WHO SHOULD PAY ZAKAH ?

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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.

WHEN ZAKAH BECOMES OBLIGATORY?

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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.

WHEN ZAKAH IS DUE ?

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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.

HOW TO PAY ZAKAH ?

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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.

DOCTRINE OF TAMLEEK

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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

WHEN TO PAY ZAKAH ?

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Zakah, in most cases, is due once a year. People engaged in farming and mining are required to pay Zakah immediately after harvesting or extraction. Allah says in the Qur'an:
"O Believers, spend in Allah 's Way the best portion of the wealth you have lawfully earned and that which We have produces for you from the earth, and do not pick out for charity those worthless things which you yourselves would not accept but with closed eyes. Bear in mind that Allah is Self-sufficient, Praiseworthy”.[2:267]
Traditionally Zakah is paid during the month of Ramadan. However, payment of Zakah in the months of November and December is recommended so that you can claim a Tax Deduction in the same year. You can establish your own financial year for the purposes of Zakah and make the payment in the month following the end of the year. Zakah not paid in the past also remains payable. Any Muslim who has not paid Zakah on Zakatable assets in the past should pay now. In the terminology of Islamic Law this payment for the past would be "ada" (valid discharge of obligation) and not just "ghada" (defective but obligatory discharge).
Unlike other kinds of property, Zakah on crops and fruits does not become due after the lapse of a full year since reaching the Nisab. Rather, the determining factor here is the agricultural season and the crop. This is confirmed by the Qur'anic verse,
"But render the dues that are proper on the day that the harvest is gathered."[6:141]
Thus, Zakah will be due on each crop produced by the land at the same year. The time when Zakah on crops and fruits becomes due begins when they are ripe. However, crops and fruits should first be gathered and piled in the threshing floor. Thus in case the yield is wasted before piling, unintentionally or due not to negligence, no Zakah is due on it. Zakah on crops and fruits, however, is due on the owner who sells the ripe yield of his land or gives it in donation or the one who dies after the crops are ripe. But in case the owner dies before the crops are ripe, Zakah will be incumbent on the buyer or the donee or the heir of the owner.
In case someone wants to use the solar year, he can use the solar calendar through raising the percentage of Zakah to 2.577% instead of 2.5% so as to make up for the difference between the two calendars.

ZAKATABLE ITEMS

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Following items, whether personal, trade or real estate are Zakatable according to Islamic Shari'ah. These items must be identified, time of ownership determined and included in the Calculation of Zakah:
A. Cash or cash equivalents; such as, certificates of deposit, promissory notes, traveler checks and other paper money.
B. Pension fund, IRA funds, provident fund, and employer’s profit sharing fund including company contribution to the extant of vested interest.
C. Gold and Silver.
D. Precious metals and Stone which are a part of business inventories.
E. Trade / merchandise inventories.
F. Secured accounts and notes receivables.
G. Marketable securities.
H. Share of stocks, stock options less the furniture and equipment of that company if known.
I. Agriculture products at the time of cultivation.
J. Ranching operation; such as Camels, Cows, Goats etc.
K. Rental Income from real and personal properties.
L. Real estate used in real estate business.
M. Windfalls (unexpected fortunes).
N. Maritime, road and air equipment manufactured for sale.
O. Communication network, Computers and other such equipment manufactured for resale.
P. Patents, Trade marks and other intangibles carrying definite determinable value.

NON-ZAKATABLE ITEMS

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The following items are exempt from Zakah:
The Debtor: Because the debtor is required to honor the obligation of a creditor, the property that he owns does not therefore, warrant the Zakah.
Dimmer property: Dimmer is a property which has slipped out of one's possession with little chance of recovery. Dimmer property is exempt from Zakah according to Abu Hanifah, Abu Yusuf and Mohammad Ibn AL-Hasan, because the condition of productivity is absent. According to Zufar and al-Shafi, however, dimmer property is subject to Zakah for past years; when recovered, because upon its recovery the cause of Zakah, namely a complete Nisab, has come into existence. But, if the property is deliberately hidden or buried, it does not qualify for such exemption.
Property which lacks productivity and is part of necessities of life, and is being actively used even though occasionally during each year are exempt from Zakah. The examples of such items are:
Dwelling houses.
Wearing apparel (excluding gold and silver, irrespective of value).
Household utensils.
Riding animals and vehicles.
Arms kept for use.
Food for self and family use.
Articles of adornment, if not made of gold and silver.
Gems, pearls, rubies, emeralds and the like (if intended for personal use)
Books and tools.
Animals used in cultivation.
Factors of production in business and manufacturing.
Animals of Dairy Farms, (Zakah is on Dairy products).
Decoration pieces irrespective of their value.
Fisheries for hobby not for sale.
Domestic animals i.e. cows, goats, chickens, for household.
Rental houses, shops, warehouses & Rental items i.e. taxi cabs, trucks, buses, furniture etc. (Zakah is on net rental income).
Trust (Waqf-fi-sabeel-lil-Lah) property.
The principle behind the exemption is to avoid hardship on the part of the Muslim to pay Zakah on items which need to meet the daily needs of life as well as items required in trade but not intended for sale or trade. It is interesting to note that the Taxable limit or exemptions as developed in modern theory of taxation is based on this principle.
The property of minors and the insane: The property belonging to minors, the insane and the non-Muslims since they lack respectively maturity, reason and the condition of being Muslims. However, according to Malikies (especially in regards to cattle and crops) and also according to Shafa‘i these properties are subject to Zakah.
Death of the property owner prior to the elapse of a full year without a will directing the settlement of the Zakah from the third of his estate.

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