1.1 BACKGROUND OF THE STUDY
1.1.1 The Meaning Of Zakat
One of the most important principles in Islam is that all things is belong to God, and the wealth is therefore held by human beings in trust. The word zakat means both ‘purification’ and ‘growth’ our possessions are purified by setting aside a proportion for those in need, and like the pruning of plants, this cutting the balances and encourages the new growth.
Zakat is a form of giving to those who are less fortunate. It is obligatory upon all Muslims to give 2.5% or wealth and assets each year (in access of what it prescribed) to the poor. This is done before the beginning of the month of the Muharram which is the first month in a year. Giving zakat is an act of worship because it is a form of offering thanks to Allah for the material well-being one has acquired.
Zakat is a 2.5% levy on most valuables and savings held for a full year if their total value is more than a basic minimum known as nisab. At present, the nisab is RM 4200 or an equivalent amount of any other currency based on the current price of 85 grams of gold in the market. Properties which are subject to zakat include cash money in bank and building society accounts, and the released values of bonds, securities and shares in any form if they are purchased as investments. Family house, household furniture, carpets, car, etc. are not subject to zakat. If such a property is being used for the payment of zakat becomes obligatory on every sane and mature Muslim, male or female, whenever there is an economic activity resulting in the net increase in their wealth.
The rate of zakat on each of the above categories is different from one another. The rate of zakat and the amount of nisab can be decided by the Islamic State after taking into consideration the prevailing standard of living and the risks and uncertainties of different modes of productions. Thus the rate of zakat and the amount of nisab are dynamic with a given minimum, but the amount may be changed through the ijma of the ummah.
Partials of zakat;
| | |Zakat Harta | | | |Zakat on wealth comprises several sub-categories, namely zakat on savings, zakat on gold/silver, zakat on farm animal, zakat on fruits and | |plants, zakat on CPF savings and zakat on shares. Calculations are based on the different types of account, multiple account, and insurance | |(endowment). The following conditions of zakat on wealth make zakat compulsory: | |Nisab (minimum zakatable amount) is reached. (i.e the approximate market value of 86 grams of gold) | |Haul is completed – i.e having possession of the assets for a complete Hijrah year. (1 Hijrah year = 354.5 days) | | | |Zakat Fitrah | | | |Zakat fitrah is also known as zakat of the body, zakat of Ramadhan and zakat fitri. The period for obligatory payment is between the end of | |Ramadhan and before Hari Raya Aidilfitri. The fitrah rate is based on 2.3 kg of rice to be given in kind or in forms that is of comparable | |value (based on...