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24 May 2024 | 15 Zulqaeda 1445

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24 May 2024 | 15 Zulqaeda 1445

5:34 am

Subuh

6:57 am

Syuruk

1:03 pm

Zohor

4:27 pm

Asar

7:08 pm

Maghrib

8:22 pm

Isyak

Types of Wealth Subject to Zakat

Updated: 3 days ago


zakat wealth

In Islam, Zakat is not only a spiritual obligation but also a practical tool designed to ensure economic equity and foster community welfare. This section of our comprehensive guide focuses on the various types of wealth that are subject to Zakat. By understanding which assets are zakatable, Muslims can accurately fulfil their religious duties and contribute effectively to the community's prosperity.


We'll delve into three main categories of wealth—monetary assets, physical assets, and agricultural produce and livestock—explaining the specific Zakat rates applicable to each and providing practical guidance on how to calculate Zakat on these assets.


Monetary Assets

Monetary assets are a primary focus in the calculation of Zakat. This includes all forms of cash, whether held at home or in bank accounts, as well as money lent to others that is expected to be repaid. Investments such as shares, bonds, and mutual funds also fall under this category, provided they are intended for saving or generating income over the threshold of Nisab.


Table 1: Zakat on Monetary Assets

Asset Type

Description

Zakat Rate

Cash

Cash in hand and bank accounts

2.5%

Debts Owed

Money expected to be repaid

2.5%

Investments

Stocks, bonds, mutual funds

2.5%

Physical Assets

Physical assets subject to Zakat include precious metals like gold and silver, regardless of their form—be it jewellery, coins, or bullion. Additionally, business assets such as merchandise intended for sale are zakatable. It is crucial to assess the current market value of these assets at the time of paying Zakat.


Table 2: Zakat on Physical Assets

Asset Type

Description

Zakat Rate

Gold and Silver

Jewellery, coins, bullion

2.5%

Business Goods

Merchandise owned by the business for sale

2.5%

Agricultural Produce and Livestock

Zakat on agricultural produce is calculated based on the quantity of produce at the time of harvest. The rate depends on whether the land is irrigated naturally or through artificial means.


For naturally irrigated land, the Zakat rate is 10%, and for artificially irrigated land, it is 5%. Livestock, including cattle, sheep, and camels, must also be counted if they exceed certain thresholds, with specific rates applied based on the type and number of animals.


Table 3: Zakat on Agricultural Produce and Livestock

Asset Type

Description

Zakat Rate

Agricultural Produce

Crops, fruits, vegetables

5%-10%

Livestock

Cattle, sheep, camels

Variable, per animal

The application of Zakat to various types of wealth underlines the comprehensive nature of this Islamic practice, ensuring that all forms of wealth are utilised to support the societal structure.


Conclusion

As we conclude our exploration of the different types of wealth subject to Zakat, it is clear that this pillar of Islam is designed to address a wide array of economic activities and assets. By encompassing monetary, physical, and agricultural assets, Zakat ensures a holistic approach to wealth redistribution, promoting fairness and preventing the accumulation of wealth in the hands of a few.


This guide has highlighted the specific conditions and rates applicable to various assets, providing you with the tools needed to accurately calculate and contribute your Zakat. It is through such contributions that the Muslim community can support those in need, foster economic balance, and uphold the social fabric that defines it.


We hope this exploration empowers you with a deeper understanding and appreciation of how Zakat functions as an act of faith and a commitment to social justice. Let each contribution you make reinforce the ties of brotherhood and compassion within the community, and may your faithful adherence to this divine commandment bring about spiritual growth and communal prosperity.

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