ZAKAT

SIMPLIFIED

CA Abdul Rahim
Ramadan 1442 (April 2021)
Subscribe for our Videos at bit.ly/ssavideos Kolkata, India
Today’s agenda
• Basics of Zakat
• Zakatable Assets?
• Valua3on of Zakatable Assets
• Case Study of Zakat Valua3on
• Zakat Payable by Whom?
• How to pay Zakat
• Who is Eligible to Receive Zakat?
• The Spirit of Giving
• Making Zakat More Effec3ve
Zakat Simplified Workshop
Basics of Zakat
The Wisdom of Zakat
•Purity
• In Wealth and Heart (Detachment)
•Balances Inequity
• In Society through Wealth Transfer
•Brotherhood
• Feeling of being part of one Ummah
•Best investment
• For Allah will give many times its reward
Zakat Simplified Workshop
CONCEPTUAL CLARITY OF ZAKAT

Annual
Income
Every year we earn
some income and incur
Minus: Expenses some expense. What
remains after that is
our Annual Saving.
Annual
Saving
Zakat Simplified Workshop
CONCEPTUAL CLARITY OF ZAKAT

Total
Wealth /
e / Assets
r
Sto vest
In Zakat-
able
Assets

Annual Savings of Various years are

stored or Invested in various forms.
These become our Wealth / Assets.
Annual Savings Of these, only a few are ‘Zakatable’
of Various Years i.e. Zakat is to be paid on them.
Zakat Simplified Workshop
CONCEPTUAL CLARITY OF ZAKAT

CHECK IF…
Zakat-
NISAAB able
Assets

Calculate the value of your Zakatable Assets. If

they Exceed the threshold (Nisaab), then only
you are required to pay Zakat.

Zakat Simplified Workshop

CONCEPTUAL CLARITY OF ZAKAT
CHECK IF…
Zakat-
NISAAB able
Assets
If your Zakatable Assets are more
than the threshold (Nisaab), pay If Yes
2.5% of the Zakatable Assets as Zakat@
Zakat. 2.5% of
Zakatable
Assets

Zakat Simplified Workshop

• Zakat = (Minimum) Obligatory
Charity
• Paid Annually (every lunar
year, not solar year)
• On few owned asset items
Some Basics (Zakatable Assets)
• Valued as per market price
(revalued every year)
• Can be given to specified
people only
• Err on the side of safety
Zakat Simplified Workshop
Zakatable
Assets
Zakatable Assets – Only 6 Categories!

Gold & Silver Cash & Equivalent Trade Stock

Livestock Agriculture Produce Buried Treasure /

Mines
Since Livestock, Agriculture and Treasure / Mines are generally not
found in cities, we limit this presentation to the first 3 items.
Zakat Simplified Workshop
Zakat on Gold
& Silver
Zakat on Gold &
Silver
• Payable on ALL Gold & Silver
owned (in use, not in use,
decorative etc.)
• Rate will be as on date of
Valuation, in city where asset is
• In case trader in Gold & Silver,
Zakatable but as ‘Trading Stock’
– no double zakat
Zakat Simplified Workshop
Calculating Zakat on
Jewellery
• Calculation based on
weight
• Exclude weight of
diamonds, pearls, precious
stones, platinum, Rubies
etc.

Zakat Simplified
ValuaDon of Gold & Silver
• Take Value of 24 carat Gold (per gram)
• Value of 22 carat gold is 22/24 of 24
carat value
• Value of 18 carat gold is 18/24 of 24
carat value
• Ignore workmanship, design costs etc.
• Silver take rate per Kg (as available in
market)
• Apply to all silver assets
• Ignore other costs such as design etc.
Zakat Simplified Workshop
Gold (24 Carat) Gold (22 Carat)
Gold and per gram: per gram:
Silver Rates Rs.4,800 Rs.4,400
on 1 Ramadan
1442 AH in
Gold (18 Carat)
India (14 April per gram: Silver per Kg:
2021) Rs.3,600 Rs. 68,500

Zakat Simplified Workshop

Zakat on Cash
& Equivalents
Include all Cash and
Bank Balances
• Cash (even if separated for Haj etc)
• Bank Balance – Current Account
• Bank Balance – Savings Account
• Exclude Interest
• Bank Balance – Overdraft (Loan) Account
• If balance positive, include
• If negative (i.e. loan taken), minus as
payable
• Fixed Deposit / Recurring Deposit
• Include principal (not interest)
• Wallets (Paytm / JioMoney)
Zakat Simplified Workshop
Treatment of
Debtors (Receivable)
• All Debtors (Amounts due and Loans Given)
are to be included as Zakatable Assets
• Advance for Flat also (until flat transferred)
• If amount is not recoverable
• If sure of non recovery (written off),
need not include
• If recovered later, pay Zakat in the year
of recovery.
• If amount is doubtful of recovery
• Zakat is payable every year, but can be
deferred until amount is received.
Zakat Simplified Workshop
Treatment of
Insurance / LIC / PF
• Your amount kept with them is
Zakatable
• Employer’s contribution in PF is
also your right, so to be
included
• Any INTEREST included /
accumulated is NOT to be
included
• If any (halal) DIVIDEND is there,
it should be added
Zakat Simplified Workshop
Treatment of
Creditors (Payable)
• Creditors to be deducted
• Reduce all business creditors that
remain, at end of year
• Loans to be deducted
• Loans for business / stock in trade to
be deducted
• Loan for Fixed Assets (such as home /
factory / shop)
• Better not to deduct - as such assets are
not Zakatable

Zakat Simplified Workshop

Zakat on
Trade Stock
What is Trade Stock
• Covers ANY item kept for resale
• Even a Flat if bought intending to
sell it
• Even a car if you are a car dealer
• Covers shares, Mutual Funds etc.
• Depends on initial Niyah when
purchased
Zakat Simplified Workshop
Zakat on Trade Stock
• Covers Raw material, Work in Progress
Stock, Finished Goods, Trading stock
• Tools of trade / machines not covered
• Shops / offices / factories not covered
• Damaged, Obsolete, Dead Stock
• To be included if can be sold
• Stock in Transit – to be included if FOB,
not if CNF
• My Stock in Other’s Godown - Include
• Other’s Stock in my godown (ex. Agent)
– Not to Include Zakat Simplified Workshop
Valuation of Trade
Stock for Zakat
• Normal Goods
• Value as per market rate
• For Raw material, will be cost price
• Can use bulk / wholesale rate
• Damaged / Obsolete / Dead goods
• At (discounted) market rate
• May need to stop inventory
transac\ons for some \me to
determine balance for Zakat
Zakat Simplified Workshop
Zakat on Shares and
Debentures (Trade Stock)
• Public Listed Shares
• Value as per Market Rate (BSE / NSE)
• Unlisted / Private Shares
• If company managed by you, treat as
separate unit and pay Zakat on it fully
• If not your own company
• Value from last available account
• 2 options – take all assets or only
Zakatable Assets
Zakat Simplified Workshop
Zakat on
Businesses
Zakat on Sole
Proprietorship
• Since Sole Proprietorship /
One Person Company
(OPC) means only one
person is the owner,
iden3fy all Zakatable assets
of sole proprietorship and
include in your own Zakat
Calcula3on under
appropriate heads.

Zakat Simplified Workshop

Zakat on Partnership
Firm
• Calculate value of Zakatable Assets (Gold,
Silver, Cash equivalents and Stocks) held
by partnership firm / LLP
• Identify firm’s liabilities which are eligible
to be deducted
• Arrive at Zakatable Value
• If all partners are Muslims
• Pay 2.5% of this value as Zakat
• If all partners are not Muslims
• Calculate and pay proportionate share
Zakat Simplified Workshop
Zakat on Private
Company
• Calculate value of Zakatable Assets (Gold,
Silver, Cash equivalents and Stocks) held
by the Company
• Identify company’s liabilities which are
eligible to be deducted
• Arrive at Zakatable Value
• If all shareholders are Muslims
• Pay 2.5% of this value as Zakat
• If all shareholder are not Muslims
• Calculate and pay proportionate share
Zakat Simplified Workshop
Some
Examples...
My Factory
(Asset)
- NOT
ZAKATABLE

But Trade Stock

Remaining on date
will be included
Zakat Simplified Workshop
My
showroom
(Asset)
- NOT
ZAKATABLE

But Trade Stock on

date of Calculation
will be included
Zakat Simplified Workshop
My Home
(Asset)
- NOT
ZAKATABLE

Zakat Simplified Workshop

My Farms
(Asset)
- NOT
ZAKATABLE

But Ushr needs to

be paid on it’s
agricultural
production
Zakat Simplified Workshop
Additional
house
(Asset)
- NOT
ZAKATABLE

Since House does not

fall in either of the 6
‘Zakatable Asset’
categories.
Number of Houses
Zakat Simplified Workshop
does not matter.
My home items above -
NOT ZAKATABLE
Since these items do not fall in either of the
6 ‘Zakatable Asset’ categories. Their value or
use does not matter.
Zakat Simplified Workshop
Zakat Payable
by Whom?
Conditions for Zakat
• Muslim
• Baligh (i.e. Adult)
• Aaqil (i.e. of sound mind)
• Owner & Possessor of the
Property
• Completion of one lunar
year (called Haul)
• Sahib-e- NIsaab
Zakat Simplified Workshop
Sahib-e-Nisaab
A person who has atleast
• Gold – 87.48 grams (7.5 Tola) or
• Silver – 612.32 grams (52.5 Tola) or
• Cash or Trade Stock equivalent or
• Any combination of these
Nisaab (14 April 2021, India)
Based on Silver ~ INR 41,900 approx
Based on Gold ~ INR 4,19,900 approx
It is recommended to pay Zakat if you are eligible by the
lower of these 2 thresholds (Nisaab)
Zakat Simplified Workshop
Sahib e Nisaab

If

Is More Than Rs. 41,900*

Then Pay Zakaat @ 2.5% of TOTAL VALUE

Zakat Simplified Workshop * Considering Silver Nisaab

If your Zakatable assets are above Nisaab for full year,
pay Zakat on Zakatable Assets at year end (red column
– 12th month).

Zakat
Payable
Net Zakatable on
Assets

Nisaab

Lunar Month 1 2 3 4 5 6 7 8 9 10 11 12

Zakat Simplified Workshop

Zakat
If your Zakatable assets are above Nisaab for full year, pay Payable
Zakat on Zakatable Assets at year end (red column – 12th on
month) even if there is an extra asset at end of year

Net Zakatable
Assets

Nisaab

Lunar Month 1 2 3 4 5 6 7 8 9 10 11 12

Zakat Simplified Workshop

If your Zakatable assets are above Nisaab for full year, pay
Zakat on Zakatable Assets at year end (red column – 12th
month) even if it is lower than during the whole year.

Zakat
Payable
Net Zakatable on
Assets

Nisaab

Lunar Month 1 2 3 4 5 6 7 8 9 10 11 12

Zakat Simplified Workshop

What to do with
Interest?
• Better not to deal with interest.
• If, even then, have interest receipt:
• Take it out from your bank account
• Don’t use it for religious activities
• Give it away for charitable
activities (without expectation of
reward)
• Use it for activities like toilets
construction, public cleaning etc.
Zakat Simplified Workshop
How to Pay
Zakat
Hurry to pay Zakat
• Once liability of Zakat is
ascertained, it is the duty of the
owner of the asset to pay Zakat
immediately.
• Someone else (like husband on
behalf of wife) can pay, if asked /
permitted by wife.
• Better to encourage them to pay on
their own
• Not having liquid assets is NOT
permissible excuse.
Zakat Simplified
Paying Zakat
• You can pay your Zakat
• In Cash
• By Cheque
• In Stock Items
• Damaged / Obsolete Stocks?
• In Asset form
• You can pay your Zakat
• Directly to Beneficiary
• Indirectly through an Agent (ex. NGO)

Zakat Simplified
Who to Pay

The person who is given Zakat Should be :

• ELIGIBLE for Zakat
• Made complete OWNER of amount
• given GRATIS (i.e. Not for work done)
• Given not only in Ramadan; round the
year
If Zakat is given in non-cash form (medicines /
clothes / food), full ownership is must (ex. food
packet instead of invitation to eat)
Zakat Simplified Workshop
Neeyah of Zakat
Intention in Heart is to be made
If Amount Segregated
• At time of segregation
If Payment made directly
• At time of giving to recipient
• After giving - until it is with recipient
If Payment Through Agent
• At time of giving to agent
• After giving - until it is with agent
Zakat Simplified Workshop
Who is Eligible
to receive
Zakat?
WHO IS ELIGIBLE TO RECEIVE ZAKAT?

To determine
Wealth / Assets eligibility for Zakat,
identify the Zakatable
Non- Zakata
Assets and Non-
Essential ble Essential Assets that
Assets Assets
the person has in his
total wealth.

Zakat Simplified Workshop

WHO IS ELIGIBLE TO RECEIVE ZAKAT?

If the value of Non-Essential Items and Zakatable

Assets is less than Nisaab (threshold), then he is
eligible to receive Zakaat.
However, the way to assess this is by ‘Taharri’ i.e. based on our perception of his financial
position, not by an inspection. It is better to have a soft / lenient approach toward this.

Non- Zakata
Essential
Assets
ble
Assets
NISAAB

How to Verify: Taharri

Zakat Simplified Workshop

1. Faqeer: poor; one who has some
money, but not sufficient for his
basic needs
Eligible 2. Miskeen: destitute; one who has
nothing
recipients for 3. Amileen: zakat collector,
Zakat appointed by the Caliph
(hence not applicable these days)
4. Mu'allafah Qulubuhum : to
soften hearts
5. Riqaab: to slaves to purchase
their freedom
Eligible 6. Gharim : one in debt for a
legitimate reason
recipients for 7. Fi Sabeelillah: in the path of Allah
Zakat 8. Ibnis-Sabeel: wayfarer; one
stranded away from home, with
no money available to him
• Relations of birth –
upward and
• Non-Muslims downward
• But we can and • (i.e. mother, father, son,
should give non- daughter, grandfather,
Those who obligatory charity
(Nafil Khairaat) to
grandson etc). Such
people, if needy, should
cannot be deserving be helped, but not from
Zakat.
given Zakat • Employee or • Other relations such as
Labourer, as brother, sister, uncle,
wages daughter-in-law,
mother-in-law can and
• Well-off people can and should be given
Zakat as first priority.

Zakat Simplified Workshop

• Relations of marriage • An organisation /
• Husband and wife institution (except
cannot give Zakat to as agent)
Those who each other but can
give other (non-
• Even NGOs,
hospitals etc. accept
cannot be Zakat) amounts*. Zakat as agents
given Zakat • Children of the family
of Bani Hashim
(Cont’d) • Prophet Muhammad
(SAWS)’s family,
Hazrat Ali (RA)’s
family etc.

* As per Hanafi Fiqh Zakat Simplified Workshop

Zakat Etiquette
• Seek out the deserving
• Give to (permitted)
relatives first
• Give with humility
• Pay in secret, preferably
• Need not explicitly mention
it is Zakat
• Don’t remind them of it
18/04/21
The Spirit of
Giving
Don’t limit your Charity only to
Zakat

Let your hearts be detached from

wealth

Let giving be your way of

invesGng with Allah

Let us acknowledge that all we

have is received from Allah and
to be routed to his creaGon –
through Us!
‫‪Hadith‬‬
‫ﻋﱠز َوَﺟﱠل ﯾَﻘ ُوُل ﯾَْوَم اْﻟِﻘﯾَﺎَﻣِﺔ‪:‬‬ ‫ِإﱠن اﱠ(َ َ‬
‫ف أ َﻋُود َُك‬ ‫ب َﻛْﯾ َ‬ ‫ت ﻓَﻠَْم ﺗ َﻌ ُْدِﻧﻲ ﻗَﺎَل‪ :‬ﯾَﺎ َر ّ ِ‬ ‫ﺿ ُ‬ ‫ﯾَﺎ اْﺑَن آدََم‪َ ،‬ﻣِر ْ‬
‫ﻋْﺑِدي ﻓ َُﻼﻧًﺎ‬ ‫ت أ َﱠن َ‬‫ﻋِﻠْﻣ َ‬‫ب اْﻟﻌَﺎﻟَِﻣﯾَن؟ ﻗَﺎَل‪ :‬أ ََﻣﺎ َ‬ ‫ت َر ﱡ‬ ‫َوأ َْﻧ َ‬
‫ت أ َﻧﱠَك ﻟَْو ﻋُْدﺗ َﮫ ُ ﻟََوَﺟْدﺗ َِﻧﻲ ِﻋْﻧدَه ُ‪.‬‬ ‫ﻋِﻠْﻣ َ‬‫ض ﻓَﻠَْم ﺗ َﻌ ُْده ُ؟ أ ََﻣﺎ َ‬ ‫َﻣِر َ‬
‫ف‬‫ب َوَﻛْﯾ َ‬ ‫طِﻌْﻣِﻧﻲ‪ ،‬ﻗَﺎَل‪ :‬ﯾَﺎ َر ّ ِ‬ ‫طﻌَْﻣﺗ َُك ﻓَﻠَْم ﺗ ُ ْ‬ ‫ﯾَﺎ اْﺑَن آدََم‪ :‬اْﺳﺗ َ ْ‬
‫ت أ َﻧﱠﮫ ُ‬‫ﻋِﻠْﻣ َ‬ ‫ب اْﻟﻌَﺎﻟَِﻣﯾَن؟ ﻗَﺎَل‪ :‬أ ََﻣﺎ َ‬ ‫ت َر ﱡ‬ ‫طِﻌُﻣَك َوأ َْﻧ َ‬ ‫أُ ْ‬
‫ت أ َﻧﱠَك ﻟَْو‬ ‫ﻋِﻠْﻣ َ‬ ‫طِﻌْﻣﮫ ُ؟ أ ََﻣﺎ َ‬ ‫ﻋْﺑِدي ﻓ َُﻼٌن ﻓَﻠَْم ﺗ ُ ْ‬ ‫طﻌََﻣَك َ‬ ‫اْﺳﺗ َ ْ‬
‫ت ذَِﻟَك ِﻋْﻧِدي‪.‬‬ ‫طﻌَْﻣﺗ َﮫ ُ ﻟََوَﺟْد َ‬ ‫أَ ْ‬
‫ب َﻛْﯾ َ‬
‫ف‬ ‫ﯾَﺎ اْﺑَن آدََم‪ :‬اْﺳﺗ َْﺳﻘَْﯾﺗ َُك ﻓَﻠَْم ﺗ َْﺳِﻘﻧِﻲ‪ ،‬ﻗَﺎَل‪ :‬ﯾَﺎ َر ّ ِ‬
‫ﻋْﺑِدي ﻓ َُﻼٌن ﻓَﻠَْم‬ ‫ب اْﻟﻌَﺎﻟَِﻣﯾَن؟ ﻗَﺎَل اْﺳﺗ َْﺳﻘَﺎَك َ‬ ‫ت َر ﱡ‬ ‫أ َْﺳِﻘﯾَك َوأ َْﻧ َ‬
‫ت ذَِﻟَك ِﻋْﻧِدي"‬ ‫ﺗ َْﺳِﻘِﮫ‪ ،‬أ ََﻣﺎ ِإﻧﱠَك ﻟَْو َ‬
‫ﺳﻘَْﯾﺗ َﮫ ُ ﻟََوَﺟْد َ‬
‫ر و اه ﻣ ﺳ ﻠم‬
Hadith
• Prophet(S) said: On the day of judgement Allah
shall ask a person
• 1- I fell ill and you visited Me not…
• 2- I asked you for food and you did not feed me….
• 3-I asked you for water to drink and you did not
bring me the water…
• After each one, the person will say He will say: O
Lord, and how could you be (ill / hungry / thirsty)
for You are the Lord of the worlds?
• He will say: Did you not know that My servant
<So-and-so> was (ill / hungry / thirsty) and you
served him not?
• Did you not know that had you served him you
would have found Me with him? (MUSLIM)
Making Zakat
More Effective
It doesn’t maCer
how many
resources WE
have..

ITS THEIR USE THAT

MATTERS
Objective:
Effective
‘Serve Deen and
Zakat raise poor to
Sahib e Nisaab’
Zakat Simplified Workshop 18/04/21
•The framework ... of
Zakat demonstrates
that it is intended to
be a systematic
institution rather
than simply a
personal act of
charity.
(1) Pooling funds
• To make the initiative worthwhile

3 qualities of (2) Focusing locally

effective • Identifying needy people
Zakat • Linking local Zakat-givers
(3) Balancing distribution
• To different categories of people
The Axe Effect!
A man from the Ansar came to the Prophet, peace and He sold them for two coins and the Prophet said, “Buy
blessings be upon him, and begged from him. The food with one of them and give it to your family. Buy
Prophet said, “Have you nothing in your house?” an axe and bring it to me.”
The man said, “Yes, a piece of cloth, a part of which we The man brought it to him. The Prophet fixed a handle
wear and a part of which we spread on the ground, and on it with his own hands and he said, “Go gather
a wooden bowl from which we drink water.” firewood and sell it, and do not let me see you for a
fortnight.”
The Prophet said, “Bring them to me.”
The man brought these articles to him and the Prophet The man went away and gathered firewood and sold it.
When he had earned ten coins, he came and bought a
took them in his hands and he said, “Who will buy
these?” garment and food.
The Prophet said, “This is be@er for you than for
Someone said, “I will buy them for one coin.”
begging to come as a blemish on your face on the Day
The Prophet said twice or thrice, “Who will offer more of ResurrecCon. Begging is appropriate only for three
than one coin?” people: one in severe poverty, one in severe debt, and
Someone said, “I will buy them for two coins.” one who must pay a difficult compensaCon.”

(Sunan Abu Dawud 1641)

A. Basic Support

• Those who have no other means of

income and future possibility – ex.
Divide disabled, old etc.)

Recipients B. Educational Support

into 3 • Where there is someone who can study
Categories and develop skills

C. Entrepreneurship Support

• Where there is a person in the family who

can start a venture – train and support
Example - Zakat models in Bangladesh
Form Recipient Use for
Cattle Distribution Abject poor, Disabled, Widow, Seed Money
aged
Rickshaw Distribution Capable Male Poor Seed Money
Sewing Machine Distribution Widow, Poor Female Seed Money
Clothes, Food stuff Distribution Abject poor, Disabled, Widow, Spent Money
aged
Provide Tailoring Training Widow, Poor Female Seed Money
Money for doing business Poor Seed Money
Distribution of agricultural Poor Seed Money
material to farmers
Scholarship to Students Poor students Seed Money
(indirectly)
Set up a Zakat Circle in each locality / Masjid
Connect with Zakat Givers in the locality
Identify Zakat Eligible persons (especially those who do not ask)
Categorise them into A, B and C categories
Prioritise Zakat to A) regularly B) for education C) for livelihood
Don’t limit Zakat to money - give your 3me, skills, knowledge too!

Possible Model for Effective Zakat

SSA’s ZAKAT HELPLINE 2021
• Answers Queries on Zakaat
• Assistance in Valuation of Zakatable Assets
• Assistance in Calculation of Zakat Payable
• Till end of Ramadan 1442
CALL / WHATSAPP SIRRI SAQTI ACADEMY’s
ZAKAT HELPLINE
9432671659
Zakat Simplified
Jazak Allah
Your comments and suggestions are welcome at
[email protected]
Or Whatsapp +91-8444057949
CA ABDUL RAHIM
VIDEO OF THIS
PRESENTATION
(2020) Available at
bit.ly/ssavideos
Zakat Simplified Workshop