What exactly is zakat due on?

In a Nutshell: Zakat is a mandatory act of charity that purifies a Muslim's wealth. It is obligatory on specific types of wealth that a Muslim possesses for a full lunar year (Hawl). Table of Contents Introduction Background or Context Evidences What Exactly Is Zakat Due On? Misconceptions about Zakat Objections FAQs Introduction Zakat is one of the Five Pillars of Islam, a cornerstone of Muslim practice alongside the declaration of faith (Shahadah), prayer (Salat), fasting (Sawm) during Ramadan and pilgrimage (Hajj) for those who are able. Fulfilling the obligation of Zakat brings immense spiritual reward and helps establish a just and equitable society. Evidences Quranic Verses "Take alms (Zakat) from their wealth so that you may purify them and sanctify them and invoke Allah for them. Verily, your invocation for them is a mercy (to them). And Allah is All-Hearer, All-Knower."(Quran 9:103) This verse emphasizes the purifying effect of Zakat on wealth and the importance of invoking Allah for those who receive it. "And whatever you give in charity will be returned to you and you will not be wronged."(Quran 30:39) This verse highlights the blessings associated with giving charity, including Zakat. Hadiths The Prophet (saw) said, Zakat is obligatory on eight categories of wealth: gold, silver, camels, cows, sheep, dates, raisins and wheat that reaches the Nisab (minimum threshold). (Sahih al-Bukhari) This Hadith specifies the categories of wealth upon which Zakat is obligator Prophet Muhammad (saw) said, Pay the Zakat of your wealth, for it purifies your wealth and increases your blessings. (Sahih Muslim) This Hadith highlights the dual benefit of Zakat - purification of wealth and an increase in blessings. Scholars' Opinions: Abu Hanifah: Gold, silver, cash, merchandise intended for trade and productive animals are all considered wealth upon which Zakat is obligatory, provided they reach the Nisab and are in the possession of the owner for a full lunar year (Hawl). Ibn Qudamah (Hanbali scholar): The wisdom behind Zakat is immense. It purifies the wealth of the giver, strengthens the bonds of society, helps the poor and needy and brings the giver closer to Allah (swt). What Exactly Is Zakat Due On? Zakat is due on a range of assets that are both possessed for a full lunar year and exceed the Nisab - the minimum threshold of wealth that makes Zakat payable. It's crucial to remember that the types of assets subject to Zakat extend beyond currency and precious metals. Let's break down the key categories: Cash and Savings: This encompasses funds that are easily accessible, whether in bank accounts, under personal custody, or loaned to others (if recoverable). Zakat is due on any amount held for a full lunar year that exceeds the Nisab threshold. Business Inventory and Investments: Zakat applies to merchandise intended for sale, as well as investments in stocks, bonds, or other forms of profit-generating assets. Calculations can vary, but the general principle involves considering the market value of these assets at the end of the Zakat year. Gold, Silver and Precious Metals: Muslims must pay Zakat on gold, silver and other precious metals if they possess them in quantities exceeding the Nisab threshold, regardless of whether they are intended for personal use or investment. Livestock and Agricultural Produce: Traditional categories of livestock, such as camels, cows, sheep and goats, are subject to Zakat when their numbers meet certain thresholds defined in Islamic law. Similarly, Zakat is due on agricultural produce like grains, fruits and vegetables if they exceed specific Nisab quantities. Debts Receivable vs. Debts Payable: Debts receivable (money that others owe you) are generally Zakat-obligatory if there is a reasonable expectation of repayment. Conversely, debts payable (money you owe to others) can potentially offset your Zakat obligations. The details of debt-related calculations can be complex. It's essential not to conflate personal possessions with assets that generate income or have the capacity to do so. While clothing, a vehicle for personal use, or your primary residence are exempt from Zakat, other wealth like rental properties or unused land may very well be subject to it. Conclusion Zakat occupies a central role in Islam, encompassing the concepts of purification, gratitude and social justice. Understanding what assets are subject to Zakat is a critical step in fulfilling this religious obligation correctly. It's crucial to recognize the complexity of Zakat calculations and consult with knowledgeable scholars or reputable Zakat calculation resources to ensure you're accurately determining your Zakat due.