Zakat

Zakat

 Zakat is one of the five pillars of Islam—the others being the

affirmation that there is no God but Allah and Muhammadsa is His

Messenger; prayers; fasting during the month of Ramadan; and

pilgrimage to the House of Allah in Mecca. For instance, the Holy

Quran commands:

Observe prayer and pay the Zakat and obey the Messenger that

you may be shown mercy.

The Arabic word Zakat literally means to purify something and in the

context of a mandatory levy would mean that the residual wealth after

the deduction of Zakat had rendered it pure and lawful for the

believers.

It is normally levied at 2.5% on disposable assets above specific

thresholds, which have remained in the hands of owners beyond one

year. Although much has been said about the rate or percentage of this

‘tax’, we find no reference to any fixed percentage in the Holy Quran.

In this respect, I beg to differ with the dogmatic view of medieval

scholars. I believe that the question of percentage remains flexible and

should be determined according to the state of the economy in a

particular country.

Zakat being a specific levy imposed upon capital beyond certain

thresholds, it can only be utilised for certain categories of expenditure.

These have been spelt out in the following verse of the Holy Quran:

 

Alms are only for the poor and the needy, and for those employed

in connection with their collection and distribution, and for those

whose hearts are to be comforted, and for the freeing of slaves, and

for those burdened with debt, and for those striving in the cause of

Allah, and for the wayfarers. This is an ordinance from Allah.

Allah is All-Knowing, Wise.

The treasury is charged the administration of this ordinance. In the

early history of Islam, Hadrat Abu Bakrra and Umarra, the first two

caliphs, were renowned for personally ensuring the speedy

disbursement of alms in what became known as the first welfare state.

This system had been at work with great success for centuries during

the Abbasid period.

As has already been explained, the motive force of interest is

replaced by the driving force of Zakat. When we examine this system

in operation, many differences between the Islamic economic order

and other economic systems come to light. The features of a

completely different economy begin to emerge.

No amount of idle money, irrespective of it being large or small,

can survive for long without multiplying faster than the rate at which

it is taxed. That is precisely how Zakat propels the economy in a truly

Islamic state.