(May Allah bestow on Ethica Institute more wisdom and knowledge)
By AMANODING D. ESMAIL, CPA, MPA
President, Philippine Association of Islamic Accountants
Zakatable Property And Zakat Rates. – What property is zakatable and what are the zakat rates?
One must pay zakat annually on the following items held for at least one lunar year:
Gold and Silver: Gold exceeding 87.479 grams (about 0.2 lbs) at 2.5% (or 1/40th), in gold or its cash equivalent; Silver exceeding 613.35 grams (about 1.35 lbs) at 2.5%, in silver or its cash equivalent; includes all forms of gold and silver jewelry;
Cash and other exchangeable monetary instruments exceeding the equivalent of the silver nisab at 2.5%;
Tradable goods: Tradable goods such as stocks, inventory and merchandise for resale that exceed the equivalent of the silver nisab at 2.5% if the goods were bought with silver or a monetary instrument (e.g. cash, stock, goods); or exceeding the equivalent of the gold nisab at 2.5% if the goods were bought with gold;
Agricultural products: (search “Ushr”);
Animals and livestock: equal to or exceeding 40 head of sheep and goat, 30 head of cattle or 5 head of camel.
Nisab is measured either 1) separately (for gold, silver, cash, stocks, and other exchangeable monetary instruments, and trade goods), by measuring the nisab separately for each zakatable category; or 2) if individual measures fall below the nisab amount, it is obligatory to combine individual measures from each category (of gold, silver, and so on) to determine the total amount of zakatable property; livestock is always measured separately.
Zakat is only obligatory on property possessed for at least one lunar year, though if during the year while the value of the property exceeds the nisab and more property which is held for less than one year is added to the original amount, zakat is paid on the new amount (i.e. zakat is paid on the original property held for one year plus new property held for less than one year).
Nisab. – What is nisab?
Nisab is a measure of the minimum property one owns that obligates one to pay zakat, and is measured in addition to (not as a part of) the typical requirements necessary for living. Typical requirements necessary for living includes such items as food, clothing, housing, means of conveyance, tools for trade and household and personal effects, regardless of their cost.
Zakat On Items Containing Gold Or Silver. – Is zakat due on jewelry, ornaments and other items containing gold or silver?
Zakat is due on jewelry, bars, decorations, ornaments, thread woven into cloth and all other items containing gold or silver regardless whether the items are used or not; for items containing a mix of gold and silver, or a mix of gold or silver with another metal in which the mixture is not accurately measurable, the predominant metal is assumed to comprise the whole (e.g. a bracelet made mostly of gold containing some silver ornamentation should be valued as if made entirely of gold, while a bracelet made mostly of steel containing some gold should be valued as if made entirely of steel).
(To be continued)