Zakat & Ushr

Group #2

IntroductionZakat:

One of the five pillars of Islam. Only imposed on Muslims, it is generally described as a 2.5% tax on savings to be donated to the Muslim poor and needy.

Ushr: A 5% tax on the harvests of irrigated land and 10% tax on harvest from rain-watered land. The term has also been used for a 10% tax on merchandise imported from states that taxed the Muslims on their products. Caliph UMAR ibn Al-Khattab was the first Muslim ruler to levy ushr

Introduction

• The Qur’an says :– “O Believers ! expend in Allah’s way the best

portion of the wealth you have earned and of what We have produced for you from the earth.” (2 : 267)

Introduction• According to some jurists, ‘ushr is not

obligatory on those vegetables and fruits which are not stored, but if the grower sells them in the market, he will have to pay Zakat as on other trade goods if he trade capital amounts up to the Nisab limit of 200 dirhams or more in the beginning and the end of the trade

Definitions

• Administrator General:– It means the person appointed as such under

section 13 and includes an officer authorized by him to exercise or perform any power or function under the ordinance 1980

• Assets:– It means assets liable to Zakat as provided in the

zakat and ushr ordinance 1980

Definitions

• Attiyat:– Voluntary donations to zakat funds, otherwise

than on account of zakat or ushr and includes sadaqat-e-nafila

• Chief Administrator:– It means a person appointed as such under

section 15 and includes an officer authorized by him to perform the function of chief administrator

Definitions

• Deducting agency:– It means a Bank, post office or other institution

referred to in the sixth column of the first schedule

• Deduction date:– It means in respect of the assets mentioned in the

first schedule, the date or dates on which zakat is to be deducted at source and which is or are specified in the fifth column of that schedule

Definitions

• District committee:– It means a committee constituted under section 16 of the

zakat and ushr ordinance 1980, or in case of ICT, the islamabad zakat and ushr

• Nisab:– Nisab in relation to assets liable to zakat except

agriculture produce and animals fed free in pastures means 612.32 grams of silver, or cash or gold or goods for trade or any assets liable to zakat under shariah.

– 87.48 grams, in case of gold

Definitions

• Surrender Value:– The sum payable by an issuer or cancellation of

life insurance policy or annuity

• Survival Benefit:– The amount payable according to life insurance

policy conditions, during the currency of the policy, on survival of the life assured to the specified data as stipulated in the policy

Definitions

• Valuation date:– Valuation date means:• In respect of assets liable to zakat the first day of the

zakat year• In respect of produce liable to issuer such date or dates

as may be prescribed or as may be notified by the admin general or by chief admin

• Zakat year:– The year according to hijra calendar for which zakat is

chargeable

Chapter 2

Charge and collection of Zakat

Charge and collection of zakat

• Section 3 of the zakat and ushr ordince, 1980 deals with the charge and collection of zakat. Zakat shall be charged on the basis of following principles:– Zakat is to be charged for each zakat year on the

first day of ramadhan– Zakat is to be charged compulsory on each saahib-

e-nisaab– Zakat is to be charged at the rate of 2.5%

Deductions• Zakat is deductible at source may be reduced

only on account of debts which have been:– Primarily secured by that asset– Used for the creation of an asset on which zakat is

deductible – Obtained from the deducting agency having

custody of the asset securing the debt and of the asset created under clause

Exemptions from Zakat deductions

• The exemptions are as follows:– Assets of non muslims– Person who is not a citizen of Pakistan– Person files a declaration on grounds of faith and fiqa– Person excluded from the definition of sahib-e-nisab– Assets frozen under the order of competent authority– Assets of the persons deceased on or before the

deduction date– Assets acquired with or held in foreign currency

Chapter 3Charge and collection of Ushr

Charge and collection of zakat

• Section 5 of the Zakat and ushr ordinance 1980, deals with the charge and collection of ushr:– Ushr is to be charge on such date as may be prescribed

or notified by admin general or chief admin.– It is to be charged from every land owner , grantee,

allottee, lessee, land holder.– The ushr shall be the first charge on the produce– It shall be collected in cash.– Ushr is to be charged at the rates specified in the

schedule.

Exemptions

• The individuals like land owner, grantee, or alottee shall be exempt from the compulsory levy of ushr if :– He is eligible under shariah to receive zakat– The produce from his land is less than 948kg of

wheat or equivalent in case of other crops

Assessment and collection of ushr • The provincial revenue department shall assess and collect ushr• In case of lease the liability of the lessor and lessee to pay ushr shall be

equitably apportioned between them by the tehsildar• An assessee may file an application within 30 days to assistant

commissioner for the revision of assessment• Assistant commissioner may at any time either on his on motion or the

application of an adult muslim residing within his jurisdiction, make an order enhancing the liability assessed under sub section 1 or 2

• The decision should be made within one month after the application receive.

• The demand under sub section 1 ,4 or 5 shall be paid by the assessee and deposited into district zakat fund.

• Tehsildar or mukhtiarkar shall proceed to recover the amount if it were an arrear of land revenue.

Chapter 4

Zakat Funds

Establishment of Zakat Funds

• Central zakat funds:– The zakat deducted at source– The zakat paid into it voluntarily– The transfers, if any from the provincial zakat

funds– The grants, atiyyat and any other receipts

including voluntary contributions

Establishment of Zakat Funds

• Provincial Zakat funds:– The transfers to it from the central zakat funds– The zakat paid into it voluntarily– The transfers, if any, from the district zakat funds– The transfers, if any, from the local zakat funds– The grants, atiyyat and any other receipts

Establishment of Zakat Funds

• District Zakat Funds:– The transfers to it, from the provincial zakat funds– The proceeds of ushr to be deposited in the

personal ledger account of the district zakat funds– The zakat into it voluntarily– The transfers, if any, from the local zakat funds– The gramts, atiyyat and any other receipts

Establishment of Zakat Funds

• Local zakat funds:– The zakat paid into it voluntarily– The transfers to it from the district zakat funds– The transfers to it from the provincial zakat funds– The grants, atiyyat and any other receipts

Utilization of Zakat Funds• The zakat funds shall be utilized for the puposes:– The zakat shall be given to the needy person, poor

particularly orphans and widows, and disabled persons eligible to receive zakat under shariah for their rehabilitation

– For the homeless people due to natural calamities, like floods and earthquakes

– Expenditures on collection and administration of zakat and ushr

– In any non-interest bearing instrument as is permitted under shariah

– Any other purpose permitted by shariah

Chapter 5Organization & Administration

Central Zakat Council• It consists of:– A chairman– 4 persons to be nominated by the president in

which 3 shall be ulema– 1 person from each province to be nominated by

the president– 2 women who shall not be less than 45 years of

age– The chief admins

Central Zakat Council– The secretary to the govt. of Pakistan in the ministry

of finance– The secretary to the govt. of Pakistan in the ministry

of religious affairs, zakat, ushr and minorities affairs– The secretary to the govt. of Pakistan in the ministry

of health– The secretary to the govt. of Pakistan in the ministry

of education– The admin general who shall also be the secretary of

the council

Provincial Zakat Council• It consists of:– A chairman– 5 persons whom 3 shall be ulema nominated by the governor– 2 women who shall not be less than 45 years of age– The secretary to the provincial govt. in the finance

department– The secretary to the provincial govt. in the local govt.

department– The secretary to the provincial govt. in the social welfare

department– The chief admin who shall also be the secretary of the council

District Zakat and Ushr Committee

• Consists of:– A chairman– 2 women who shall not be less than 45 years of

age– Deputy commissioner of the district– 1 non official member of each tehsil, taluqa or sub

division in the district– The district zakat officer who shall also be the

secretary of the committee

Tehsil, Taluqa or Sub Divisional Zakat and Ushr Committee

• It consists of:– Assistant commissioners– 2 women members nominated by the district

committee– 6 members to be elected by the chairman of the

local committee– The members of the committee shall elect 1 of

their members to be the chairman of the committee

Local Zakat and Ushr Committee

• It shall be constituted for:– Each revenue estate in settled rural area– Each deh or village in non settled rural area– Each ward in urban area