Zakat, an Islamic practice initiated in Islamthat changed the view of wealth and assets management since then. It is the source of wealth purification in terms of justified distribution of money to the needy ones and defined beneficiaries to be paid every year.
This concept is well understood by western world as well and so the idea of Corporate Social Responsibility (CSR) aroused. The theory revolves around the same belief, which is the growth and progress of individuals, nation and state; well-being of state where there is peace, harmony and philanthropic element is promoted.
Zakat Rules is another important aspect to be familiar with as it gives the holistic view and answers the many important queries.
This is very clear that zakat is compulsory in nine things:
- Grapes (raisins)
There are several terms and conditions related to Zakat calculation that are mandatory to be followed by any individual. Next, we see how Zakat is calculated.
How do we calculate our Zakat?
Zakat Calculator is the first and foremost approach to fathom the threshold of zakat. This threshold is called the Nisab. Zakat Nisab for 2017 has been declared at Rs. 38,406 by government of Pakistan which is equal to 85 grams of gold, whereas it is applicable at 2.5% of the wealth which one possesses above nisab.
Nisab is calculated by the market price of gold or silver of that point in time. The cash equivalent to 3 ounces of gold and 21 ounces of silver is actually nisab. Below is the mathematical calculation for calculating nisab:
1 ounce of silver=x
(x * 21ounces)= Rs.y
Next, start calculating your assets and possessions, which will tell you the amount of zakat payments.
Zakat Payments Terms & Conditions:
Once, you have calculated the amount of charity that you need to pay your zakat from your halal income so the next questions that roll up are when to pay (the time frame; which part of the year), where to pay and how to pay.
Zakat is an annual obligation so the cycle of zakat must be considered significantly as the time frame is one lunar year. The track record of the date must be kept so as to remember when the cycle is due next year.
Generally, there are some of the ways that people spread their Zakat to the needy:
- Lump Sum Payment During the Month of Ramadan: There is always a connection of Muslims generosity and compassion with the holy month of Ramadan. As it the month of blessings- a spiritual journey, to purify the heart and soul, hence Muslims look forward to giving of alms more as compare to other months. So, you could select a date in the month of Ramadan and donate to needy people.
- Spread It Over The Month of Ramadan: You could also distribute throughout the blessed month in various portions to give across different days, to different people.
- Spread The Payment Over the Year: Sometimes, it may not be possible to give a large sum immediately during the month of Ramadan. You could also phase it out across the entire year by taking out and disbursing your Zakat each month. This will lessen the burden to give out a big chunk on an immediate basis.
Some key tips to note regarding Zakat payments that you should consider as well:
- The government also notifies State Bank of Pakistan to deduct the amounts on value above Rs. 38,406 available in Saving, Profit and Loss sharing or other similar accounts at the rate of 2.5%. However, if you wish that zakat is the amount which you would like to directly donate and needs exemption from this deduction then it is mandatory to submit an affidavit by the account holders of all above mentioned accounts.
- There are many private charitable institutions serving for humanity for instance Shaukat Khanum, Edhi Foundation, etc. where you can donate. If you opt to donate your zakat payments to any institution then there are numerous ways to contribute. In some cases, you can directly make online contributions, at times you can sponsor an orphan, or be part and help the disaster relief programs, or to aid financially the vulnerable communities that lacks in education, deprived of basic necessities of life. Some of these institutions also allow for tax credit so you may want to evaluate this option as well.
- On the contrary, you can also directly aid the water scarce communities by developing efficient systems to provide clean water. You can also build micro-financing ecosystem of any community and utilize your zakat payments as initial seed capital to help them get their earnings. These are few examples where you can use your zakat amount for the year instead of disbursing all at once in any particular month.