This has reference to the article on Computation of Zakat by Dr. Waquar Anwar (Vol LVIII No. 11, 20th June, 2020). The commandment of 9.60 of the Qur’an is with respect to allocation/distribution of zakat. Whereas, the commandments for Zakat are numerous. The Qur’an recognises the role of society, active as well as passive, in the creation of wealth. Sadaqat is, therefore, the rightful dues of the society for their role in the creation of wealth. Moreover, the Qur’an also recognises Allah’s grace as a factor of production, and since Allah cannot come and collect His dues, He ordained for its distribution among the needy of the society.
The eight-fold purposes are ok but the proportion in which the zakat needs to be allocated among the eight objects is left open and is a matter of research. As far as the various rates of zakat are concerned, three distinct categories can be classified [Saleem, 1992 p 4]:
- a) Wealth: After deducting the nisaab (exempted amount), the wealth of a person shall be taxed annually at the rate of 2%. Tax on trade capital shall also be levied at the same rate by considering this capital to be the sum of cash in hand and cash in trade.
- b) Produce: Zakat on produce is deducted at the time of produce and depending upon the various items has three rates: 5%; 10%; 20%.
- i) 5%: On items which are produced by the interaction of both labour and capital: e.g. produce from irrigated lands and industrial produce from factories. This is also known as half-ushr.
- ii) 10%: On items which are produced in which the major factor in producing them is either labour or capital, but not both. Examples of the former include an artist’s creation like paintings and the works of scholars and intellectuals, while examples of the latter include rented houses, and produce from rainy lands. This is also known as ushr.
iii) 20%: On items which are produced neither as a result of labour nor capital but are actually a gift of God, e.g. war booty (fai), treasure, etc. This is also known as khums (one-fifth, Quran 8.41)
- c) Animals: Only those animals which are bred and reared for the purpose of trade and business are subject to zakat.
In Point 2 of the salient features it has been stated that zakat is computed on the net working capital. The deduction of current liability from current assets needs to be established. Further, in Point 3 of the salient features it has been stated that for the purpose of Zakat, stock is valued at current market / replacement price. This notion also needs to be established. Point 5 of the salient features states that zakat is meant for purification. This concept of purification is not in consonance with the Islamic principle, rather it is a notion of non-Muslims known as washing off sins.
Dr. Waquar Anwar wrote:
The commandments of zakat at other places are of recommendatory nature. At ayah 9:60 the word faraz has been used which is in the form of an order. That is why even if the word zakat has not been used in the ayah, our Prophet (peace and blessings of Allah be to him) referred to this Ayah at several occasions for the obligatory sadaqa, which is zakat in our parlance.
I agree with the opinion on role of society in wealth creation and in fulfilling its need by its own actions. The proportion at which zakat will be distributed among the eight objectives has been consciously left open. This gives leeway and free hand to human intellect in view of the changing needs of the society and its inhabitants.
Point numbers 2 and 3 are established positions of all schools of Islamic jurisprudence. On point number 5, it may be noted that Zakat literally means purification and growth. Islam has a distinct concept of purification and growth. For example, here it also means payment of 2.5% makes 97.5% pure. There are other dimensions of purification, tazkia, too. This is a problem of translation. The English language may not have a proper word for zakat and tazkia. We fulfil the need by using the word purification, and at other places adding the expression ‘growth’.