty in the case of natural resources like agriculture when it is irrigated by rain fall the rate of Zakah is 1/10 or 10% whereas if it is irrigated by ones own efforts the rate of Zakah is 1 /20th or 5%. Similar principle with varying rates applies to ranching operation. Furthermore, one must understand that Zakah is an act of worship and a method prescribed by Allah Himself for paying thanks to Allah in order to be His 'Abdan shakoor' (grateful devotee) therefore, it is not a levy or burden like income tax or a property tax. This is Divine commandment for the distribution of wealth among the community members. Another major difference between Zakah and Taxation is that the person paying the Zakah is not expecting any worldly benefit in return, while the person paying income tax is expecting the government services in return.

In Islam Salah and Zakah are two most important acts of worship. Salah is a training for all the acts of worship relating to body and soul, while Zakah is the training for all the acts of worship relating to wealth. There are only two kind of obligatory rights and duties. First are the rights of Allah and their related duties. Second are the rights of other human being and their related duties. Salah prepare the believers to fulfill the Rights of Allah, while the Zakah play a role to fulfill the Rights of other human beings. Al-Islam is the name of fulfilling these two kinds of Rights in a proper Way.

In the establishment of Deen, Zakah is the second most important act of worship. Salah play the most important role in spiritual elevation, while Zakah play the most important role in financial stability which is the backbone of worldly life. Combination of spiritual and worldly lives in a balanced way is called "Sirat-ul-Mustaqeem" the Right Way. That's why in the Holy Qur'an whenever Allah ordered the believers to establish Salah, He ordered the believers to pay the Zakah and these two acts of worship have been obligatory on each and every Ummah before us. For example in Surah Al-Anbiyaa after mentioning the incident of putting Prophet Ibrahim in fire and fire becoming cool and comfortable for him, and mentioning Prophets Loot, Ish'aq and Yaqoob, Allah said:

"We made them Imams who guided people by Our command, and We revealed to them the doing of good deeds, establishing the Salah and paying the Zakah, and Us alone they served" [21:73].

In Surah Al-Ma'idah while addressing the Children of Isra'el,:

"Allah said (to the children of Isra'el) I am with you only if you establish Salah and pay Zakah" [5:12].

In Surah At-Taubah while addressing the Muslims Allah said:

"So if they repent, establish the Salah and pay the Zakah, then they are your brethren in Deen (Al-Islam)” [9: 11].

In Surah Al-Anfal Allah said:

"Those who establish Salah and spend in charity out of the sustenance which We have given them, they are the True believers". [8: 3-4]

Since Salah and Zakah are the two basic pillars of Islam, therefore, denying any one of them or differentiating in any one of them is equal to becoming Murtad (traitor or disbeliever). Syyiduna Abu Bakr Siddiq (may Allah be pleased with him), when some of the tribes refused to pay Zakah, said: "I swear in the name of Allah that I will make Jihad against those who differentiate between (the obligation of) Salah and Zakah" - (Tibrani).

Those who do not pay Zakah are given the warning of a dreadful punishment in Surah At-Taubah:

"To those who hoard up gold and silver and do not spend in the cause of Allah, proclaim a dreadful punishment. The Day will surely come when their treasure will be heated in the fire of Hell, and their foreheads, sides and backs branded with them. They will be told: this is the wealth, which you hoarded. Taste then what you were hoarding”. [9:34, 35].

In order to save the believers from this dreadful punishment Allah asked the Prophet in the same Surah:

"Take alms (Zakah) from their wealth, so that their wealth may thereby be cleansed and purified, and pray for them...” [9:103].

After this introduction let us try to understand this pillar of Islam and do our best to comply with this act of worship. May Allah help us all to strive hard for His cause to gain His good pleasure.

Âmeen

3 - DEFINITIONS

Zakah:

Zakah literally means - growth and increase as well as purification. The payment of Zakah purifies and cleans the remaining wealth because it is blessed by Allah for compliance with His commandment. Zakah is considered an act of worship relating to one's wealth. The giving of Zakah leads to increase the wealth in this world, develop the religious merits in the next and purify the giver from sins. The Divine verse: "Take from their property alms in order to purify them from their sins" illustrates the spirit of Zakah. Zakah is an obligatory Sadaqah enjoined on the members of the Muslim community, so as to take the surplus money from the comparatively well-to-do members of the society and give it to the destitute, needy and the other welfare projects along with spreading the true understanding of Islam.

Sadaqah:

Sadaqah is from the word 'Sidq' which means `truth'. Sadaqah is that charity out of one's wealth which is given with true heart (from the depth of one's heart) to seek the pleasure of Allah. Sadaqah can be compulsory, such as Zakah or voluntary, such as charity. Al-Qur'an uses the word `Sadaqah' for both. In other words, while every Zakah is Sadaqah, only the Sadaqah, which is obligatory (fardh), is called Zakah.

Nisab:

Nisab means the ownership of that quantity of wealth through which one is called wealthy. In Shari'ah term `wealthy' is used for that individual or business who owns, free of any encumbrances, 3 ounces of gold (20 mithqals = 4.25 grams of fine gold) or 21 ounces of sterling silver (200 dirhams = 595 grams. A silver dirham is equal to 2.975 grams) or the equivalent of either one's value over and above the necessities of life in accordance with one's status and standard of living in the community of one's residence. For those who are in Ranching business, their Nisab for sheep and like animals is 40 heads, for cows and like animals is 30 heads, for camel and like animals is 5 heads. Nisab for Trade Merchandise is equivalent to the price of 21 ounces of sterling silver.

Ard-al-Tijarah:

Ard-al-Tijarah means completely owned business property, free and clear of any debt, which is obtained for resale purposes and is growing in value and nature (Nami); such as inventories of merchandise, raw material, goods in progress, finished goods, goods in transit depending on the passage of title to the goods, as well as commercial agriculture and ranch products.

Ard-al-Qinyah:

Ard-al-Qinyah means the property which is kept for the personal or business use and is not acquired with the intention of trade or resale. This property is not subject to Zakah.

Usher:

Usher literally means one-tenth but in Islamic terminology it is Zakah on agriculture products, whether one-tenth or one-twentieth.

Tamleek:

Tamleek means to make the Zakatees owner of the Zakah funds without imposing restriction on its usage except regarding the Islamically prohibited items like intoxicants, gambling etc.

4 - WHAT IS ZAKAH ?

Zakah is a corner stone of financial and fiscal affairs of an Islamic Community. Its importance can be judged by the fact that at different places in Qur'an, the commandment to perform Salah (prayers) is followed by the commandment of paying Zakah (obligatory charity). Just as Salah is an act of worship relating to the body and soul, so is Zakah an act of worship relating to wealth. Islam recognizes that a human being has two fold relationships: first, his relationship with his Creator (Allah) and second, his relationship with other human beings. This relationship has given rise to the Rights of the respective parties and he is under obligation to fulfil them. Salah plays a role to fulfil the rights of Allah, while Zakah plays a role to fulfil the rights of other human beings. In other words Al-Islam is the name of fulfilling these two kinds of Rights in a proper Way, and this is also called 'The Right Way' which in Arabic is called Al-Sirat-al-Mustaqeem.

Zakah is a compulsory charity levied by an Islamic Law on the members of the Muslim community, so as to take the surplus money from the comparatively well-to-do members of the society and give it to the destitute, needy and the other welfare projects along with spreading the true understanding of Islam. Thus it provides the principles of a true welfare state where the people with less means could share with others to improve the income distribution. The importance of Zakah can be noted by the fact that Al-Qur'an has mentioned Salah and Zakah together at about 32 places as two of the foremost duties after the affirmation of the Faith. A person who fulfills these two duties properly is considered to have fulfilled all his religious obligations. A person, who makes ablution, put up good clothing and go all the way to present his body and soul in complete obedience to Allah inside the Masjid, cannot be expected to disobey Allah outside the Masjid. That's why Al-Qur'an presented Islam, a combination of Salah and Zakah as a testimony of one's real faith,

“Allah said (to the children of Israel) I am with you if you establish Salah and pay Zakah”. [5:12].

The institution of Zakah is aimed to root out the love of the material world from the heart of the believer and inculcate in it the pure love of Allah. Al-Zakah is a means to cleanse the Muslim society from stinginess, malice, jealousy, hard-heartedness and exploiting of others. Al-Zakah is also a means to inculcate and develop pure and noble feelings of love, sacrifice, goodness, sincerity, well-wishing, co-operation and companionship. In the Sunnah, Zakah is reckoned as one of the five pillars of Islam. Zakah being a compulsory payment becomes the right of the entire community or society to the wealth of individuals, as prayers is the right of Allah on the believers. Since Zakah has religious Islamic sanctity of the highest order, its collection is easy, inexpensive and voluntary.

Zakah is regarded by some as mere alms giving ; but this is a wrong interpretation of the tenets of Zakah, as illustrated in Al-Qur’an. Although private charity and payment by individuals privately is permissible, it is required to be organized on community or state level. Moreover, the beneficiaries of Zakah have been prescribed in the Al-Qur’an and it is not open to the State or collecting agency to divert the funds of the Zakah for purposes other than those prescribed in Qur'anic verse which reads:

"Verily the Sadaqah (Zakah) are for the poor and the needy and those who collect them and those whose hearts are to be reconciled, and to free the captives and the debtors and for the cause of Allah, and for the wayfarers; a duty imposed by Allah. Allah is the Knowledgeable, Wise." [9:60].

Thus it is clear that not only the definition of Zakah is precise but the amount collected by way of Zakah is also to be distributed in a precise manner. Therefore, Al-Qur’an clearly illustrates the mechanics and chief beneficiaries of Zakah.

5 - ZAKAH IN ISLAM AND IN THE SHARI'AH OF PRIOR PROPHETS

Importance of Zakah in Islam can be understood by the very fact that Allah's commandment of establishing the Salah (prayer) is immediately followed by the commandment of paying the Zakah in such a way that it is made an integral part of Iman (Islamic Faith), and it appears that the whole of Islam is based on these two main pillars after the Belief in Allah and His Rasool. It is important to know that Zakah has been obligatory in the Shari'ah of all the Prophets; as Allah , after mentioning Prophets Ibraheem, Lut , Ishaq and Yaqoob, has stated in Surah Al-Anbiyaa:

"We made them leaders who guided other people by Our Command and We sent them revelations to do good deeds, establish Salah and pay Zakah. To Us alone did they serve.”[21: 73]

Likewise while stating the purpose and mission of Prophet Muhammad (peace be upon him) and the Muslim Ummah, Allah has stated in Surah Al-Hajj:

"Strive in the Way of Allah as you ought to strive with sincerity and discipline; He has chosen you and has not laid upon you any hardship in the observance of your faith - the faith of your father Ibrahim. He named you Muslims before in the prior scriptures where the believers were called Muslims and in this (Al-Qur’an, the believers are being called Muslims); so that His Rasool may testify against you and you yourselves may testify against rest of the mankind. Therefore, establish Salah, pay Zakah and hold fast to Allah; Who is your Protector - what an excellent Protector and what a splendid Supporter!”[22: 78]

Prophet Isma'el (peace be upon him):

In surah Maryem, the address of Prophet Isma'el is quoted in the following words:

"Also relate to them the story of lsma'el in the Book; he was a man of his words and was a Rasool and a Prophet. He commanded his people to establish Salah and give Zakah, and was the one with whom his Rabb was well pleased.”[19:54-55]

Children of Isra'el:

Allah took the covenant from the Children of Isra'el. This fact has been stated in surah AL-Baqarah as follows:

“Remember, We took a covenant (firm commitment) from the children of lsra'el: ‘You shall worship none but Allah; be good to your parents, relatives, orphans and destitute; speak fair to the people, establish Salah, and pay Zakah’. But you broke the covenant except a few of you, and you paid no heed.”[2: 83]

In Surah Al-Ma'idah reference is made to this covenant in these words:

“Allah did in fact made a Covenant with the Children of lsra’el and appointed twelve chieftains from among them and said: I am with you; if you establish Salah (prayers) pay Zakah, believe in My Rasools, support them and give a generous loan to Allah (spend in charity), I will certainly forgive you your sins and admit you to gardens beneath which the rivers flow. However, if anyone of you, after this, violates this covenant, he will indeed go astray from The Right Way”.[5: 12]

Prophet Isa (Jesus) peace be upon him:

In Surah Maryem, the address of Prophet Isa (Jesus) to the Children of Isra'el is quoted in the following words:

"I am indeed a servant of Allah. He has given me a Book and made me a Prophet. His blessing is on me where ever I go. He has commanded me to establish Salah and give Zakah as long as I live”.[19:30-31]

Prophet Muhammad (peace be upon him):

Allah has made it very clear to the Believers that if they want to attain felicity, Allah's pleasure and an abode in Paradise, they should adopt the characteristics of the True Believers which are stated in Surah AL-M'uminun, of which 1st. three are as follows:

"Indeed successful are those Believers, who are humble in their Salah; avoid vain talk; and are punctual in the payment of Zakah”. [23: 1-4]

While stating the effects and credits given for spending in His way, Allah has proclaimed the following similitude:

"The parable of those who spend their wealth in the wayof Allah is that of a grain, which sprouts into seven ears, each bearing one hundred grains. Allah gives manifold increase whom He wishes. Allah has boundless knowledge. Those, who spend their wealth in the cause of Allah and do not follow their charity with reminders of their generosity or injure the feeling of the recipient, shall get their reward from their Rabb; they shall have nothing to fear or to regret. Kind words and forgiveness is better than charity followed by injury. Allah is Self-sufficient, Forbearing”.[2:261-263]

6 - OBJECTIVES OF AZ-ZAKAH

A. Generosity

Az-Zakah trains the believers in generosity and motivates the believers to rush towards the achievement of goal and passing the test for which they are here on Earth during this worldly life, this objective is stated in Surah Âl-e-'Imran as follows:

"Rush towards the forgiveness from your Rabb and a Paradise which is as vast as Heavens and the Earth, prepared for the righteous people; those who spend generously in the way of Allah - whether they are in prosperity or in adversity - those who control their anger and forgive other people, for Allah loves such charitable people”.[3: 133-134]

Az-Zakah also saves the believers from casting themselves into destruction by their own hands, because those communities who do not take care of the poor and needy among themselves, incur the wrath of Allah Therefore Believers are required to be charitable and even call such a help to the needy a loan to Allah, and He promises to pay back in full, plus a reward equal to ten times. Allah says in Surah Al-Baqarah:

"Give generously for the cause of Allah and do not cast yourselves into destruction by your own hands. Be charitable; Allah loves those who are charitable”. [2: 195]

"Whatever wealth you spend in charity, it is to your own advantage; provided you give to seek the pleasure of Allah. Whatever wealth you spend for the sake of Allah will be paid back to you in full, and you will not be wronged”.[2: 272]

B. Righteousness

Righteousness can not be achieved without unconditional love and obedience to Allah and His Rasool, and the main hindrance in the modern world is the love of materialism. Az-Zakah helps the believer to attain righteousness as it is stated in Surah Âl-e-'Imran:

"You can never attain righteousness unless you spend in the cause of Allah that which you dearly cherish; and whatever you spend, surely it is known to Allah”. [3: 92]

C. Felicity

Al-Zakah is a source to attain felicity and gain the maximum credits through: fulfilling the rights of the relatives, poor and needy people in the community, actively participating in the charitable work, seeking the pleasure of Allah and not to be stingy like the unbelievers. Furthermore, Allah wants the believers to clearly understand those actions which are blessed by Him and meet His approval. Allah advises the believers in Surah Ar-Rum:

"O Believers, give what is due to your relatives, the needy and the traveler in need. This is best for those who seek the pleasure of Allah and it is they who will attain felicity. That usury, which you give to increase through the wealth of people, does not increase with Allah: but the Zakah that you pay to seek the pleasure of Allah shall be repaid to you many times over.”[30: 38-40]

D. True Faith

Al-Zakah brings the believers closer to Allah and helps them in attaining the true faith. It inspires the believers to feel happy in helping the needy and inculcate in them the quality of sacrifice which distinguishes them from the Hypocrites, who merely provide the lip service and faith has not gone down to their hearts. Since hypocrites consider Al-Zakah a tax or a levy, so they give reluctantly and such half hearted contribution are not acceptable to Allah, Who, while addressing the hypocrites, has very clearly stated in Surah At-Taubah:

"Say: ' `Whether you give willingly or with reluctance, it will not be accepted from you; for you are the people who are transgressors ". The reasons which prevent their contributions to be accepted are: that they disbelieve Allah and His Rasool; that they come to offer Salah but reluctantly; and that they offer contributions but unwillingly. Let neither their wealth nor their children dazzle you: in reality Allah intends to punish them with these things in this life and that their souls may depart while they are still unbelievers.” [9: 53-55]

E. Protection

Al-Zakah serves as a protection from the severe punishment which is specially prepared for those who hoard up wealth and do not spend in the cause of Allah and to help the needy in their community, as Allah says in Surah At-Taubah:

"O Believers! Indeed most of the (Jewish) rabbis and (Christian) priests misappropriate the wealth of people and debar them from the Way of Allah. To those who hoard up gold and silver and do not spend it in the Way of Allah proclaim a painful punishment. The Day will surely come when their treasure will be heated up in the fire of Hell, and their foreheads, sides and backs branded with them. They will be told: "This is the treasure which you hoarded. Now taste what you were hoarding!”[9: 34-35]

F. Forgiveness

Al-Zakah is a source of prosperity. In this regards the saying of the Holy Prophet is: "Al-Zakah is the treasure of Islam". Islam guarantees that a Muslim community who will establish the system of Al-Zakah will never be poor. It is Shaitân who seduces the people towards the wrong direction and creates a fear of loss in the minds of those who want to spend in the path of Allah or for the welfare of the poor and needy people of the community. Shaitân tries his best to make sure that a believer may not spend for a good cause and become eligible for the reward from Allah, rather leave all that they own for Taghût (Satanic forces). Allah admonishes the people not fell into the trap of Shaitân to earn His wrath. The fact is that no one in the history of mankind has ever gotten poor for spending in charity. Allah says that the only way to increase your wealth and seek His forgiveness is to spend in charity. Surah AL-Baqarah states this fact in the following words:

"The Shaitân threatens you with poverty and prompts you to commit what is indecent, while Allah promises you His forgiveness and bounties and Allah has boundless knowledge”.[2: 268]

G. Party of Allah

Al-Zakah helps in joining the 'Party of Allah' and avoids falling into the category of disbelievers, because Allah has very clearly stated in the Qur'an that the people who do not establish Salah and pay Zakah are false in their claim of being the believers. There is a 'Party of Allah, His Rasool and the Believers', and it is the duty of a Believer to leave other parties and join the Party of Allah. If a Muslim befriends a person, who is outside this party, may he be his father, brother, son, relative, countryman or any one else, and maintains with him the relationship of affection and support, he should not expect that Allah would like to keep up relation with him as his supporter. Allah has very explicitly explained that in Surah AL-Ma'idah:

"O' Muslims! Your real protecting friends are Allah, His Rasool and the fellow believers - the ones who establish Salah, pay Zakah and bow down humbly before Allah. Whoever makes Allah, His Rasool and the fellow believers his protecting friends, must know that Allah's party will surely be victorious”.[S: 54-56]

H. Paradise

Al-Zakah is a means to get Paradise which Allah has prepared for the Believers. Allah also wants the believers to excel both in spiritual as well as in worldly lives. Just as Salah plays the most important role in spiritual elevation of the believers, similarly Zakah plays the most important role in their financial stability. When a person embraces Islam and recites Qalimah Tayyabah: "There is no God but Allah and Muhammad (peace be upon him) is His Rasool," he enters into a bargain between him and Allah, as a part of this bargain, Allah promises the believer to grant him Paradise, this transaction is stated in Surah At-Taubah in the following words:

"Indeed Allah has purchased from the believers their persons and their wealth and in return has promised them the Paradise; they (believers) fight in the cause of Allah and slay and are slain. This is a true promise which is binding on Him mentioned in Taurât (Torah), the Injeel (Gospel) and the Qur'an; and who is more true in fulfilling his promise than Allah? Rejoice, therefore, in the bargain which you have made, and this is a mighty achievement.”[9:111]

7 - WHO SHOULD PAY ZAKAH ?

The one who has recited: “La Ilaha Illullah Muhammad-ur-Rasool Allah” (There is no god but Allah and Muhammad is His Rasool) and has testified according to the commandment of Allah Almighty in Surah Al-Anaam:

"Declare, surely my Salah, my devotion, my life and my death are all for Allah, the Rabb of the Worlds. He has no peer, thus I am commanded and I am first of the Muslims.” [6: 162-163]

The one (may be an individual or an organization) who is in possession and has free and clear ownership of "Productive Nisab". The one who believe in the Five Pillars of Islam and believe that Zakah is the 3rd Pillar of Islam and a mandatory act of worship relating to their wealth, which is in excess of their basic needs, in order to render thanks for His bounty. Productivity, real or hypothetical, is considered to be present in one of the following cases:

· When property is gold or silver,

· When property is intended for trade.

· When harvest is ready to be used.

· When animals are pastured for trade or business.

· When minerals and oil resources are extracted for sale.

8 - WHEN ZAKAH BECOMES OBLIGATORY?

Zakah becomes obligatory when following conditions are met :

A. One must be a sane adult, because maturity, reason and responsibility are based on this quality. However, according to the Malikies (especially in regards to cattle and crops) and also according to AL-Shafa'i minors and insane are also under obligation to pay Zakah.

B. One must be a Muslim, because the payment of Zakah is a divine commandment and is considered an act of worship which can be performed only by a Muslim.

C. One must be a Free Citizen in order to comply with the provision concerning the transfer of ownership by the Zakah-payer to the Zakah beneficiary, because a slave cannot own any property.

D. One must be an owner of the property. Possession of property alone is not sufficient; ownership of property is necessary condition for Zakah.

E. Property must be more than Nisab (i.e. 3 ounces of gold or 21 ounces of Sterling silver or their equivalent value).

F. Property must be over and above the necessities of life; necessities of life may include Residential home, clothes, utensils, furniture, cars and other such items irrespective of their value, whether actively used or not, which were purchased for personal use and not for re-sale.

G. The Nisab must also be free from debt. However, according to AL-Shafa'i indebtedness does not affect the obligation of Zakah. According to the accepted Hanafi view, the debt is applied against the property which is subject to Zakah and not against property which is destined for the satisfaction of necessities and is consequently exempt from Zakah.

H. Nisab assets must be of growing nature and value; such as, property intended for trade or business, gold, Sterling silver, ranch operation and so on. If the assets are not of growing nature, they are not subject to Zakah even if they be over and above the basic necessities of life; such as, more than one car in the household, utensils not in daily use, more than one set of furniture and so on.

I. Intention of paying the Zakah; since Zakah is considered an act of worship, therefore, the payment of Zakah must be accompanied by the intention to discharge the obligation of Zakah.

9 - WHEN ZAKAH IS DUE ?

One full year must have been elapsed over the Nisab of productive property. The lapse of a year is essential "because time is indispensable for productivity to materialize". Hadith of Rasool-Allah is explicit, "No Zakah is due on property before there elapse over a year". The property acquired in the course of the year is added to the Nisab of the property already in existence. However, AL-Shafa'i has a difference of opinion that additional property acquired during the year should not added to the original Nisab.

In the case of Agriculture products (Farming) : at the time of harvest, as Allah has commanded in Surah AL-Ma'idah:

"It is He who has created all kind of plants; trellised and untrellised, the palm trees, the field crops with produce of different kinds, the olive and pomegranates similar in kind yet different in taste. Eat of their fruit in their season and give away their Zakah on the harvest day. Do not be spendthrift; surely He does not love the spendthrifts”.[6:141]

This may be once, twice or as many times as possible under the modern methods of cultivation. Nisab in this category is on "Khamsa Aosaq" which is approximately 10 Lbs.

In the case of Ranching operation: when the cattle are pasteurized after acquisition and one year has elapsed. However, the off springs which were born during the year will be counted for the purposes of Zakah. Animals raised for riding and for meat are exempt except when raised for trade and business. Nisab is ownership of at least 40 goats, sheep and other like animals, 30 cows and other like animals and 5 camels and other like animals.

In case of finding a treasure, windfall profits and similar gains without directed efforts, at the time gaining the custody or ownership.

Minerals and other mine products, oil and sea resources: at the time of extracting, catching and marketing.

10 - HOW TO PAY ZAKAH ?

Zakah is supposed to be paid to Islamic State and in the absence of Government Agency, Muslim Community is under obligation to organize Islamic Bait-ul-Mall for the purpose of collecting and disbursing the Zakah according to the need and priority based on the categories stated in the Divine Revelation of Al-Qur’an. To comply with this obligation, Zakat-ul-Mall Inc. has been established in the United States of America to organize Islamic Bait-ul-Mall. For details about this corporation, its board members, objectives and operations, visit its web-site “www.zakatulmal.com” / “www.zakatulmal.org” /“www.zakatulmal.net”.

It is NOT necessary to tell the individual that the amount is Zakah money. Therefore, it can be disbursed to the eligible people in the shape of prizes and gifts, only intention of disbursing the Zakah is enough.

Zakah can be given in advance in a lump sum or in the installments provided the individual or business entity had Nisab prior to its disbursement. Zakah can be prepaid for three years in advance on an estimated basis. In the second and third year, if the actual Zakah payable exceeds the prepayment then just pay the balance. If, however, prepayment exceeds the actual Zakah for the second and third year then the exceeded amount should be considered "Sadaqah" to get blessings from Allah.

In case of a family where man is head of the household, he is responsible for the payment of Zakah by those who are under his control of influence. Same is the case for the one who is a trustee.

In the case of destruction of loss of ones assets resulting in one's insolvency after one have calculated the Zakah; it is still due and payable whenever the solvency is restored.

If the cash that has been set aside for the payment of Zakah is destroyed or lost, you still have to pay the Zakah form your other assets.

Zakah can be given in kind or in cash value. In modern economy cash is more appropriate. Items can also be purchased for the individuals or institutions from the Zakah funds for disbursement purposes.

Under normal circumstances Zakat-ul-Mall should be disbursed for the needs of the Local Community, except in case of extra ordinary circumstances or an important project qualified under Zakah category is located elsewhere.

Zakah can be given to individuals, families as well as institutions.

Qardh-i-Hasna can also be given from the Al-Zakah fund to the needy to put them back into business or for their training and education to make them capable of earning their own living and to broaden the future Zakah base. This is one of the most recommended categories in North America.

Zakah can be given as one time help and also as repeated times depending on the circumstances and needs.

Zakah can be given to the relatives but not to the immediate family and dependents (whether ascendants or descendents) - however, brother, sister and in laws are eligible for Zakah if deserving. As a matter of fact, there is double reward for doing so; one for giving Zakah and second for being kind to you relatives (Silah Rehmi).

Zakah should be given based on Lunar Calendar; however, it can be given by Solar Calendar since we did not come across any restriction in this regard based on our research. However, since lunar calendar is 355 days and solar is 365 days, therefore, the rate of Zakah used for Solar Calendar should be 2.577% instead of 2.5%. The month of Ramadan is considered to be more fitting from reward point of view; however, any month can be fixed for that purpose. In North America months of November and December are recommended for IRS Tax exemption purposes.

One very important condition of Zakah is that the individual or Institution to whom Zakah is given should be made the OWNER of the funds with no strings attached except when a restriction is imposed based on the circumstances and habits of the individual to avoid misuse of Zakah funds for Un-Islamic or illegal purposes.

Zakah is considered paid and obligation discharged when given to Zakah Collection Agency or Institution (Wal A'meleena Alaiha). Then it becomes the obligation of the Zakah collection Agency to disburse in accordance with the Qur'anic injunctions.

Zakah can be given by the relatives on behalf of one another. Such as husband can pay for the jewelry of his wife.

11 - DOCTRINE OF TAMLEEK

According to Hanfi school of thought, obligation of Zakah has not been discharged until you made the Zakatee, to whom you have given Zakah, the owner of Zakah payment. Some of them claim that this condition is fulfilled only when it reached its final destination and most of them have mentioned in all their write-ups the first two categories of Zakah and has neglected the other six categories ordained in Al-Qur’an. They claim that "Laam" with Al-Foqaraa and Al-Masakeen denote that condition. Well the same "Laam" also go for Al-A'meleena Alaiha. Scholars such as Yousef Islahi and Abul ‘Ala Maududi assert accordingly that the same "Laam" for Tamleek is applicable to Al-A'meleena Alaiha, just like the Poor and Destitute. The Zakah obligation is properly discharged when the Zakah funds are given in the ownership of Zakah Collecting Agency. Since after accepting the Zakah funds, it becomes the Agency's obligation to disburse the funds according to the Qur'anic injunctions, there should be no restriction or condition imposed on the spending once the payee is made the owner of Zakah funds (which is agreed upon by all Ulema from all schools of thought). Therefore, there can be no restriction imposed on the Zakah Collecting Agency after making the agency an owner of Zakah funds.

12 - RATES OF ZAKAH

Rate of Zakah is different on different assets. Before one calculates the Zakah, one must first know all the categories of the assets, their beginning and ending balances. Then calculate the Zakah based on the following rates. These rates are also made a part of the Zakah calculation Forms which are the final part of this Manual.

Cash and cash equivalents, Gold, Silver, Jewelry made of gold and/or silver (weight of diamonds, pearls and other precious stones can be deducted), Trade or merchandise inventories, accounts receivables, Marketable securities, Shares of Stocks, Bonds and all other kind of business property acquired for trade. Investment and resale: the Zakah rate is 2.5 % or .025% (1/40th).

Agriculture products: All agriculture products are subject Zakah called "Usher". Although literally it means one-tenth but in Islamic terminology means Zakah on agriculture products. Some jurists claim that there is no Zakah on those products which can not be stored like, fruit, vegetables etc. However, our research indicates no such provision in Shari'ah and furthermore, in modern age every thing can be stored, therefore, non-zakatability does not apply. This category of Zakah has two categories:

Cultivation dependent on rainfall. The Zakah rate is 10% (1/l0th). Zakah has to be paid first without any consideration of the expenses. Expenses of cultivation have to be paid from the remaining 90%.

Cultivation through irrigation, not dependent on rainfall. The rate of Zakah is 5% (1/20th). Zakah has to be paid first without consideration of the expenses. Expenses of cultivation have to be paid from the remaining 95%.

Ranch operation: the rate of Zakah is different in all three categories:

A. Poultry, Goats, sheep and like animals:

From 1 – 120 head = 1 head

121 - 200 heads = 2 heads

201 - 399 heads = 3 heads

400 - 499 heads = 4 heads

500 heads = 5 heads and thereafter (1) head on every 100 heads

but nothing on fractions.

B. Cows and the like animals:

From 30 – 39 heads = 1 head of one year old

40 – 49 heads = 1 head of two year old

60 – 69 heads = 2 heads of one year old each