Zakat on wealth is a required payment made by all qualified Muslims only when their wealth satisfies certain conditions and accumulates to or beyond specified threshold limits and time periods.
As for the qualifications relating to Zakat payer are as follows:
- Islam
The owner of the wealth must be a Muslim because zakat is prescribed to Muslims only. Non-Muslims are not required to pay zakat because zakat is a form of worship to draw closer to Allah SWT and show self-obedience as a servant to Him.
- Independent
Free from the grip of slavery. Although the issue of slaves is no longer present, scholars nevertheless hold that freedom is one of the necessary prerequisites for paying zakat.
III. Minor to Adolescent.
Zakat is due upon minors and that includes the rich orphans according to 3 schools of Islamic Law except for Hanafi school that view zakat is only obligatory upon age of puberty.
As for the conditions relating to wealth are as follows:
- Complete Ownership
A wealth must have a clear and unambiguous ownership, with only the owner having the ultimate right to use it. A wealth is not susceptible to the rights of third parties when it has perfect ownership. The owner is allowed autonomously without any restrictions to manage their wealth, and whatever profits they make shall belong to them. Therefore, it is not required to pay zakat if the wealth have no definite owner or is owned by the public e.g. waqf land, baitulmal property, charities, and the like.
- Complete Nisab
A property owned must meet the nisab, which is the minimum level that determines whether or not it is obligatory to pay zakat. Generally, each category of wealth has its own nisab rate. For instance, for zakat on investment, business, savings, stocks and gold, the nisab is 20 mithqal, or equivalent to 86 grams of gold. While the nisab on livestock zakat depends on the number of animals one owns. For Singapore context, the current nisab rate is SGD$7,541. You may refer to Zakat Singapore for further details on the current and past nisab values.
- Complete Haul
Complete haul means that one year has passed on the property owned in the estimation of the Hijrah year which is 354 days (with zakat rate of 2.5%) or according to the Masihi year which is 365 days (with zakat rate of 2.577% standard accepted by AAOIFI Shariah Standards). Unlike zakat fitrah where its obligation falls on every month of Ramadan, zakat on wealth becomes obligatory only when the haul or one-year cycle has completed. The requirement for completion of the haul was based on the hadith: “It is not obligatory to pay zakat on any wealth until a year has passed.” (HR Daruqtni). Originally, the basis of haul calculation was according to the Hijrah year, but due to the custom (uruf) today of dominantly using the Masihi year over the use of the Hijrah year, the practice of zakat calculation is shifted to the Masihi calendar.
- Productive Wealth (Al-Nama’)
Zakat must be levied on wealth that is growing (حَقِيْقِي) or has the potential to be grown (تَقْدِيْرِي). The inherent nature of growing wealth implies that the wealth is able to provide returns or revenue to its owner. Scholars have unanimously agreed that the imposition of zakat does not applies on wealth used for personal use, e.g. vehicles, houses, furniture, work equipment, and any other types of assets whose its nature is not really growing or expanding. Only when these personal use assets are put into a business intention moving forward that we have to pay zakat. This is in is similar to the original definition of the Arabic term zakat, which means to increase and grow.
All in all, if an independent muslim owns and have access to an asset or wealth (e.g. cash savings), and the cash savings is constantly growing over time until it has exceeded the nisab limit and completed a one-year cycle (haul), then he is obliged to pay zakat.
References:
PPZ MAIWP https://www.zakat.com.my/info-zakat/syarat-wajib-zakat/
Lembaga Zakat Selangor https://www.zakatselangor.com.my/info-zakat/zakat-kewajipan-berzakat/syarat-berzakat/
https://shamela.ws/book/9771/1869
https://e-penerbitan.jawhar.gov.my/ManualPengurusan/zakat/MP-Pengiraan-Zakat.pdf
