Monday, April 18, 2016

Zakat Calculations

 According to Islamic Law…

The Islamic Dinar is a specific weight of 22k gold (917.) equivalent to 4.25 grams, and Dirham is a specific weight of pure silver equivalent to 2.975 grams.


Umar Ibn al-Khattab established the known standard relationship between them based on their weights: “7 dinars must be equivalent to 10 dirhams”.

“The Revelation undertook to mention them and attached many judgements to them, for example Zakat, Marriage and Hudud etc., therefore within the Revelation they have  a reality and specific measure for assessment [of Zakat, etc.] upon which its judgement may be based rather than on the non-shari’i coins”.

Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari’ah is that of which ten weigh seven mithqals [weight of the dinar] of gold… The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus. Ibn Khaldum, Al-Muqaddimah.

Zakat
The literal meaning of Zakat is ‘to cleanse’ or ‘purification’. In the Islamic faith, Zakat means purifying your wealth for the will of Allah SWT; to acknowledge that everything we own belongs to Allah SWT and to work towards the betterment of the Muslim Ummah. According to Islamic regulations, Zakat is 2.5% of one year’s total cumulative wealth. This amount is then distributed to the poor. Prophet Mohammad (PBUH) has said “Whoever pays the zakat on his wealth will have its evil removed from him”

Sayyidina Ali ibn Abi Talib (karam-Allah Wajhu) reported that Rasul-Allah (sallallahu alaihi wasallam) said: “There is nothing due upon you in gold, until it reaches twenty dinars. Thus, if you have twenty dinars at the end of the lunar year, then there is half a dinar levied on it [as Zakat] and if you have two hundred dirhams and a year passes, then five dirhams are due upon it. Any additional amount will be calculated in this manner. There is no Zakat on property until it has been owned for one year.” (Hadith related by Ahmad, Abu Dawud, and al-Baihaqi).

0.5 dinar / 20 dinars = 0.5/20 * 100 = 2.5%

5 dirhams / 200 dirhams = 5/200 * 100 = 2.5%

Nisab
To be liable for zakat, one’s wealth must amount to more than a threshold figure, termed the “nisab”.

Nisab for Zakat (according to Dinar & Dirham concept)
Gold
20 Dinars (20 * 4.25) = 85 grams (85 / 28.3495231) = 2.99828 Oz = 3 Oz
85 * 3,884/- = Rs. 330,140/- (as of April 18, 2016)
Silver
200 Dirhams (200 * 2.975) = 595 grams (595 / 28.3495231) = 20.9880 Oz = 21 Oz
595 * 57/- = Rs. 33,915/- (as of April 18, 2016)
Cash
equivalent to gold or silver whichever is less

Nisab for Zakat (according to tola concept)
Early dinars were struck of 4.4 grams of gold and 20 dinars equals to approx. 7.5 Tola, and early dirhams were struck of 3.0615 grams of silver and 200 dirhams equals to approx. 52.5 Tola.

Gold
7.5 Tola (7.5 * 11.6638038) = 87.47 grams (87.47 / 28.3495231) = 3.08 Oz
87.47 * 3,884/- = Rs. 339,734/- (as of April 18, 2016)
Silver
52.5 Tola (52.5 * 11.6638038) = 612.35 grams (612.35 / 28.3495231) = 21.60 Oz
612.35 * 57/- = Rs. 34,904/- (as of April 18, 2016)
Cash
equivalent to gold or silver whichever is less


Notes
1 Oz = 28.3495231 grams
1 Tola = 11.6638038 grams