Chanda is not the same as Zakat – neither, for that matter, is it the same as sadaqa. So what’s the story here? We’ve laid out the main points for you in another post, but here are the details. You can download these FAQs for your reference here. And if you have more questions, you can always ask on our discussion forum.
Zakat and Other Financial Sacrifices
1. How are Zakat and Jamaat Chandas different?
Zakat is a fundamental pillar of Islam and is NOT superseded by Jamaat chandas. Its purpose and eligibility criteria are different. Zakat is wajib, which means that it’s obligatory when conditions are met. (Fiqah Ahmadiyya, Vol 1, pp 358.) Zakat is due on money held unused for a year. Chandas are paid on earned income as it comes regardless of whether it is used or not. Some voluntary chandas are not based on income or savings.
2. What if my intention is that my Zakat is included within the amount that I pay for my Jamaat chanda or Wasiyyat chanda, without spelling out the breakdown of the two? Is that allowed?
Based on the differences of between the philosophy and applicability of Zakat vs. chanda (mentioned before) this practice is not correct. Zakat should be paid separately. (Fiqah Ahmadiyya, Vol 1, pp 370.)
3. Isn’t Zakat same as Sadaqa?
No. According to Hazrat Musleh Ma’ood (ra), Sadaqa is a voluntary form of charity that a Muslim participates in to seek Allah’s nearness. Zakat is mandatory on all Muslims on whom it is due. Think about it like this: Zakat resembles Fardh Salat that is mandatory; sadaqa resembles Nafl (voluntary) prayers which are offered to seek nearness to Allah. (Islah-e-Nafs. Anwar-ul-Aloom, Vol 5. pp 452).
4. What’s the difference between the distribution of Zakat vs. sadqa?
Sadaqa may be given individually by the person to whomsoever he pleases, but it is preferred that Zakat should be collected by a central authority and distributed for prescribed expenses only. (Fiqah Ahmadiyya, Vol 1, pp 359.)
5. How is the Zakat different in purpose than Chanda or Sadaqa?
The main purpose of Zakat is to purify wealth that has accumulated and remained unused for one year by taking it from the unused pool and using it for the welfare of the poor. It discourages hoarding of wealth, and encourages investment of wealth into new ventures, and unlike interest in capitalist financial system, it does so without burdening those who do not have accumulated wealth. By limiting uses to uplifting of the poorer segments of the society, it also promotes upwards social mobility. That is why Zakat is judged on unused accumulated wealth.
The Jamaat Chanda system is primarily used for promoting and propagating Islam and Ahmadiyyat. That is why chandas are calculated on the members’ running income.
Sadaqa is individual voluntary charity that is meant as an act of devotion and specifically to seek Allah’s help against misfortune. Amount and timing of Sadaqa is purely on the individual’s discretion.
How to calculate Zakat
1. What is Zakat Due on?
In general Zakat is due on money or monetary forms that are held in possession by a Muslim for one year. Money held in personal possession (for example as cash or in a bank), gold and silver are specifically covered by Zakat. Zakat is not due on assets and objects of normal use (for example a house one lives in), nor is it due on assets that generate income (for example a factory or a rental property, but farming and produce are handled differently). Similarly, Zakat is not due on assets that are not accessible by the owner (for example money given as a loan to someone).
In modern times, the financial system we live in is very complex, and the boundaries are not always clear. One should use best judgment to determine how much Zakat to pay. Zakat is a form of worship, and one should submit to worship wholeheartedly and in the best manner possible.
Assets on which Zakat is due
- Cash and bank balance and accumulated profit it may fetch in a year
- Gold & silver coins
- Jewelry that is not worn “regularly” or is purchased with the intention of investing in gold.
Assets on which Zakat is not due
- Articles of personal use (for example a house one lives in, car, household items or jewelry that is “regularly” worn). Fiqah Ahmadiyya Volume 1, page 361
- Assets that are used for income generation (such as a business, its property, equipment etc.) (Fiqah Ahmadiyya, Vol 1, pp 361.)
- The Promised Messiah (as) stated: “On property that is suspended, Zakat is not necessary, until it comes in your possession. A trader should not make plans to avoid Zakat because in the end he himself pays for his expenditures with this property. One should make Allah happy by keeping an eye on his current and suspending property. Some make plans and excuses will Allah as well, this is not correct.” (Fiqah Ahmadiyya, Vol 1, pp 367.)
- Money or assets that would normally come under zakat but are beyond one’s access for the year (for example money given as a loan given to someone, or a retirement account before retirement). Once the asset is accessible again, zakat would be due on it.
What is Nisaab?
Nisaab is that threshold of assets held in possession for a year above which Zakat is due on that asset. If someone did not hold assets above the Nisaab for one year then no Zakat is due.
In Islam, Nisaab was originally defined in terms of gold coins (dinars) and silver coins (dirhams), and the exchange rate between them was 1:10 during the time of the Holy Prophet (peace be upon him). The Nisaab was set to 20 dinars or 200 dirhams. In modern times, these coins are no longer in circulation, and the value of gold and silver by weight has drifted apart. Some Islamic scholars now use the weight of gold and silver in the dirham & dinar coins to calculate Nisaab: 620 grams of Silver (about 20 Troy ounces, roughly $380 in January 2014) or 87 grams of Gold (about 2.8 Troy ounces, roughly $3500 in January of 2014). This is open to interpretation and is being shared as food for thought only.
If one has multiple assets, and the value of each individual asset is below the nisaab, then Zakat is not due on them. Even though their collective value may be higher than the nisaab. However, the Holy Prophet (peace be upon him) has also warned against deliberately breaking up an asset to avoid paying Zakat. Allah is the judge of all intentions. (Fiqah Ahmadiyya, Vol 1, pp 366.)
What is the rate of Zakat?
The rate of Zakat is one-fortieth (1/40) or 2.5% of the assets on which Zakat is due, provided they are worth more than the Nisaab ( approximately $3500 in Jan. 2014). If the assets are worth less than the Nisaab, then no Zakat is due.
In this FAQ, we have tried to highlight common situations that people come across as part of a global financial system. Members may feel differently about some answers below. That is why we invite you to join us in this blessed conversation at our “Spiritual Fitness Forums” where our respected missionaries and other learned members of the Jamaat will facilitate a dialogue to handle some of the more complex matters.
As in all worship, Taqwa is the root of all good. Please read the Zakat section mentioned in Fiqah Ahmadiyya Volume 1 (Urdu only) and in case of confusion or questions, please seek advice from a local Missionary.
The Who, Why, When, How and Where of Zakat
1. Who should pay Zakat?
Every Muslim who has more than a threshold amount of assets (wealth, gold/silver, other) in his/her possession for over a year (also known as nisaab) should pay zakat on it.
2. What’s the big deal if we have jewelry or cash in our possessions for over a year and don’t pay zakat on it?
“Zakat is such a thing that those who refuse to pay it, are expelled from the fold of Islam.” By Hazrat Musleh Ma’ood (ra) here. (Islah-e-Nafs. Anwar-ul-Aloom, Vol 5. Page 452.)
3. Is Zakat due on retirement fund (IRA or 401k)?
As discussed above, Zakat is not due on assets that are outside of a person’s access, so Zakat is not due on these funds as long as the money is not within access. In case the funds become accessible, Zakat will be due on them. (Fiqah Ahmadiyya, Vol 1, pp 369.)
4. What do you mean by “regular” use of jewelry? How often is “regular”?
This is best left to individual judgment. If a jewelry didn’t get used for the whole year, the answer is obvious. The Promised Messiah (as) states:
“Jewelry which is used – there is no Zakat on it. Jewelry which is stored and used very seldom – one should give Zakat upon it. Jewelry which is worn and occasionally given to poor women to use – some have given the judgment that there is no Zakat upon them. Jewelry which is worn and not given for other’s use – it is better to give Zakat upon it. Our household acts upon this and give Zakat for the jewelry every year. Regarding the jewelry which is saved as money, there is no disagreement concerning it” (Fiqah Ahmadiyya, Vol 1, pp 360).
5. Is Zakat to be paid on precious stones?
No. There is no zakat on precious stones (Fiqah Ahmadiyya, Vol 1, pp 370).
6. I had some money in my account for a few months and then bought some jewelry with it. Collectively I’ve had the money or jewelry for more than one year, but the jewelry has been with me for less than one year, and I didn’t use it. Do I need to pay Zakat?
If during the course of a year an asset changes form and Zakat is payable on that asset, but the duration is less than one year for each form of the asset, then Zakat is not due on it.
7. When should Zakat be paid?
Zakat is due on assets held in possession for more than one lunar year (the Islamic calendar year). One can choose any month for assessing personal Zakat payment. Ramadan is particularly suited for this as worship done in Ramadan is especially favored in the eyes of Allah.
8. Who should Zakat be paid to?
According to the guidelines of the khuafa, it is preferred for Ahmadi Muslims to pay their Zakat to their Jamaat finance secretary who will then send it to the National/International headquarters. (Hazrat Musleh Ma’ood (ra). Islah-e-Nafs. Anwar-ul-Aloom, Vol 5. pp 453.)
9. I already pay a lot of chanda, and paying Zakat will be a great burden. What should I do?
Zakat is the foremost among mandatory financial sacrifices in Islam Ahmadiyyat. One should prioritize making financial contributions according to Quran, hadith and the teachings of Masih Ma’ood (as). Muslims under exceptional financial hardship are unlikely to meet the threshold of Nisaab.
10. Is Zakat due on the money that is taken out as a loan?
Zakat is due if someone acquires a loan but does not use the money for business or personal use, but keeps the money in his possession for one year. If someone takes a loan to buy a house or run a business, or an item of use, then Zakat is not due on that money.
11. Is Zakat due on money given out as a loan?
No, Zakat is due only when the loan is returned (Fiqah Ahmadiyya Vol, pp 370).