The Roles of Zakat
Overview of Zakat
It is also used to fund and support refugees and displaced and other charitable causes.
In addition to fulfilling a religious obligation, paying zakat is also seen as a way to promote social cohesion and strengthen the bonds of the Muslim community.
Difference between Zakat and Sadaqah
Zakat and Sadaqah are two forms of charity that are similar in nature but also have some important differences. Zakat is a mandatory Islamic obligation that requires Muslims to set aside 2.5% of their wealth for charity each year, while Sadaqah is an act of voluntary giving.
The purpose of Zakat is to purify one’s wealth and help the needy, while the purpose of Sadaqah is to foster a spirit of generosity and kindness. Zakat must be given to certain categories of people such as the poor, the destitute, debtors, and those employed to collect Zakat. On the other hand, Sadaqah can be given to anyone in need regardless of their financial situation.
Another difference between Zakat and Sadaqah is that Zakat must be given annually, while Sadaqah can be given at any time or even on a regular basis. Additionally, Zakat must be given in money or its equivalent such as gold or silver, while Sadaqah can be given in various forms such as money, clothes, food, and even kind words.
The Obligated to Pay out Zakat
In order to be eligible to pay zakat, a person must also meet certain other criteria. For example, they must be an adult and must be of sound mind.
In addition, the wealth on which zakat is payable must be in the form of excess savings that are not needed for basic living expenses or business expenses.
Types of Assets That are Subject to Zakat
In Islam, zakat is payable on a variety of assets, including:
Cash: Zakat is payable on cash and other forms of currency, including both physical cash and electronic forms of money such as bank accounts and investments.
Gold and silver: Zakat is payable on gold and silver, either in the form of jewelry or other objects made of these metals, or in the form of gold or silver coins or bars.
Agricultural products: Zakat is payable on agricultural products, such as crops and livestock, that are produced for sale or trade.
Minerals and other natural resources: Zakat is also payable on minerals and other natural resources that are extracted and sold, such as oil, gas, and other minerals.
Business assets: Zakat is payable on the profits and assets of a business, including inventory, equipment, and other assets.
It is important to note that not all assets are subject to zakat. For example, personal possessions such as clothing and household items are generally not subject to zakat. In addition, assets that are needed for basic living expenses or for running a business are generally not subject to zakat.
How to Calculate the Amount of Money Owed in Zakat
To calculate the amount of zakat that is owed, a person must first determine the value of their wealth, including all of their savings, investments, and other assets.
The value of these assets is then calculated in terms of a specific measure of value, such as gold or silver.
For example, the value of one's assets might be calculated in terms of the amount of gold that they would be worth at a given price.
Once the value of a person's assets has been determined, the amount of zakat that is owed can be calculated by multiplying this value by the applicable rate of zakat.
For example, if a person's assets are worth $50,000 and the rate of zakat is 2.5%, the amount of zakat that is owed would be $50,000 x 2.5% = $1,250.
