Zakah must be paid on rental income. Zakah is only payable on the rental income of properties that are owned by Muslims. If both a Muslim and a non-Muslim own a property, only the Muslim's portion of the rental income is subject to Zakah. Rental income from the properties that were acquired through financing or any other credit facilities not subject to zakah.
Applied Conditions
1. Muslim.
2. Full ownership.
3. Asset was bought for the purpose of renting out or leasing.
4. Renting or leasing must be for permissible purposes.
5. Haul is completed.
6. Nisab is reached.
The Zakah Calculation Formula
2.5% x [Total Rental Revenue - Rental Expenses - Current Liabilities] x Percentage of Muslim Ownership
Steps in Calculating Zakah on Rental Income
1. Determine the completed Haul for rental or leasing operations (closing fiscal year of a business operation). Haul can be determined either using the Islamic Hijri year or the solar year (Gregorian calendar).
2. Determine the percentage of ownership the Muslim has in the property or properties.
3. Determine the total rental revenue at the end of the haul.
4. Determine all the relevant rental expenses incurred during the haul. This includes the maintenance, refurbishment and repairing costs or any other related expenses.
5.
Deduct the relevant rental expenses from the total rental revenue for the year.
6.
Deduct the current liabilities i.e. current creditors, any amount credited (owing) to suppliers, etc.
7. Add the net amount of (6) with all the cash or cash equivalent of the property owner that is not directly related to the operation of renting or leasing.
8.
Multiply the total amount of (7) with the percentage of Muslim ownership to determine the zakah base.
9.
Compare the zakah base with the nisab (85gm of gold). If the base exceeds the nisab, multiply it by 2.5% (0.025) if the haul is based on the Islamic year or 2.5775% (0.025775) if it is based on the solar year.
In this context, personal income refers to the salary/wages, commissions, allowances, bonuses and monetary gifts earned by a zakah payer through permissible (halal) activities.
Applied Conditions
1. Muslim.
2. Fully entitled to the income.
3. Income must be derived from permissible (halal) activities.
4. Income must be in the form of cash or cash equivalent.
5. Benefits or perks are excluded in the calculation of zakah.
6. Haul is completed.
7. Nisab is reached.
The Zakah Calculation Formula
2.5% x [Total Salary for the Year + Any Other Income - Allowable Expenses]
Steps in Calculating Zakah on Income
1. Determine the completed haul for employment. Haul can be determined either by using the Islamic Hijri year or the solar year (Gregorian calendar).
5.
Deduct all the payments made to repay debts or personal financial loans.
6.
Compare the zakah base (the net amount) with nisab (85gm of gold). If the base exceeds the nisab, multiply it by 2.5% (0.025) if the haul is based on the Islamic Hijri year or 2.5775% (0.025775) if it is based on the solar year.
*** In the case of zakah on personal income, if the differences between calculation in using the Islamic and the solar year is immaterial (too small), zakah can be paid by multiplying the zakah base by 2.5% regardless of any type of basis year applied.
Savings consist of money that is kept in a bank's fixed deposit, current, personal or other type of savings accounts. Cash that is lent or saved elsewhere mustalso be included for the purpose of calculating zakah. Zakah is calculated on the lowest amount that is available in a person's savings for the year. As a prerequisite that amount must exceed the nisab.
Applied Conditions
1. Muslim.
2. Full ownership.
3. Haul is completed.
4. Nisab is reached.
The Zakah Calculation Formula
2.5% x [Total Lowest Annual Savings in Bank + Cash Saved or Lent Elsewhere]
Steps in Calculating Zakah on Savings
1. Determine the completed haul for savings. Haul can be determined either by using the Islamic Hijri year or the solar year (Gregorian calendar).
2. Determine the lowest annual balance on Bank accounts for the year.
3. Add any other savings such as cash saved or lent elsewhere.
4.
Compare the zakah base (the net amount) with the nisab (85gm of gold). If the base exceeds the nisab, multiply it by 2.5% (0.025) if the haul is based on the Islamic Hijri year or 2.5775% (0.025775) if it is based on the solar year.
*** In the case of zakah on personal savings, if the differences between calculation in using the Islamic and solar year is immaterial (too small), zakah can be paid by multiplying zakah base by 2.5% regardless of any type of basis year applied.
Zakah is payable upon gold or silver which is bought solely for the purpose of investment. Jewelry and ornaments are usually excluded from zakah unless they are kept unused for one full year.
Applied Conditions
1. Muslim.
2. Full ownership.
3. Asset was bought for the purpose of investment.
4. Haul is completed.
5. Nisab is reached. (Nisab for gold is 85gm while the nisab for silver is 595gm)
The Zakah Calculation Formula
2.5% x [Value of Gold + Value of Silver]
Steps in Calculating Zakah on Gold and Silver
1. Determine the completed haul. Haul can be determined either by using the Islamic Hijri year or the solar year (Gregorian calendar).
2. Determine the weight of each gold and silver product.
3. Determine the current market value of gold and silver as the products reach the completion of haul.
4.
Compare the weight of gold and silver with the nisab. If the weight exceeds the nisab, multiply it with the current market value of the respective assets to get the zakah base. Multiply the zakah base by 2.5% (0.025) if the haul is based on the Islamic Hijri year or 2.5775% (0.025775) if it is based on the solar year.
Shares in this context refers to money invested in companies or businesses. The amount of zakah payable will be derived from the current market value of the shares at the completion date of the haul and must exceed nisab. If the shares are sold before the completion of the haul, then no zakah is due. However, in the case of more than one portfolio of shares, which were purchased at different times, the determination of haul must be calculated separately.
Applied Conditions
1. Muslim.
2. Full ownership.
3. Haul is completed.
4. Nisab is reached.
The Zakah Calculation Formula
2.5% x [Market Value of Shares]
Steps in Calculating Zakah on Shares
1. Determine the completed haul for shares. Haul can be determined either by using the Islamic Hijri year or the solar year (Gregorian calendar).
2. Determine the current market value of shares on the completion of haul.
3.
Deduct the amount borrowed (if any) for the purchase of the shares.
4.
Compare the current market value of shares with nisab (85gm of gold). If the price exceeds the nisab, multiply the zakah base by 2.5% (0.025) if the haul is based on the Islamic Hijri year or 2.5775% (0.025775) if it is based on the solar year.
Applied Conditions
1. Muslim.
2. Full ownership.
3. Haul is completed.
4. Nisab is reached.
5. Nisab on Livestock is fixed on each category of animals.
The Zakah Basis Type of Animal
No. of Animal Owned
Amount for Zakah
1. Muslim.
2. Full ownership.
3. Haul is completed.
4. Nisab is reached.
5. Only wheat, barley, raisins, paddy and dates are included; not fruits, vegetables, onions, etc.
The Zakah Basis
The rates are five percent (5%) on irrigated and ten percent (10%) on rain, river or spring-watered crops. Both calculations take place upon harvesting.
What Is Sadaqah?
Sadaqah is a voluntary act of giving alms 'fi sabillilah' (for the cause of Allah), by Muslims who want to contribute more than their obligatory zakah payment. Sadaqah may be given to mark or bring blessings to occasions such as weddings, anniversaries, personal success or even instances of sadness or bereavement. In short, sadaqah can be given during any period of happiness or sadness or as a sign of gratitude to Allah Subhanu wa Ta'ala.
In a Hadeeth Narrated Ibn Masud: I heard the Prophet (S.A.W.) saying, "There is no envy except in two: a person whom Allah has given wealth and he spends it in the right way, and a person whom Allah has given wisdom (i.e. religious knowledge) and he gives his decisions accordingly and teaches it to others."
In another Hadeeth: The Prophet (S.A.W.) said: 'Charity is a necessity for every Muslim'. He was then asked: 'What if a person has nothing?' The Prophet replied: 'He should work with his own hands for his benefit and then give something out of such earnings in charity.' The Companions asked: 'What if he is not able to work?' The Prophetsaid: 'He should help poor and needy persons'. The Companions further asked 'What if he cannot do even that?' The Prophetsaid 'He should urge others to do good'. The Companions said 'What if he lacks that also?' The Prophetsaid 'He should check himself from doing evil. That is also charity'.
Literally, qurban is an Arabic word which means sacrifice. In other parts of the world, qurban is also known as qurbani. In Islam, qurbani/qurban is an act of worship performed by Muslims on specific days (10th, 11th or 12th of Thul hijjah in the Islamic calendar) whereby livestock are slaughtered and distributed for consumption to the poor, and friends and relatives of the performer.
Basic conditions of slaughtering during Qurban
1.
The slaughtering process must be carried out in accordance to the Shari'ah.
2.
The animal should only be slaughtered with a sharp knife or object. It is not permissible to use guns, electronic shock or carbon dioxide gas in the slaughtering process.
3.
The animal should be laid on its left side with its face pointing towards the Qibla and slaughtered quickly.
4.
Before the animal is slaughtered, "Bismillah" (in the name of Allah) must be recited.
5.
When slaughtering, at least three of the four veins in the throat of the animal must be cut.
6.
The animal must be completely dead (or cold) before it can be skinned and cut into pieces.
7.
The following animals can be slaughtered for qurbani:
a. Goats, either male or female, that are at least one year of age.
b. Sheep, either male or female, that are at least six months of age.
c. Cows, oxen, buffaloes that are at least two years of age.
d. Camels, male or female, that are at least five years of age.
8.
A person can offer either one goat or sheep, or one seventh of a cow, buffalo or camel as qurbani, i.e. 7 people can agree to offer a cow, buffalo or camel between them.
9.
Animals that are impaired (i.e. blind or crippled) cannot be slaughtered for qurbani.
10. Qurbani can only be carried out during the period of qurbani (i.e. during the three days of Eid Adha - 10th, 11th and 12th of Zulhijjah). Animals that are sacrificed outside this period will not be considered as qurbani.
