Importance of paying Zakat

Zakaah is one of the important obligations of Islam, and it is mentioned alongside prayer in the book of Allaah. Failing to pay it and procrastinating is a major sin. 

There is a strong warning about not paying zakaah, which fills the believer’s heart with fear. For example, Allaah says (interpretation of the meaning): 

“And those who hoard up gold and silver (Al‑Kanz: the money, the Zakaah of which has not been paid) and spend them not in the way of Allaah, announce unto them a painful torment.

35. On the Day when that (Al‑Kanz: money, gold and silver, the Zakaah of which has not been paid) will be heated in the fire of Hell and with it will be branded their foreheads, their flanks, and their backs, (and it will be said unto them:) ‘This is the treasure which you hoarded for yourselves. Now taste of what you used to hoard’

[al-Tawbah 9:34-39] 

“And let not those who covetously withhold of that which Allaah has bestowed on them of His Bounty (wealth) think that it is good for them (and so they do not pay the obligatory Zakaah). Nay, it will be worse for them; the things which they covetously withheld, shall be tied to their necks like a collar on the Day of Resurrection. And to Allaah belongs the heritage of the heavens and the earth; and Allaah is Well‑Acquainted with all that you do”

[Aal ‘Imraan 3:180] 

al-Bukhaari (1403) narrated that Abu Hurayrah (may Allaah be pleased with him) said: The Messenger of Allaah (peace and blessings of Allaah be upon him) said: “If Allaah gives a person wealth and he does not pay zakaah on it, his wealth will appear to him on the Day of Resurrection in the form of a bald-headed venomous snake with two fangs in its mouth which will encircle him on the Day of Resurrection, then it will hold him with its jaws then it will say: ‘I am your wealth, I am your treasure.’” Then he recited (the verse): “And let not those who covetously withhold of that which Allaah has bestowed on them of His Bounty (wealth) think that it is good for them…” 

If zakaah is obligatory upon a person but he does not pay it, then he must pay it for all the years that have passed. 

Al-Nawawi (may Allaah have mercy on him) said in al-Majmoo’ (5/302): If several years have passed in which he did not pay zakaah, then he must pay zakaah for all of them.

Zakaah does not have to be paid on cash unless it reaches the nisaab (minimum threshold) and one year has passed. The nisaab is the equivalent of 85 grams of gold or 595 grams of silver. 

The shares in which a person deals buying and selling, are subject to the zakaah on trade goods, so at the end of the year you should estimate their value and pay zakaah at a rate of one-quarter of one-tenth (2.5%). 

If the shares make a loss, then their value should be worked out; if it reaches the nisaab, then zakaah must be paid on them. 

What counts is not the capital with which you bought the shares, but their value at the end of the year. If a person buys shares for ten thousand, for example, and their price falls and at the end of the year they are worth three thousand, then zakaah is due on three thousand, not ten thousand. 

Based on that, you have to strive to pay zakaah for the past years. Work out how much money you had at the end of the year, then add to it the value of the shares at that time, then pay zakaah at 2.5 %, and so on for the end of each year. 

With regards Gold Jewellery: Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was asked: Is zakaah due on gold that is prepared for adornment, if a woman does not have any means of paying zakaah other than selling some of the gold? 

He replied: 

The correct scholarly view and the most likely to be correct in my view is that zakaah must be paid on jewellery if it reaches the nisaab (minimum threshold), which is eighty-five grams. If it reaches this amount, zakaah must be paid on it. If she has other wealth and pays from that, there is nothing wrong with it. If her husband or one of her relatives pays it on her behalf, there is nothing wrong with that. If neither of these options is available to her, then she should sell some of it and pay zakaah with that money. 

Are we allowed to give our Zakat to organisations and charities that distribute the zakat to the needy even if we are not aware exactly where the money is being spent? Shaykh Ibn Baaz said: If the people who are doing that are trustworthy and honest, and will dispose of the zakaah in the ways prescribed in sharee’ah, then it is OK to give one’s zakaah to them, because this is a way of co-operating in righteousness and piety.

Fataawa al-Shaykh ‘Abd al-‘Azeez ibn Baaz, 3/126 .

There is no zakaah on houses if they are for living in… but with regard to land, houses, stores and the like that are prepared for sale, zakaah is due on these according to their value each year when a full year has passed, regardless of whether their value has risen or fallen, if the owner has firmly resolved to sell them. 

Majmoo’ Fataawa al-Shaykh Ibn Baaz, 14/173 

Secondly: 

There is no zakaah on shops and property used for business themselves; there is no zakaah on land or buildings or on the furnishings and vessels in the store, no matter how much they are worth, unless these things have been prepared for sale, in which case zakaah is due on them. This is what the scholars call zakaah on trade goods. 

Shaykh Ibn Baaz (may Allaah have mercy on him) said: 

The basic principle is that everything that is prepared for sale is subject to zakaah, and things that are used in the shop are not subject to zakaah. 

Majmoo’ Fataawa wa Maqaalaat Mutanawwi’ah li’l-Shaykh Ibn Baaz, 14/183 

The way in which the zakaah is worked out is: 

The value of the goods that are in the store at the end of the year is worked out, then the zakaah is paid on them at a rate of one-quarter of one-tenth, i.e., 2.5 % of the value.

Taken from –  Islam-qa