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Chapter 13 Zakat Answer

This document discusses Islamic accounting practices regarding Zakat. It defines Zakat as an obligatory charity in Islam calculated on certain assets and income. Zakat is compulsory while Sadaqah is voluntary charity. The document outlines the sources Zakat is levied on including gold/silver, livestock, crops, business assets, and discusses methods to determine the Zakat base amount using net assets or net invested funds. It provides an example calculation of Zakat due from a bank's assets using both methods.

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NUR ARISSA BINTI AZHAN
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145 views

Chapter 13 Zakat Answer

This document discusses Islamic accounting practices regarding Zakat. It defines Zakat as an obligatory charity in Islam calculated on certain assets and income. Zakat is compulsory while Sadaqah is voluntary charity. The document outlines the sources Zakat is levied on including gold/silver, livestock, crops, business assets, and discusses methods to determine the Zakat base amount using net assets or net invested funds. It provides an example calculation of Zakat due from a bank's assets using both methods.

Uploaded by

NUR ARISSA BINTI AZHAN
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Islamic Accounting Practices

Chapter 13: Zakat


Definition of ZAKAH
 Literary, Zakah means blessing, purification, increase and
cultivation of good deeds. It is called Zakah because it blesses
the wealth from which it is paid and protects it. In Shari'ah,
Zakah is an obligation in respect of funds paid for a specified
type of purpose and for specified categories. It is a specified
amount prescribed by Allah the Almighty for those who are
entitled to Zakah as specified in the Qur’an. The word Zakah is
also used to indicate the amount paid from the funds that are
subject to Zakah.
ZAKAH vs. SADAQA
 Zakah is not religious charity, which is termed
Sadaqah (although Sadaqah is sometime used in the
Qur’an to mean Zakah). Charity is a voluntary affair,
whereas Zakah is a compulsory levy on wealth and
income, once it exceeds a certain amount termed
nisab. According the Qur’an it is a right of the poor
on the wealth and income of the rich.
Some Qur'anic Zakah verses

And in their wealth and possessions (was remembered) the right of the (needy,)
him who asked, and him who (for some reason) was prevented (from asking).
Adh-dhariyat 51:19

Of their goods, take alms, that so thou mightest purify and sanctify them; and pray on their
behalf. Verily thy prayers are a source of security for them: And Allah is One Who heareth and
knoweth At-Tauba (The Repentance) (9:103)
Cash and cash equivalent
 Cash and cash equivalent include local and foreign
currency and deposits with the central bank and other
Institutions which the Islamic bank can withdraw in full
on demand.
 For Zakah purposes cash and cash equivalent includes, in
addition to the above, gold or silver in the form of
currencies, bullion or other.
FIQH OF ZAKAH
AGRICULTUR GOLD, CASH
E

SOURCES
OF
ZAKAH

LIVESTOCK
INVENTORY
Sources for ZAKAH
 Zakah is levied on gold and silver (or money, bank
account balances, financial papers) , livestock (cattle,
sheep/goats, camels), agricultural produce of staple
crops (wheat, rice), business working capital
(inventory, receivables, cash and cash equivalents),
Under each sources, there are further detailed fiqh
rules which vary among the schools of thought.
ZAKAH in Today’s Economy
 FAS no. 9 and the AAOIFI shari'ah standard (11) on Zakah,
Sheikh Yusuf Qaradhawi’s seminal work and the FatÉwÉ of the
Islamic Fiqh Academy of the OIC are all making the rules of
Zakah more relevant to today’s economy.
 Islamic financial institutions are businesses and therefore have to
pay business zakÉh.
Liability Conditions to Zakah
 Unencumbered possession
 The asset must be capable of growing or increasing
 Nisab ( i.e. 85 grams of gold or 595 grams )
 H’awl and Zakah rates [2.5% (per Lunar year) and 2.5775% per Solar year)]
 Exception: except in the case of agriculture where the Zakah is payable on the day of
harvest at 5 or 10%.
 Duplication of Zakah, TAX, Unlawful fund
Determination of the Zakah base
 Net Assets method (Prescribed by Fuqaha)
 Net invested funds method (used by government organizations).

METHODS OF
DETERMING
ZAKAH BASE

NET NET
INVESTE
ASSETS
D FUNDS
METHOD METHOD
Question 13.3
Zakat Payable by Bank Shariah Malaysia Berhad

NET ASSETS METHOD


Current Assets RM
Cash and balances with Banks and agents 150,500,000
Deposits and placement with financial institutions 1,800,000,000
Dealing securities 1,200,500,000
Investment securities 300,000,000
Financing of customers Click to add text 4,500,000,000
Bills receivable (less 200k) 250,300,000
Total Current Assets 8,201,300,000

Less: Current Liabilities


Deposit from customers 7,000,500,000
Deposit and placement of banks and other financial institution 40,500,000
Bill payable (less 300k) 84,700,000
Total Current Liabilities 7,125,700,000

Zakatable Amount (TCA - TCL) 1,075,600,000


Zakat due at 2.5775%' 27,723,590
NET INVESTED FUND METHOD

Share capital 500,000,000


Reserves 1,226,500,000
Bill payable 300,000
1,726,800,000
Less: deposit with BNM (250,500,000)
1,476,300,000
Less:
Fixed assets (400,500,000)
Bill reeceiable (200,000)

Zakatable Amount 1,075,600,000


Zakat due at 2.5775%' 27,723,590
Question 13.5
Zakat Payable by Bank Shariah Malaysia Berhad

NET ASSETS METHOD


2004 2005
Current Assets RM RM
Cash and short term funds 1,410,000 2,308,000
Deposits and placement with financial institutions 79,000 21,000
Dealing securities (1721-21+22.5) 1,722,500 2,369,000
Investment securities (1429-19+23) 1,433,000 1,448,000
Other assets 7,800,000 6,950,000
Bills receivable (12000 - 5%) 11,400 8,550
Total Current Assets 12,455,900 13,104,550

Less: Current Liabilities


Deposit from customers 6,500,000 6,185,000
Deposit and placement of banks and other financial institution 350,000 32,000
Bill payable 80,000 74,000
Other payables 81,000 83,000
Other liability - deferred tax 7,000 8,000
Total Current Liabilities 7,018,000 6,382,000

Zakatable Amount (TCA - TCL) 5,437,900 6,722,550


Zakat due at 2.5775%' 140,162 173,274
NET INVESTED FUND METHOD

Share capital 500,000 500,000


Reserves 663,000 613,000
Equity (less 15) 4,753,000 6,165,000
5,916,000 7,278,000
Less: deposit with BNM (373,000) (390,000)
5,543,000 6,888,000
Less:
Fixed assets (90,000) (115,000)

Zakatable Amount 5,453,000 6,773,000


Zakat due at 2.5775%' 140,551 174,574

Different (389) (1,300)


The different is small and immaterial
Thank you

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