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Important Questions Relating to Zakat

The concept of Zakat is one of phenomenal significance. It is one of the five pillars of Islam and a mandatory obligation on every Muslim that he or she must pay 2.5% of their total net yearly wealth to those in need. The concept itself is very simple; help the poor. However, there are certain conditions and criteria as to who can donate Zakat as well as who is eligible to receive it. The idea is to ensure the right people give the right amount to right people. What follows is a brief FAQ which highlights the particulars of giving Zakat. 

How is Zakat calculated?

Zakat is payable if your net yearly savings meets or exceeds Nisaab values. This includes any investments, valuable ornaments, cash, and real estate. Keep in mind that that the keyword here is savings; meaning money left over after one has cleared all their responsibilities, past dues and worldly obligations. This is the amount on which Zakat must be paid. 2.5% to be precise.

What Is Nisaab and who determines Nisaab?

 Nisaab values are determined every year by religions institutes and organisations. Because of inflation, the rates have to be adjusted according to the current value of gold and silver. In Islam, the Nisaab amount is 20 dinars for Silver and 200 dirhams for Gold. However since both these currencies are extinct in today’s world, scholars now use a different approach. They calculate Nisaab using a mithqal of pure gold as reference. A mithqal is 4.25 grams. Although this is not an exact calculation, it is considered a valid approximation given the current circumstances. For example, this year, the Nisaab amount is £253 in silver, $2303 in gold. Meaning if you have this amount on hand whether in the form of cash or investment or valuable objects, you are obligated to pay Zakat.

Can Zakat to be paid on money that is inherited?

You are liable to pay Zakat even on the money that you have inherited and have owned for at least a lunar year. If the person whom you inherited the money from did not pay Zakat then it is your responsibility to calculate the Zakat on that amount and pay that as well.  

Who is eligible to receive Zakat?

People who are genuinely poor are eligible for Zakat. People who can’t make ends meet to gain the basic provisions of life such as food, water and clothes. People who are elderly or those who are handicapped can receive Zakat donation.

 What If I haven’t paid Zakat in a couple of years or more?

It’s never too late to pay Zakat. If you have Zakat due from previous years, then calculate it for each individual year and then make the contribution. It is the duty of every Muslim to pay Zakat every year but if an individual is unable to for whatever reason, he or she can still pay at a later date calculated all the previous years for which Zakat is owed.

Can Zakat be given to a charity?

Yes it can. Provided that the organisation is involved in Zakat donations and uses that money to aid people who are needy, hungry and need basic necessities of life to survive. 

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