Zakat on Salary

By | February 18, 2019

The payment of zakat is obligatory on all Muslims who meet the stipulated conditions, hence, its not obligatory on all, but those that have met the conditions. Generally, zakat is obligatory on four kinds of wealth:

  1. Agricultural produce (grains, fruits, etc.)
  2. Grazing livestock and cattle;
  3. Gold and Silver (and their equivalents in modern currencies and bank-notes)
  4. Trade goods.

As for the frequency of payment of zakat what is mandatory is that, it should be done once in a year (lunar calendar) for the third and fourth categories of wealth mentioned above, however for the first and second categories the payment is done once the conditions attached to each of the produce or stock are met and this can be as many time as possible in a year and it’s also possible that in a whole year or years payment of zakat is not made if the nisaab attached to this is not attained. Further reading on this is available at: http://www.tijarahhub.com/zakat-agricultural-products/

For salaries, this is the monthly amount earned by an employee and it falls under the third category of wealth that is ‘zakatable’ as stated above. One of the conditions to pay zakat on salaries and other funds is that the funds must be with the owner for a whole year. For most salary earners they can fall into any of the following categories:

  1. Spend all their salary and have nothing to save.
    1. For this category of workers, they are not required to pay zakat on their salary because they have not saved anything from their salary, and they are not obligated to pay zakat because they don’t have any savings let a lone have it for a year which is a precondition for zakat payment on this type of wealth.
  2. Save part of the salary.
    1. For this category of workers, they can be further divided into two
      1. Those that have saved enough and at the end of the year have savings that is more than the nisaab then they must pay zakat on the savings and not the total salary earned. For example, if I earn 5 Million Naira and I save 1 Million Naira every month. At the end of one lunar calendar year I would have saved 12 Million Naira. Then I will be obligated to pay zakat on 12 Million Naira which is 2.5% of 12 Million Naira which amounts to about 300,000 Naira.
      2. Those that saved and the savings is not up to the nisaab at the end of one year are not obligated to pay zakat. For example, if I earn 5 Million Naira monthly and save 50,000 Naira monthly. At the end of one lunar year I would have saved 600,000 Naira, but the savings is not up to the nisaab hence I am not obligated to pay zakat.
    2. Invest part of the salary.
      1. For this category of workers, they are not saving part of their salary, but they are putting it into use by investing it in halal investment instruments. For the details of how the zakat is paid on the salaries that is invested you can read up details here: http://www.tijarahhub.com/payment-zakat-financial-instruments-funds/

The summary is that payment of zakat on your salary will be dependent on how much you are able to save or invest and keep for one lunar calendar year and the fact that it must be up to the nisaab and not necessarily the amount you earn monthly. It is possible that you earn 5 Million Naira monthly and you are not ‘zakatable’ while another person earns 2 Million Naira monthly, yet they must pay zakat because they have saved more. The differentiator is how much did you save or invest? And not the amount you earn.

However, we are encouraged to always give sadaqat as there are no specific conditions with this and we should also help the poor and needy. It is not a bad idea if we dedicate certain amount monthly and give to the poor and needy, hopefully, Allah will reward us for this. Yes, you might not be obligated to pay zakat because you don’t have enough saving but its necessary you pay sadaqat so that you can earn the mercy of Allah. The Prophet (SAW) was reported to have said:

“Every day two angels come down from Heaven and one of them says: ‘O Allah! Compensate every person who spends in Your cause’, and the other [angel] says: ‘O Allah! Destroy every miser’.” (Bukharī: No. 1374)

So, if you need compensation from Allah have a daily, weekly and monthly sadaqat plan such that you can give to the poor and needy, with this you will even earn more blessings and compensations from Allah daily, weekly or monthly and this will be counted for you as sadaqat. But if you desire to save or invest then at the end of the year you must pay zakat if other conditions are met and Allah will definitely reward you for doing so.

Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkedin
Contact us

Leave a Reply

Your email address will not be published. Required fields are marked *