Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

 

One of our brothers/sisters has asked this question:

As-salaam alaikum wa Rahmatullahi wa barakatuh

On the question of Zakat, is Zakat due on new wealth created and held for a year or whatever a person possesses at the end of the fiscal year. Specifically my question is if I have a savings of $100 at the end of the fiscal year, zakat would be 2.5% or $2.50. The following year I have not added any new wealth so is the zakat due on $97.50? If I have added another $100 for that year then is Zakat due on $197.50 or just the added savings of $100 for that year.

 

JazakAllahu khair

Shaukat

 

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

 

Answer:

 

Zakah on earning or assets

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

 

Every believer, regardless of whether man, woman, or child, who has excess wealth (over the ‘nisaab which is appx US$1,000.00) of their own, is liable to pay a 2.5% annual zakat of their nett excess wealth in Shariah.

 

Zakat is not determined from one’s earnings or profits, but rather on one’s net excess wealth which is left over after paying all their expenses, and it has been in their possession for a period of one calendar year. There is no zakah liable on the house one lives in, or the furniture and fixture one uses in their house, or the car one drives, etc.  But if one has property which one has bought as an investment, or spare vehicles other the one one drives, or jewelry, or any other excess asset…then zakah would be liable on these excess wealth and property.

 

Any asset, or wealth, or cash, or savings, which are left over after all of one’s expenses are paid, and that excess savings and wealth has been in their possession for one full calendar year is liable for payment of annual ‘zakat’ at 2.5% of its value.

 

Thus the basic formula to calculate zakah is as follows:

 

All Assets (except the house one lives in, vehicle one uses, etc.) minus all loans = Nett Excess Assets.  It is on the market value of these Nett Excess Assets upon which the annual zakah of 2.5% is due.

 

Your Question: Specifically my question is if I have a savings of $100 at the end of the fiscal year, zakat would be 2.5% or $2.50. The following year I have not added any new wealth so is the zakat due on $97.50?

Firstly brother, zakah is only due on an individual whose Total Assets are worth more than approximately US$1,000.00.

 

Thus assuming that one’s total Nett Excess Assets are $100.00, then zakah for that year would indeed be 2.5% of $100.00 or $2.50.

 

If the following year one has not added any new wealth to their savings of $97.50, then indeed the zakah for the following year would be determined at 2.5% of $97.50 or $2.44.

 

Amr ibn Shuaib reported from Abdullah ibn 'Amr that the Messenger of Allah (saws), said: "One who becomes the guardian of an orphan with property must trade on his behalf and not leave it passive in order to avoid depletion of the property by zakah."

Related by al-Hafiz.

 

That is precisely why the Messenger of Allah (saws) guided the believers to strive to invest their wealth, lest it is depleted by the annual zakah due on it.

 

Your Question: If I have added another $100 for that year then is Zakat due on $197.50 or just the added savings of $100 for that year.

If one has initial savings of $97.50, and one adds $100.00 to it the following year, then the zakah for the following year would be determined on their total savings of $197.50 at 2.5% or $4.94.

 

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone.  Allah Alone Knows Best and He is the Only Source of Strength.

 

Your brother and well wisher in Islam,

 

 

Burhan