Islamic State

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Islamic Economics
Institution Of Bait-ul-Maal

By
Muhammad Adeel Mian
Sajjad Naqwi
Sec-H
Presented to: Miss Tahseen
Lahore School of Economics
BAIT-UL-MAAL

Introduction
The bait-ul-maal is a unique institute which was established for the economic prosperity of the people. As we all know in the Islamic system of life sovereignty belongs to Allah and man is His vicegerent on earth. Similarly the same concept applies to Bait-ul-maal, where Allah is sole master of this treasury while the caliphs are only the trustee of Bait-ul-Maal. In this sense the concept of Bait-ul-maal is different from the concept of public exchequer in un-Islamic systems. In an Islamic state Bait-ul-maal is Safeguarded and expenditures from it is made in the sense that it is a trust. Definition

So how can we define bait-ul-maal? It is the place which is designed for keeping the spoils of war, charity, land tax and Jizyah (the tax which a free non-Muslim pays in Muslim countries in return for his protection), and this money should be in the hands of the caliph or a Muslim ruler who spends it in what Allaah has ordained. Historically, it was a financial institution responsible for the administration of taxes in Islamic states, particularly in the early Islamic Caliphate. It served as a royal treasury for the caliphs, managing personal finances and government expenditures. Further, it administered distributions of zakah revenues for public works.

History
Bayt al-mal was the department that dealt with the revenues and all other economic matters of the state. In the time of Muhammad (SAW) there was no permanent Bait-ul-Mal or public treasury. Whatever revenues or other amounts were received were distributed immediately. There were no salaries to be paid, and there was no state expenditure. Similarly Prophet Muhammad, (pbuh), established the common brotherhood of Muslims soon after the Hijrah to Medina from Mecca. Each resident of Medina became a helper (ansar) to each individual who migrated with Prophet Muhammad (pbuh). The rich Muslims took charge of the poor ones and soon the economic disparity was removed with the interdependency. Hence the need for the treasury at public level was not felt. Abdullah ibn Abbas (R.A) states:

“For me to fulfil the necessities of a Muslim family for a month or for a week or whatever period of time Allah pleases is more beloved to me than performing hajj after hajj. Buying a utensil for even a daaniq (one-sixth of a dirham) and giving it to my brother as a gift for the pleasure of Allah is more beloved to me than spending a dinar in the path of Allah.” - Abu Nu’aym in Hilya 1:328 But It wont be right to say that the concept of Bait-ul-maal didn’t exist at the time of last prophecy. The Prophet, sallallaahu 'alayhi wa sallam, used to have trustworthy people who kept these assets and they divided them with his order on those who deserved them. The mosque was the place in which the assets and belongings were exposed and the Prophet, sallallaahu 'alayhi wa sallam, would divide them by himself. However, the camels and other cattle remained in the folds until it was time for their division. Even in the time of Abu Bakr there was not treasury. Abu Bakr earmarked a house where all money was kept on receipt. As all money was distributed immediately the treasury generally remained locked up. It was reported that at the time of the death of Abu Bakr there was only one dirham in the public treasury. After the death of 1st caliph things changes. Establishment of Bait-ul-maal

In the time of Umar (R.A) things changed. With the extension in conquests money came in larger quantities, Umar also allowed salaries to men fighting in the army. Abu Huraira who was the Governor of Bahrain sent a revenue of five hundred thousand dirhams. Umar summoned a meeting of his Consultative Assembly and sought the opinion of the Companions about the disposal of the money. Uthman ibn Affan advised that the amount should be kept for future...
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