zakat on share and income

ZAKAT ON INCOME AND ZAKAT ON SHARES

Zakat on Income• Additional payment receive by an individual from their employer or

individual itself in the form of physical energy or professional employment or physically for specific day, month and yearly also been required to pay zakat.

• Prof. Dr. Yusuf al-Qaradawi and Dr. Hussein Shahatah, pay zakat and income termed Mustafad Zakat al-Mal which is sourced from Zakat salary and professional income. It is the reward of service with an employer or an individual or institution.

Meaning :“ To all men who are all faithful to Allah . Give out the best what you have work for and this is part what comes from the earth that we have given you."

(Surah Al-Baqarah : Ayat 267 )

Condition• Income will include :

Salary

Arrears of pay

Various allowances (car, meals, meetings)

Income

Others (including bonus or something that can be counted as income such as royalties, rent and other)

• Pay and free income must be counted based on the following conditions: Islam

Independent

Complete ownership

Nisab

Haul

Lawful income

CALCULATION OF ZAKAT INCOME

METHOD 1

Using gross income (without deduction) 2.5% on gross income

per year.

METHOD 2

Using the net income (Income

year less allowable

expenses per year) x 2.5%

Method 1

Method 2(A) GROSS INCOME PER YEAR (RM)

Basic salary 42,000

Various allowances 10,000

Other income 6,000

Total income 58,000

(B) (-) HAD KIFAYAH PER YEAR (RM)

Himself 10,850

Wife 6,000

His parent ( 2 person ) ( RM2300 each ) 4,600

His daughter ( 7-11 years old ) ( 2 person ) ( RM 2,200 ) 4,400

His daughter ( 0-6 years old ) ( 1 person ) ( RM 1450 ) 1,450

(C) ( - ) ADDITIONAL HAD KIFAYAH ( RM)

Disable children ( no example ) ( RM2,400 each ) -

Chronic deseases ( no example ) ( RM2,400 each ) -

OTHER DEDUCTIONS (RM)

EPF contributions 5,170

Contributions fund for HAJJ 2,000

Total deductions ( B + C + D ) 34,470

THE AMOUNT OF ZAKAT (RM)

A - ( B + C + D ) = E ( More Than Current Nisab )Nisab For 2015 = RM11,145

23,530

Zakat Per Year ( RM23,530 X 2.5 %) 588.25

Zakat Per Month ( RM588.25 / 12 ) 49.00

Zakat On Shares• Dr Yusoff al-Qardhawi in his book Fiqh-Zakat defines shares as valuable

papers or commodities that are traded in the market such as Bursa Malaysia.

• Zakat which is given out for investment which has reach its time limit and minimum value.

• O you who believe! spend (benevolently) of the good things that you earn and or what We have brought forth for you out of the earth, and do not aim at what is bad that you may spend (in alms) of it, while you would not take it yourselves unless you have its price lowered, and know that Allah is Self-sufficient, Praiseworthy.

ه� �� ه ال ه�� ه�ا موا ه� ع� ه�ا � ه� ه�ي م�وا ه ع� م� ع� ه�ا ��ا ه ه�ا ه� ه�ي �ه �آ ه� ع م! ع" هل ه� ه� م#و ه$ ع% م� م� ع% ه& ه' ه)ي ه( عل ا موا ه� هي ه� ه�ا ه� ه+ � ع, ه�ا ع� ا ه- ه& ع م. هل �ه% ع/ ه0 �ع ه�ا �ه� ه& ه� ع م! ع) ه" ه1 �ه& ه2 �ه) يي ه4 ع- ه& م#وا ه$ ع5 ه�ا م%وا ه& آا ه- ه�ي �ل ه ا �ه6 م�ي ه�ا �هيد7 هي ه9 د�: ه% ه;

Condition Zakat Of Shares

• Include only those shares and bonds that you owned on the last day of the previous zakat year, and use the market value as of that date. Purchases made during this year should not be included in this.

• Include all shares and bonds that you owned on the last day of the current zakat year, and use the market value as of that date.

• Include only those earnings that occurred within the zakat year, then exclude that portion from the earnings.

• Include all associate expenses, including estimated income tax on earnings and capital gains.

Listed companies (from Syariah Councils)

Shares owned at the end of haul period

2.5 percent on the lowest market price of the share

Shares traded during the haul period

2.5 percent on the net profit (capital gain)

Types Of Zakat On SharesI. Share that is still owned until the end

of haul.

*The calculation of Zakat is 2.5% on the smallest price or cost.

Sample calculation for 200 lots of share :

1 lot : 100 units

1 lot : RM1.00

200 lots :

= 200 lot x RM1.00

= RM20,000.00

Zakat :

= RM20,000.00 x 2.5%

= RM500.00

Non-listed companies (from Syariah Councils)

Difficulties to determine the market value

Zakat is calculated based on the dividend received

II. Share that always trade in the duration of haul (a year)

*The calculation is 2.5% on the value of share after deducting the expenses cost (profit).

Sample of calculation :

Total value of selling share – expenses cost (profit)

= RM500,000 – RM400,000

= RM100,000.00

Zakat :

= RM100,000 x 2.5%

= RM2,500.00