Wednesday, January 17, 2018 | ePaper

Jakat : A social equity tax

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Jakat is one of the major religious duties in Islam. Literally, Jakat means to 'purify'. It refers to the purification of a believer's wealth and soul. Wealth purification denotes the mobilization of assets for the purpose of financial growth and justified distribution. Purification of the soul implies freedom from hatred, jealousy, selfishness, uneasiness and greed.
Jakat is a fixed proportion collected from the surplus wealth and earnings of a believer. It is then distributed to prescribed beneficiaries and for the welfare as well as the infrastructure of a society in general. This contribution is made payable by a Muslim once every year.
Jakat is paid on the net balance after a Muslim has spent on basic necessities, family expenses, due credits, donations and taxes. Every Muslim male or female who at the end of the Hijri year is in possession of the equivalent of 85 grams of gold or more in cash or articles of trade, must pay his or her Jakat at the minimum rate of 2.5 per cent.
Jakat has a deep humanitarian and socio-economic value. This religious act prevents the hoarding of wealth and advocates solidarity with humanity because excessive wealth is distributed amongst the poor. The paying of Jakat helps purify one's soul and encourages a person to have gratitude towards Allah's bounties.
Jakat is mentioned along with Salat (prayer) in 30 verses of the Quran.
It was first revealed in Surah Muzzammil 73:20 :  "…. and establish regular prayer and give regular charity ; and loan to Allah a beautiful loan. And whatever good ye send forth for your souls, ye shall find it in Allah's Presence, Yea, better and greater in reward and seek ye the Grace of Allah : for Allah  is Oft-Forgiving, Most Merciful."
In another verse, Allah declares that those who pay Jakat, are included within the Muslim society : "But (even so), if they repent, establish regular prayers, and practise regular charity, -- they are your brethren in Faith: (thus) do We explain the Signs in detail, for those who understand." (Sura Tawba 9:11)
Allah says in the Quran : "They were enjoined only to worship Allah, sincere in their faith in Him alone - and of upright religion - and to establish the Salat and the Jakat. Such is the upright religion." (98:5)
"...Those who lay up treasures of gold and silver and spend them not in the way of Allah; give them the news of a painful punishment, on the Day when that (wealth) will be heated in hellfire, and their foreheads and their sides and their backs branded therewith : This is the treasure which you laid up for yourselves! Taste, then, your hoarded treasure!" (Sura Tawba 9:34-35)
Bukhari and Muslim relate on the authority of Ibn Abbas (Ra) that the Messenger of Allah sent Mu'az to  Yemen. He told him, "You are going to a people who have a Scripture, so call them to testify that there is no deity but Allah, and that I am the Messenger of Allah. If they respond to this, then teach them that Allah has imposed five Salats upon them in everyday. If they respond to this, then teach them that Allah has imposed upon them a charity to be taken from the wealthy amongst them and given to their poor. If they respond to this, then beware of taking any more of their wealth! Beware also of the prayer of the oppressed, for there is no veil between such a prayer and Allah."
Then he recited the verse : "...Let not those who are miserly with what Allah has given them of His bounty think that this is good for them. Rather, it is bad for them. Soon that which they withhold shall be hung around their necks like a twisted collar on the Day of Arising." (Sura Ali-i-Imran 3:180)
Several conditions must be fulfilled before Jakat can be paid. These conditions are necessary as Jakat can only be applied on those who are of legal age and who own 'Nisab' assets. These conditions are categorised into two broad categories, namely performer and asset.
Jakat is payable only on those assets that are acquired for the purpose of creating or generating wealth. Some examples of this type of assets are livestock or crops that are traded or sold, inventory of goods used for trading, and investments such as gold or securities that have potential for appreciation in value. However, Jakat is not payable in the case of fixed assets such as buildings, if they are not subjected to 'capital circulation'.
Jakat need only be paid on those assets that exceed a minimum value.
This minimum value is calculated based on the market price of 85 grams of gold or 595 grams of pure silver. This minimum value is termed Nisab. The Islamic Fiqh and Research Councils, as well as majority of Ulama recommend that gold be used as the basis for the calculation of Nisab.
Haul is defined as the completion period for a Jakat asset. The length of time for haul is one Islamic or Hijri year (1 year Hijri = 354.5 days, 1 year Solar = 365.25 days). Jakat is only payable on assets that have been held for at least this period.
Jakat can only be distributed to any of the eight eligible beneficiaries (asnaf) that are mentioned in the Quran in Sura Tawbah : 60:
"Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer: (Thus is it) ordained by Allah, and Allah is full of knowledge and wisdom." (Sura Tawba 9:60)
However, priority should be given to the poor and needy. Where there is no central authority to administer Jakat, it can be paid directly to the needy.
1. The poor (Faqir) : Those without any means of livelihood and material possessions.
2. The needy (Miskeen) : Those without sufficient means of livelihood to meet their basic necessities. For instance, those who have job,  but whose income is below the minimum requirement.
3. The administrators of Jakat (Amil) : Those appointed to manage and administer Jakat. This category is sub-divided into the following categories: Group of people who go out to the society and determine those who fall Fuqara and Miskeen categories. Those who collect the Jakat money. The accountant of the Jakat money. The administrator, manager, clerical worker or secretary who puts the files in order. Those who handle Jakat distributions. The auditor who audits overall Jakat management and administration.
4. The sympathisers (Muallaf'at-Qulubuhum) : Those whose hearts are inclined towards or have accepted Islam.
5. To free slaves (Riqab) : Jakat can also be used to free slaves or captives.
6. Those who are in debt (Gharimin) : Jakat can be used to pay off the debts of a person who has borrowed to pay for basic necessities so that he/she can lead a normal life. Jakat can also be distributed to those in financial difficulties e.g. bankruptcy due to the loss of employment and heavy debt.
7. For the cause of Allah (Fi Sabillillah) : Jakat can be used to finance any form of struggle or work for the love of Allah. The following examples fall under this category, e.g. Da'wah; building and developing society's infrastructure; defending Muslims, who are being oppressed; assisting poor travelers and sponsoring  student's educational expenses.
8. Those who are stranded during a journey (Ibnus Sabil) : Jakat can also be used to help a traveler facing difficulties in continuing his journey due to reasons such as loss of money or the break down of his vehicles, the repair of which he cannot afford.
-Islami city

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