Part III: Charity (Az-Zakat)
Calculate Your Zakat Yourself
Some examples to show how Zakat is calculated are given below. They would help you in calculation of your Zakat yourself.
Example No. 1
Mrs. Ahmad has following assets as on 30th of Shaaban. Kindly calculate Zakat thereon.
1. Gold Jewellery amounting to 100 Tola given at the time of marriage by parents thirty years ago. Its cast was Rs. 2 lac at that time. Now its market value is Rs. 50 lac.
2. Silver bangles amounting to 50 Tolas given by parents at the time of marriage. Their cost was Rs. 5000. Now their worth is Rs. 70,000/-
3. In dowery from the parents she received one TV, one Fridge, one air conditioner, one oven, some utensils, furniture, etc.
4. She owns a house of 10 Marla where the family is living.
5. Her husband owes a debt of Rs. 10 lac to bank as this money was needed in his business.
6. She owns a 1000 cc car which is used by her and other members of the family
7. She has an amount of Rs. 1 lac in her bank a/c and amount of Rs. 50 thousand as cash in the house.
Solution: Assets at No. 3, 4 and 6 are exempt from Zakat being articles of personal use, residence and conveyance. Asset at No. 2 falls below the Nisab which is 52.5 tolas, and hence not chargeable to Zakat. Thus Zakat would be levied on asset at No. 1 and 7. Bank would deduct Zakat on Rs. 1 lac lying in her bank A/c. So Zakat is payable only on gold Jewellery of Rs. 50 lac and cash of Rs. 50,000 and it would come to Rs. 126250/-. The debt owed by husband cannot be deducted from her wealth. It would be considered in the hands of the husband when his assessment would be made.
Example No. 2
Four friends, A,B,C,D are doing business of a departmental store jointly. At the end of the year stock of trade is worth Rs. 10 crore, cash in current bank A/c is Rs. 1 crore, cash in hand is Rs. 10 lac, debts payable are Rs. 2 crore 10 lac including bank loan, and debts receivable are 3 crore. All the partners have equal shares in the store. Partner B has other zakatable property worth Rs. 1 crore. Work out Zakat liability of the assessee and its partners.
Solution: Stock in trade: Rs. 100,000,000
Add cash in current A/c 10,000,000
Add cash in hand: 1,000,000
Add debts receivable: 30,000,000
Total Rs. 141,000,000
Less debts payable 21,000,000
Total wealth: Rs. 120,000,000
Wealth of the store would not be charged to zakat. Share of each partner comes to Rs. 3 crore. Partner A,C and D would be paying Zakat of Rs. 7.5 lac each on their shares respectively. Partner B would pay Zakat of Rs. 10 lac on his total wealth including share of Rs. 3 crore in the store and other wealth of Rs. 1 crore.
Example No. 3
Mr. Hamid Ali owns a commercial building worth Rs. 50 crore. Shops, offices, and flats in the building have been let out for Rs. 3 lac per month. Property tax of the building has been paid at Rs. 6 lac. Please work out Zakat liability.
Solution: Building would be exempted from Zakat on the analogy of agricultural land as it is factor of production. However rent of the building which works out to Rs. 36 lac for the year would be charged to Zakat. Property tax paid on the building would not be deducted as gross rent is to be charged to Zakat and no expenses can be deducted from the rent. Thus Zakat would come to Rs. 90 Thousand.
Example No. 4
Mr. Nazeer Ahmad has set up a textile factory which produces cloth. Worth of the Factory is Rs. 10 billion. Its stock in trade on the date of the closing of the account is Rs. 50 crore and debts payable are Rs. 10 crore and receivable are Rs. 5 crore. Total production of the factory during the year is Rs. 2 billion. What would be the Zakat payable?
Solution: Worth of the factory is not chargeable to Zakat as factory is exempt on the analogy of Agricultural land. However, total production of the factory amounting to Rs. 2 billion would be charged on the analogy of agricultural produce. Rate of Zakat would be equal to half Ushr i.e. 5 percent as it is like artificially irrigated land because much labour is required in respect of its production. Stocks in trade and debts will not be considered as Zakat is being levied on the factory in respect of its industrial produce and not as a business shop.
Zakat on production of Rs. 2 billion at rate of 5 percent will come to Rs. 10 crore.
Example No. 5
Ch. Muhammad Ahmad is a big landlord. He has 200 acres of fertile agricultural land and has latest agricultural machinery worth Rs. 10 crore. He has setup a garden of mangoes and dates on 20 acres of his land and on the remaining land he grows various crops. He has earned income of Rs. 1 crore last year after deduction of expenses amounting to 1 crore. Production of his garden and farms during the year is as under. Please work out his Ushr liability.
1. Wheat 10 thousand maunds
2. Barley 2 thousand maunds
3. Rice 5 thousand maunds.
4. Pulses 500 maunds
5. Mangoes one lac maunds.
6. Dates 1000 maunds
7. Potatoes 10 Thousand maunds
8. Garlic 20 maunds.
Solution: Agricultural land and machinery are exempted from Zakat. His income will not be charged because in case of agricultural land only produce is charged to Ushr. Rate of Ushr in this case would be 5% which would be charged on produce without allowing production expenses. Ushr is worked out as under.
1. Ushr on wheat comes to 500 maunds
2. Ushr on barley comes to 100 maunds
3. Ushr on rice comes to 250 maunds
4. Ushr on pulses will be 25 maunds.
5. Ushr on mangoes will be 5000 maunds.
6. Ushr on dates will be 50 maunds
7. Ushr on potatoes comes to 500 Maunds
8. No Ushr on garlic will be charged as its quantity is below Nisab of 24 maunds
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