It is now well recognised that Zakat, the fourth pillar of Islam, is an effective tool to reduce poverty and social discrimination. Being a Muslim-dominated country, the impact of Zakat in the society of Bangladesh is not adequately visible. It thus indicates that the mobilisation of Zakat is not sufficient and efficient. For many eligible Muslims, the principles and rules of Zakat are still not clear. So, they are yet to focus on well-planned and well-targeted payments of Zakat. The government also has no proper policy except a Zakat fund administered by the Islamic Foundation. Thus, a country with around 90 per cent Muslim population is struggling to eradicate poverty when its economy has been growing at a fast rate annually.
As more people become solvent and rich thanks to continued economic growth for the last two decades, the number of eligible Muslim people to pay Zakat has also increased. However, a good number of them are still not adequately aware of the effective distribution of Zakat. That's why a common practice of distributing clothes to poor people during Ramdan in the name of Zakat is still there. Every year, a mad rush to collect a piece of cloth causes loss of many lives.
PRINCIPLES OF ZAKAT: It is necessary to understand the principles and core values of Zakat comprehensively by all Muslims. Zakat is one of the five fundamental pillars of Islam. The five pillars are: Sahadah (Faith), Salah (Prayer), Sawm (Fasting), Zakat (Poor-tax), and Hajj (Pilgrimage). Professor Syed Ali Ashraf, an eminent Islamic scholar and educationist, in his book titled 'Islam' (The Islamic Academy, Cambridge) explained: "A Muslim believes that everything belongs to Allah, and therefore the wealth and property that a person owns must be regarded as a trust (amanah). That is why it is obligatory for all human beings to pay a certain percentage of their wealth at the end of every lunar year to the poor. This obligatory duty is known as Zakat. The Qur'an repeatedly lays stress on Salah and Zakat. The Prophet explained this obligatory duty by saying: 'Allah has made Zakat obligatory simply to purify your remaining property." (P.17).
He also wrote: "The Qur'an lays down the categories of people who should receive Zakat and the Prophet explained the rules of payment regarding different kinds of property. Later, authorities worked on those foundations and formulated rules derived from the practices of the Prophet and of the first four Caliphs. The basic principles of Zakat highlight that wealth must not remain hoarded and should be distributed so that the circulation of wealth takes place. Moreover, the person who pays Zakat is not doing a favour to the poor; on the contrary, by accepting Zakat the poor and the needy are actually bestowing a favour on the rich.
According to the Qur'an, eight-types of people are eligible to receive Zakat. They are: (1) poor (fakr), (2) needy (miskin), (3) those responsible for collecting and dispensing Zakat, (4) rendering services to win over the hearts of the people, (5) for manumitting slaves, (6) for relieving the debtors, (7) in the path of Allah, and (8) for helping the wayfarers. [(Surah Al-Taubah, Verse-60]
In the Islamic system, there are two types of charity. One is Sadaqah or voluntary charity. Another is Zakat or obligatory charity. It is the obligation to those who have adequate wealth and disposable incomes. Being an obligatory duty to all Muslims who are well-off physically, mentally and wealthily, it requires proper calculation to determine the payable amount of Zakat.
CALCULATION OF ZAKAT: The primary condition of eligibility to pay Zakat is possession of minimum surplus wealth at the end of a lunar year, known as Nisab of physical and financial wealth. There are two standards to determine the Nisab. One is gold standard which stipulates possession of at least seven and a half tola or vori (87.50 grams) of gold or equivalent amount of money by a Muslim after dispensing all his/her personal and family necessities and clearing liabilities in a year. Another is silver standard or possession of at least 52.50 tola or vori (613 grams) of silver or equivalent money.
Due to a huge difference in prices of gold and silver, the sliver standard of Nisab provides a very low threshold to make Zakat payment obligatory. For instance, currently, (April 17 price quoted by Bangladesh Jewellers Association) price of per gram 21-karate gold is TK 5,655 or per tola Tk 65,994 (as 11,67 gram makes one tola or vori). For 21-karate silver per gram price is Tk 123 or per tola Tk 1,435. Based on these market rates, seven and a half tola gold price stood at Tk 494,954 and 52 and a half tola silver price at Tk 75,369 (fraction rounded). Anyone will, however, not get the price if he or she wants to sell his or her gold or silver ornaments. Usually, he or she will get 20 per cent less than the quoted market price. So, an individual's sell price of seven and a half tola gold will be Tk 395,963, and the amount is the Nisab for him or her in the gold standard. For 52 and a half tola silver, the selling price or Nisab amount will be Tk 60,287 only. Clearly, it is not logical to follow the silver standard to determine Nisab and pay Zakat accordingly. Islamic scholars and experts have agreed that a Muslim has to follow the gold standard to determine Nisab. In consultation with Islamic scholars, government may announce Nisab as it does in the case of Fitra annually before Eid-ul-Fitr. In Pakistan, every year, the government declares the Nisab amount on the bank and related balances.
To determine Nisab, a Muslims has to calculate the balance of his or her disposable physical and financial assets in monetary terms, preferably at the end of the lunar year or any date Zakat payers wants to do. On the particular date, he or she has to calculate the market value of the balance of all kind of disposable assets and wealth. The balance is simply the difference between annual income and expenditure. It is like preparing a yearly income tax return. Then he or she needs to calculate the monetary value of any debt obligation or other liabilities. By deducting the liabilities from the balance of disposable assets, he or she will get the net balance. If the net balance becomes equivalent to or more than the Nisab amount, he or she has to pay 2.50 per cent Zakat on the net balance.
Thus, the calculation of assets and wealth is critical. To put it simply, all kinds of gold and silver ornaments, all types of bank balances, bonds and financial assets, and rent or income-generating lands, buildings, flats and cars are subject to Zakat. If anyone has a flat and a vehicle for personal and family use, it does not come under Zakat obligation. Nowadays, an online Zakat calculator is available to estimate Nisab and Zakat amount. Some Zakat manuals or calculation guides are also there. Booklets written by different Islamic scholars are also available from where anyone can also get the list of properties and assets under Zakat.
Setting the year is also important. Though the lunar calendar is preferable, there is no bar to estimate Zakat based on prevailing financial or tax year based on the solar calendar. In that case, according to Islamic scholars, the rate of Zakat will be around 2.60 per cent as a solar calendar as there are usually 11 days gap between solar and lunar years. Again, Muslims prefer to pay a significant portion of their due Zakat in Ramadan to help the poor and needy people in the holy month and get more heavenly blessings. So, they can set any date of Ramadan as Nisab day for Zakat calculation. Once set, the exact date has to be followed every year, although Zakat may be paid throughout the year and adjusted in the Nisab day.
COLLECTIVE EFFORT: Mobilisation of Zakat requires a collective effort, although it is an individual obligation. By paying Zakat through different organisations, it can be utilised efficiently. The ultimate objective of Zakat is to reduce poverty and make more people eligible to pay Zakat for social improvement. Zakat needs to be distributed in such a manner so that a Zakat recipient can get rid of unemployment and hunger and become a self-reliant within a short period. Instead of giving small amounts of Zakat money to more people, giving away bigger sums to few people in a planned manner may be more effective in the long run.
Many non-government charitable organisations have been working to collect and distribute Zakat to the poor and the needy. As their activities have been expanding gradually, it becomes easier for many Muslims to pay Zakat. Organisations like Anjuman Mofidul Islam, Centre for Zakat Management, Ahasania Mission, As-Sunnah Foundation, Quantum Foundation are working to collect and distribute Zakat to the needy across the country. Zakat payers also get tax rebates in some cases by paying their Zakat through these charitable organisations. It is important to note that Zakat is not a state tax. Tax paid by any Zakat payer is included in his or her annual spending.
As the second wave of Covid-19 has already hit the country, more people are trapped in poverty and uncertainty. By losing their jobs and works, thousands of people are now struggling for survival. Zakat can contribute significantly to help these people if collected and distributed in a transparent manner.