Question # 280: Zakat is considered as 2.5% of Net Worth or 2.5% of annual savings. What is the zakat rate on production of goods, farm products, salary income etc. Can I have reference from authentic Hadith on 2.5% rate on annual savings or net worth? Thanks
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Shorter Answer: In order for zakah to be due on wealth, it should have reached the nisaab (minimum threshold) and that one lunar year (hawl) must has passed since it reached the nisaab. The nisaab is the equivalent of 85 grams of gold or 595 grams of silver and zakah is payable at 2.5%, so when the wealth reaches the threshold according to either of these two, then Zakah becomes an obligation. The scholars are unanimously agreed that zakah is obligatory on camels, cattle, sheep, gold, silver, cash (paper currency), trade goods, wheat, barley, dates and raisins; they differed with regard to other types of wealth.
Next, goods that are for trade/sale are subject to zakah, whereas machinery used for producing goods or fixtures and fittings that are not intended for sale; no zakah is due on these items. As for farm products, zakah is only due on edible agricultural products, provided the resulting crop can be measured and stored. As for vegetables and fresh fruits (except grapes and dates), which are not stored, no zakah is due on them. Further, the rate of zakah to be given on crops and fruit varies according to the method of irrigation. If it is irrigated by rainwater or springs, then the rate is 10%, and if irrigated with expenses, the rate is 5%. Also, it is not obligatory to give zakah on grains and fruits, unless they reach the nisaab of five wasqs (approximately 612 kgs). Lastly, if the money earned from selling agricultural products reaches the due nisaab of zakah, whether by itself or when added to other zakatable items, and the hawl has passed, then zakah becomes due on that money.
Zakah on salaries is the same as zakah on cash in general. It is due when a person`s wealth has reached the nisaab, whether by itself or in combination with his other wealth and a hawl has passed. However, if he spends all of his salary and does not save anything, he is not obliged to pay zakah. If he saves and it reaches nisaab, he can either a) make a schedule of his earnings along with receipt dates and pay zakah for each amount separately when one year has passed or b) he pays zakah on all the money he saved over one year, from the date when his wealth first reached the nisaab, which more generous and rewarding.
Long Answer: In order for zakah to be due on wealth, two conditions must be met:
- That it reaches the nisaab (minimum threshold)
- That one lunar year (hawl) has passed since it reaches the nisaab.
If the money is less than the nisaab, then no zakah is due on it. If it reaches the nisaab, and one year has passed, i.e. a lunar (hijri) year has passed since the time when it reached the nisaab, then zakah becomes due at that point. The nisaab is the equivalent of 85 grams of gold or 595 grams of silver. The rate that must be paid for zakah is one quarter of one tenth (2.5%). The reckoning of the year begins when he takes possession of the nisaab.
Zakah on wealth is only obligatory on certain kinds of wealth as specified in shari’ah, if they reach the nisaab, viz.:
- An’aam livestock (camels, cattle and sheep)
- Gold and silver and, nowadays, paper currency (cash)
- Trade goods
- What is produced by the earth, which includes two things:
- Crops and fruits. The scholars are unanimously agreed that it is obligatory to pay zakah on four kinds: wheat, barley, dates and raisins; they differed with regard to other kinds.
- Rikaaz (buried treasure), i.e., wealth of the kuffaar buried in the ground that is found by a Muslim.
Shaykh al-Islam Ibn Taymiyah (may Allah have mercy on him) narrated in Majmoo’ al-Fataawa that Ibn al-Mundhir (may Allah have mercy on him) said: “The scholars are unanimously agreed that zakah is obligatory on nine things: camels, cattle, sheep, gold, silver, wheat, barley, dates and raisins, (minimum threshold) for each type at which zakah becomes due. They differed with regard to other types of wealth. Zakah for each of these kinds of wealth is obligatory subject to certain conditions, and a specific amount of the wealth must be given as defined by shari’ah.”
Let’s deal with each of the areas mentioned in the question:
- Production of goods: Factories usually contain products and goods that are for trade, so these are subject to the zakah on trade goods. Their value should be estimated at the end of the lunar year, and one-quarter of one-tenth of their value (2.5%) should be paid. And factories contain [machinery used for producing goods,] fixtures and fittings that are not intended for sale; no zakah on due on these.
Shaykh Ibn Baaz (may Allah have mercy on him) said: Zakah is due from owners of… factories only on things that are prepared for sale. As for things that are prepared for use, there is no zakah on them. The same applies to cars, furniture and vessels that are prepared for use – no zakah is due on them, because of the report narrated by Abu Dawood in his Sunan with a hasan isnad from Samurah ibn Jundub (رضي الله عنه), who said: The Messenger of Allah (صلى الله عليه و سلم) commanded us to pay zakah on that which we had prepared for sale. (Majmoo’ Fataawa al-Shaykh Ibn Baaz)
- Farm products: Scholars have differed with regards to the due zakah on agricultural products. Imam Abu Hanifah believed that zakah is obligatory on agricultural products, regardless of their amount. He believed that zakah should be paid on everything that comes out of the earth like grains; all crops and fruits; such as bananas, pomegranates, peaches and even vegetables, legume and flowers. The other three Imams believed that zakah is obligatory on edible agricultural products that can be measured by capacity such as rice, wheat, dates and raisins. This indicates that zakah is only due on edible agricultural products, provided the resulting crop is used as regular food which can be stored and planted. As for vegetables, fresh fruits [((except grapes and dates))] and legumes, they are not measured or stored, so no zakah is due on them.
Ibn Qudaamah (may Allah have mercy on him) said in al-Mughni: “The scholars are unanimously agreed that zakah is obligatory on wheat, barley, dates, and grapes. This was stated by Ibn al-Mundhir and Ibn ‘Abd al-Barr.”
Allah (سبحانه و تعالى) says in the Qur’an: “but pay the due thereof (its Zakah, according to Allah’s Orders 1/10th or 1/20th) on the day of its harvest” (Soorah al-An‘am 6:141)
As stated above, zakah must be paid on [edible agricultural products] that can be measured and stored, whether they are foods or otherwise, because of the report narrated by al-Bukhari from ‘Abdullah ibn ‘Umar (رضي الله عنه) from the Prophet (صلى الله عليه و سلم) who said: “With regard to that which is irrigated by rainfall and springs, or has a taproot, (the zakah) is one tenth, and with regard to that which is irrigated by drawing water, (the zakah) is half of one tenth.” This hadith is general in meaning and applies to everything that is produced by the earth, whether it is food or not.
Al-Haafiz said: “has a taproot” – al-Khattaabi said: This refers to plants that take up water through their roots and veins, without being irrigated and “drawing water” – this refers to using camels to carry water. The camel is mentioned by way of example, otherwise oxen and other animals come under the same ruling. This is equivalent to irrigation by digging irrigation channels nowadays.
Muslim narrated from Abu Sa‘eed al-Khudri (رضي الله عنه) that the Prophet (صلى الله عليه و سلم) said: “There is no zakah due on grains or dates unless they reach five wasqs.” This indicates that what matters is the volume, which is a kind of measurement. As for storing, that is because the blessing is only completed by that which could be stored, because the benefit thereof lasts for a longer time.
Al-Bahooti said in Kashshaaf al-Qinaa‘: “Zakah must be paid on every kind of fruit that may be measured or stored, such as dates, raisins, almonds, pistachios and hazelnuts.”
Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) said in ash-Sharh al-Mumti‘: “Zakah must be paid on grains and fruits, on condition that they can be measured and stored. If that is not the case, then no zakah is due on them.”
It is not obligatory to give zakah on grains and fruits unless they reach the minimum threshold (nisaab), which is five wasqs, and a wasq is sixty saa‘s. So the nisaab is three hundred saa‘s measured by the saa‘ of the Prophet (صلى الله عليه و سلم), of dates, grapes, and grains such as corn, barley, rice and so on. The saa‘ of the Prophet (صلى الله عليه و سلم) is equal to two handfuls scooped up by someone with hands of average size, and each handful is equivalent to a mudd. This is the amount of a saa‘. In terms of weight it is four hundred and eight (480) mithqaal, and a mudd is one hundred and twenty (120) mithqaal, of grains that are of an average size, neither very heavy nor light. [So, the nisaab is equal to approximately 612 kilograms] (Fataawa Noor ‘ala al-Darb)
Zakah is not required on vegetables or fruits, [which cannot be] measured or stored. Zakah is, however, required on fruits that are measured and stored, such as dates, raisins, almonds, pistachios, But, if they [cannot be] measured and are stored – such as pomegranates, figs, peaches, melons and other fruits, and tomatoes, cucumbers and other vegetables – there is no zakah due for them, because if they are stored they will be spoiled. It was reported from ‘Ali ibn Abi Taalib in a marfoo’ report – and some said it was mawqoof – “There is no zakah due on vegetables.” Moreover, neither the Prophet (صلى الله عليه و سلم) nor his successors (al-Khulafaa’ al-Raashidoon) collected zakah for fruits and vegetables. Although they were grown in their regions, there was no zakah paid on them. This indicates that there is no zakah to be paid for these things.
However, if the money that is earned from selling agricultural products reaches the due Nisaab of zakah, whether by itself or when added to other money or trade goods, and the Hawl (i.e. lunar year) has passed, then zakah becomes due on that money.
- Salary Income: Zakah on salaries is the same as zakah on cash in general. It is due when a person`s wealth has reached the nisaab and a full lunar year (hawl) has passed, whether it reaches the nisaab by itself or reaches it in combination with his other wealth. The employee with a salary will find himself in one of the following two situations:
- Either he spends all of it and does not save anything, in which case he is not obliged to pay zakah;
- Or he will save some of it, sometimes more and sometimes less. In such case, zakah is to be reckoned in the following manner:
- If he insists on having all his rights and on not giving any charity to those who deserve it apart from what he is obliged to give, then he should make a schedule of his earnings and write down every amount and the date on which he took possession of it. Then he should pay zakah for each amount separately when one year has passed from the date on which he took possession of it.
- But if he wants an easier method, and wants to be more generous and give precedence to the poor and others who are entitled to zakah over himself, then he can pay zakah on all the money he possesses when one year has passed from the date when his wealth first reached the nisaab. This will bring a greater reward and raise him higher in status; it is easier for him and is more generous towards the poor and needy and others who are entitled to zakah. Whatever extra amount he may pay will be regarded as a “down payment” [advance payment] on the zakah for any wealth for which one year has not yet passed.” (From Fataawa al-Lajnah al-Daa’imah)
For example, a person saves from his salary – 500 one month, and 1000 another month, until at the end of the year he has collected 4000. So, he has the choice of paying zakah on the whole amount at the end of the year, in which case he will pay zakah in advance for the money for which a year has not yet passed, or he can pay the zakah for each sum separately when its year has passed, but this entails some kind of hardship, as he will be paying zakah several times in one year.
(Most part of the above reply is based on various answers provided by the Ministry of Awqaf and Islamic Affairs and various answers by Shaykh Muhammad Saalih al-Munajjid on the topic)
Allahu A’lam (Allah (سبحانه و تعالى) knows best) and all Perfections belong to Allah, and all mistakes belong to me alone. May Allah (سبحانه و تعالى) forgive me, Ameen.