Which Assets are Zakatable?

Introduction

Islam is not a religion of pure rituals, Islam is a productive, organised, and community-based way of living and being, taught and demonstrated by successive prophets, revealed by God. The final messenger was Prophet Muhammad (peace be upon him). Among the communal-based activity in Islam is Zakat. Every Ramadan, the majority of Muslims pay Zakat. 

Zakat is from the five pillars of Islam are the foundation of Islam, namely, the Shahadah (testimony of the Oneness of God), Salah, Zakat, Fasting, and Hajj. These pillars are connected in strengthening an individual and the community. These pillars work together to form the basis of a successful and strong community. From the five pillars, the Qur’an mentions the three pillars of Iman, Salat and Zakat together repeatedly. In particular, the Qur’an interlinks Salat and Zakat 28 times. 

Zakat, constituting 2.5% of a Muslim's qualifying assets, is a divine injunction designed to support the faithful in their faith, and balance social inequality, allowing wealth to flow from those who have been blessed with abundance to those who face hardship and poverty. By the flow of Zakat, the community remains united, forming a prosperous, harmonious, successful community.

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Which assets have Zakat?

To fully appreciate the scope and purpose of Zakat, it is essential to understand the types of assets that qualify for this obligatory charity. Islamic jurisprudence specifies several categories of wealth on which Zakat must be paid:

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1. Money: This includes cash in hand, bank deposits, and savings, reflecting the most liquid form of wealth.
2. Debts Owed to You: Loans that are expected to be repaid qualify for Zakat, emphasizing the circulation of wealth.
3. Gold and Silver: Precious metals, whether held as currency, bullion, or jewelry intended for investment, are considered assets of enduring value.
4. Stocks in Trade: Goods and commodities held for business purposes are subject to Zakat, highlighting the importance of commercial activity in wealth generation.
5. Investments: This covers securities and other financial instruments aimed at profit through trade or capital appreciation.
6. Agricultural Produce: Crops and livestock produced for sale or consumption are Zakatable, underlining Islam's recognition of natural resources' value.
7. Livestock: Animals such as camels, cattle, sheep, and goats are subject to Zakat, reflecting their economic significance.

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Why is there Zakat on these assets?

Zakat is obligated on a specific category of assets known as Mal Nami, a term often translated as "productive wealth." However, the term "productive" might not fully capture the essence of Mal Nami. In essence, Zakat is a form of worship, and the criteria for what constitutes Zakatable assets are precisely defined by Shariah, focusing not on the market value, attractiveness, or economic fluctuations of an asset but on its inherent characteristics.

‍Mal Nami refers to assets acquired primarily for exchange or investment purposes, aiming for a return, or to natural assets that naturally increase in quantity or size. Perhaps one of the wisdoms behind these assets being Zakatable is that they are very liquid, making it easy for cash conversion. This liquidity is crucial because it ensures that Zakat payers can easily transfer these assets to fulfill their obligations without the burden of dealing with illiquid or undesirable assets that might be hard to distribute.

For recipients of Zakat, receiving Mal Nami assets is particularly advantageous. These assets are not only liquid but also widely recognized and accepted, making it easier for beneficiaries to convert them into cash or other forms of wealth necessary to meet their needs. Thus, the classification of certain assets as Mal Nami serves a practical purpose in the Zakat system, ensuring efficiency and benefit for both the giver and the receiver by focusing on assets that offer liquidity and flexibility. This approach optimizes the impact of Zakat, providing recipients with more options and opportunities to improve their circumstances.

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What is Zakat not due on?

Zakat is mandated only on specific types of assets, known as Mal Nami, which are easily liquidated and beneficial for both the giver and receiver. This categorization excludes personal use items from Zakat obligations, regardless of their value, including:

• Personal residence
• Personal vehicles
• Electronic devices
• Household appliances
• Personal clothing

Additionally, Islamic jurisprudence identifies another category known as Mal al-Dimar, which encompasses wealth that, due to various restrictions, cannot be utilized or benefited from in any way. This includes assets that are inaccessible or unusable because of legal or physical constraints, such as:

• Zakatable assets that have been confiscated, leaving the owner without any means to reclaim them.
• Wealth that has been lost.
• Assets that have sunk and cannot be recovered.
• Wealth buried in such expansive areas that it cannot be located.
• Properties that have been expropriated.
• Debts that cannot be substantiated with evidence, with the debtor denying the obligation and the creditor having no expectation of recovery.

These principles ensure that Zakat remains a practical and manageable obligation, focusing on assets that can actively support the community's well-being without imposing undue hardship on the individual.

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Conclusion

Zakat emerges as a pivotal thread that weaves together the spiritual with the societal, grounding the divine command in the everyday lives of Muslims. Through the meticulous classification of zakatable assets—ranging from liquid wealth like cash and savings to tangible goods such as livestock and agricultural produce—Islamic jurisprudence demonstrates an astute understanding of the diverse economic activities that comprise a flourishing community. This system, underpinned by the principles of Mal Nami, ensures that Zakat transcends mere financial transaction to become a means of spiritual purification and social solidarity.

By delineating assets subject to Zakat, Islam articulates a vision of an economy where wealth is not hoarded but circulated, where the prosperity of one contributes to the welfare of all. The exclusion of personal use items and inaccessible wealth from Zakat obligations reflects a compassionate regard for individual circumstances, ensuring that the practice of Zakat remains a source of relief and not a burden.

Ultimately, the institution of Zakat encapsulates the ethos of Islam—a faith deeply invested in the well-being of the community, advocating for a balance between material wealth and spiritual health. It fosters a culture of empathy and generosity, encouraging Muslims to look beyond their individual needs and contribute to a collective reservoir of hope and support. In doing so, Zakat stands as a testament to the transformative power of faith, serving not only as a pillar of Islam but as a beacon of light guiding the faithful towards a path of righteousness, unity, and communal prosperity.

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