Zakat

01. Scope of the standard(cover)

Identification of Zakah base for:

• Institutions (including Islamic insurance companies) • Subsidiary and mother
company
• Zakah rates
• Categories of Zakah recipients
• Rulings pertaining to disbursement

Disscuss will be

02.Procedural Rulings
03.General Rulings
04.Fixed Asset
05.Zakatable Asset
06.Liabilities
07. Provisions
08. Reserves
02.Procedural Rulings.

There are Two methods for Calculation of Zakah Base.

01.Net Asset Method  Different Base of

02.Net Investment Asset method Assesment
 If Difference is well
organized the final
outcome will be the
same.
 The Standard is based
on the Net Asset
Method
 Calculation of Zakah base by using the net assets method is done as
follows : Zakah Base : Zakatable Asset-Liabilities
Zakatable assets include:

Cash and the like Xxx

Receivables Xx x
Less: Doubtful debts (X) x

Assets prepared for trading:

Goods(commodity Value) XX
Financial papers(Investment Sukuk,Share,Bond) XX
Real estate (Land, Building) XX

Financial assets
Mudarabah X
Musharakah X
Salam X
Istis’ana x
------------------------------------ xxxxxx

Zakatable assets XXXXXX

A.
 Net Asset Method

Zakatable Asset *******

Less :

Liabilities payable during the financial year

as at the date of the balance sheet ***

All instalments of liabilities of the financial year

which will become due during the coming
financial period ****

Rights of the holders of non-restricted

investment accounts *****

Minority rights *****

Sovereign rights(Legal rights by
the Goverenment,like
Oil and natural resources, Gas) *****
Waqf rights *****
Charitable rights *****

Rights of non-profit earning organizations

that have no specific owner *****

Zakah Base *******

Asset Type Zakah Basis

Assets prepared for trade Cash value (selling market value) at
the time Zakah is due
Agriculture and livestock other than Applicable ratios and rates
articles of trade

B. The Institution accept agency for payment of Zakah on behalf of

a. All or some of its Equity Holder

b.Investments Holders for payment of Zakah on their behalf.
c. The Institution Coordination between the mother Company and its subsidiaries with
regard to payment of Zakah avoid double Payment.
 Direction Payment of Zakah By the Institutions

Required by Stipulated in Resolution passed

Zakah law the articles in the general
of assembly
association

d. Clearance of the Shariah board should be obtained for:

• Establishing Zakah fund
• Preparing Zakah accounts
• Disbursement of Zakah funds
 Institution -------- Direct distribution-------------------- Zakah recipients
 Institution-------- Zakah agency--------------------------- Zakah recipients

e.If any condition absence for paying Zakah through Institution The Zakah payment shall
become responsibility of-----------------
* Share holders Institution has to Indicate the amount of Zakah payable per
share. Example : If Total number of shares of the institution: 50,000 and Share holder
CU 80,000 then Per Share : 8000/50,000 : 1.60 per share

*Holders of the Investment Accounts. Institution has to Indicate the balance

of an Investment account. Example : Total investment account balance: CU 500,000 and
Investment account holders CU 20,000 then 20000/500000: CU Investment account
Balance.
C.

Balance Sheet Income Statement

 Zakah calculation is based on  Income statement does not form a

balance sheet basis for Zakah calculation
 There will be no Zakah if:  In order to pay Zakah, it is not
Liabilities > Assets necessary for the institution to
make profit (i.e., incurring losses
does not prevent Zakah becoming
due)

03. General Rulings

a.

Zakat is Obligatory Zakat is not Obligatory

 Fixed assets that generate income and
 Gold not acquired for trade (e.g., leased
 Silver assets
 Currencies
 Trade Articles  Public wealth (public sector)
 Livestocks(Camels, Cows,  Insurance funds of public
Goats) institutions
 Agricultural products
 Mineral and Rikaj  Charitable Waqf (al-Waqf al-
Khayri)

 Trust funds as well Irsad

(allocation) of public funds
that do not have specific
owner

 Properties for (non-

profiteering) educational,
charitable, and social
Institutions that do not have
specific owner
 Income
Obligatory Not Obligatory
Zakah is obligatory on the portion of Zakah is not obligatory on wages, salaries and
such income that remains income from free occupations at the time of
unexpended for a whole year receiving such income
Family waqf
Beneficiaries should pay Zakah, at the end of the year, from that portion of the Waqf
income which remains unexpended

b.Condition for Zakah Obligation :

Full Ownership b.2 Nisab(Excluding b. Al Hawl(Zakah year

b.1 agricultural produce 3 Cash and Commercial
and livestock that are assets as well as
not for trade) Livestock

Nobody else has a right The whole amount is

in the asset in question zakatable if Nisab is Lunar year: 354 days
crossed 2.50%
The owner can dispose
of the asset the way he Gold : 85 grams of pure Solar year: 365 days
likes gold 2.577%
=
The owner of the asset is Equivalent in currency Solar year (leap year):
the sole owner of the (paper or coins) 366 days
income generated from =
the asset Articles of trade after
valuation
Silver : 595 grams of The Hawl does not apply to:
pure silver • Agricultural products
The Nisab which is widely • Minerals and Rikaz
recognized as applicable to (treasures
articles of trade is that of
gold.
C.Applicable Zakah Rate:

Zakah rate applicable to agricultural produce:

Non-irrigated lands 10%(One Tenth)
Irrigated lands 05%(Half of the Tenth)

Partially irrigated lands 7.5%((Three quarters of the tenth)

Gold, Silver Currencies and articled of trade 2.5%

01. Methods of Calculation of Zakah Base ----------------

A.Net assets Method

B. Net Investment method
C. Both of them
D. None of them

02. Zakah asset include-------------------------

A.Cash and the like, receivables- doubtful debts

B. Asset prepared for trading( goods, Financial papers and real estate)
C.Finacing asset(Mudarabah, Musharaka, Salam, Istinia)
D. All of them

03.In which of the following cases it is obligatory for an Institution to pay Zakah?

A. Required by a Zakah Law

B. Resolution passed in a general assembly
C. Stipulated in the articles of association
D. All of the above
 03. Institution accepts agency for payment zakah on behalf of -----------------------

A. Equity Holders
B. Investments Account Holder
C. Both of them
D. None of them

04.The Institution coordinate needed to avoid double zakah Payment-----------------

A.Mother Company
B. Subsidiary company
C. Both of them
D. Nome of them

04. The Institution for the clearance of the Shariah board should be obtained for---------------
---

A.Establishing Zakah Fund

B. Preparing Zakah Account
C. Disbursement of Zakah fund
D All of the above.

05. The Institution pay Zakah receipts through-------------------

A.Institution---------Direct direction to Zakah receipts
B. Institution-----------through Zakah agency----------Zakah receipts
C. Both of them
D. None of them

06. Which of the following is permissible ?

A.For an Institutions to accept agency to pay zakah on behalf of others

B. For an Institution to distribute zakah through an agency
C. For an Institution to coordinate with its subsidiary to avoid double payment of zakah
D. All of the above.

07.Incase of the responsibilty of payble to Zakah which one is the true in the following

A. The share holder are liable to pay Zakah

B. The Investment Holder account are liable to pay Zakah
C. The Institution is liable to indicate Zakah per share & Zakah per given a balance of
investment account.
 D. All of them.

07. Which one of the following is the true of Zakah obligation on the Institution.

A. Zakah calculation is based on Balance sheet

B. There will be no zakah if the calculation liabilities are greater then assets
C. Income statement does not form a basis of Zakah calculation.
D. Incurring losses by the Institution does not prevent Zakah from becoming due.
E. All of the above.

08.In which of the following cases there will not be any Zakah obligation on the Institution?
A. If liabilities are greater then the asset
B. If assets are greater then the liabilities ?
C. If the Institution report a loss
D. None of the above.

09.Zakah is obligatory-------------------------
A.Gold, Silver currencies
B. trade articles Livestock(camels, cows and goats),

C.Agricultural products, Mineral and Rikaj(treasures)

D. All of the above.

10. Which one is the true for not obligatory of Zakah Payment ?
A.Fixed assets which generate income and not acquired for trade, such as leased asset.
B. Charitable Waqf (al waqf al khair)
C. Trust funds as well irsad (allocation) of public funds that do not specific fund and the
Insurance fund of public Institutions.
D. Properties for (Non profiteering) educational, charitable, and social institutions that do have
specific owner
E. All of them

11.In case of Income in the following which one is the true for the payment of ZAkah ?
A. Zakah is not obligatory on wages, salaries and income from free occupations at the time of
receiving of such income.
B. Zakah is obligatory on the portion of such income that remains unexpended for a whole year.
C. In case of family waqf Beneficiaries should pay Zakah at the end of the year from that portion
of the waqf income which remains unexpended.
D. All of the above.

12.The assets on which Zakah is not mandatory include the following?

A. Income generating fixed assets
B. Current commodity asset(articles of trade)
C. Investment accounts
D. All of the above.

13.-----------------------is used in calculating ZAkah?

A. The statement of Fiancial position{Balance sheet)
B. The statement of Income
C.The statement of Cash flow
D. The profit amount made by the IFO.

14.Which of the following is correct?

A. Every types of wealth is Zakatable
B.Income generation Fixed asset is Zakatable
C.Agricultural products are not zakatable
D.None of the Above.

15. The Nisab for Gold regardless of its form--------------------

A. 85 grams
B. 595 grams
C. 87 grams
D. None of the them

16. The Nisab for Gold regardless of its form 85 grams of pure gold equivalent in
A. Equivalent in currency(paper or coins)
B.Articles in trade after valuation as well as to extracted minerals
C. 595 grams of pure silver
D. All of them

17. The Zakah year for cash and commercial asset like gold , silver , currency, articles of trade as
well as livestock is a ---------------------
A. lunayar year 354 days and 2.50%
B.Solar year 365 days and 2.577%
C.Solar year(leaf year) 366 days and 2.60%
D. All of them

18. The 2.50% Zakah rate applies for ----------------

A. Solar year
B. Lunar year
C.leaf year
D. Agricultural product

19.The zakat due on agricultural crops (agricultural products) if they are Non irrigated by
machinery is :
A. 2.5.%
 B. 5%
C.7.5%
D.10%

20. The zakat due on agricultural crops (agricultural products) if they are irrigated by machinery
is :
A. 2.5.%
B. 5%
C.7.5%
D.10%

21. The zakat due on agricultural crops (agricultural products) if they are partial irrigated by
machinery is :
A. 2.5.%
B. 5%
C.7.5%
D.10%

04.Fixed Asset :

a. Operational Fixed Asset : Zakah is not obligatory on the following assets:

Operational fixed assets  Premises of the institution
• Equipment
Intangible assets (for operational  Patent rights
use) • Trademarks
• Computer software
Moveable assets acquired for  Spare parts
operation • Tools used for further production
even when such assets are kept in the
warehouses.

b.Income Generating Fixed Asset( There is no Zakah on )

Income generating fixed assets Mustghallat (leased assets):
(if not acquired for trade) • Real estate properties
• Transportation vehicles
• Real estate investments
• Capital projects under implementation(Which
are not for trding)
Zakat is only on the unexpended portion of the income generated by such assets
c. Investments in shares with the aim of retaining them (Nama`)
Is it possible for him to know through
the company the exact amount of
zakatable assets per share?
If the company has no zakatable
assets???
If Zakah can be levied on that amount,
Yes i.e
The shareholder should pay the zakat
accordingly
If Zakat is levied on the portion of zakatable
NO assets per share, which is reached through
estimation
Zakah is obligatory on the remaining part of the
net income at the end of the year.

no allocation for deterioration in the value of

If the shareholder owned the shares for share investments should be made from the
non-trading purposes are concerned zakatable assets.
????
Did he shareholder buy the shares for The shareholder should pay in the same manner
the purpose of trading? that zakat is paid for articles of trade (ʿurūḍ
tijārah)
Investment in the shares of subsidiaries
If a Subsidiary is entity but the Mother company owns 50% of the share

22. Which of the following asset is zakatable

A.Operational Fixed asset – premises of the Institution and equipment

B.Intangible asset for operational asset like trade mark,Patent Rights and computer software

C.Movble asset like spare parts, tools use for further production even such asset are kept in the
ware house.

D. None of them

23. The zakatable assets of institution includes a real estate property that it leased out to Party
A.

• The purchase price of the property: CU 500,000

• The market price of the property as at the Zakah due date: CU 750,000
• The rental income from the property during the year: CU 30,000, out of which CU 10,000 was
spent by the institution for different purposes Based on the above information, which of the
following will be zakatable?

A. CU 750,000
 B. CU 500,000
C. CU 30,000
D. CU 20,000

05.Zakatable Assets

5/1.Liquid or Easy to Liquidate Current Assets

Cash In Hand Pay Zakah

If in Foreign Currency----Convert Applying prevailing

Exchange Rate on the date when Zakah is Due.

Gold, Silver assets Pay Zakah

In the Weight or Cash value.
Current Account with other Institutions Interest will be donated
Institutions Pay to Zakat on principal amount on Charitable Purpose
Reason for Pay Zakah

Owner(clients) Consideration
Pay Zakah from the Investment Investments assets
balance+profit(If it is Short or rather than their share.
Investment account(a) long term deposit even if drawing
from the account.
Institution The IFO Pay Zakat Reason for Pay Zakah
on their Share of Since the account
profit or their represent trust(Amanah)
commission , as rather then a Liability.
part of their cash
asset.
Investment account(b) If If earn Interest Interest will be donated
Institution earn Zakah will pay on to Charitable purpose
Interest(ThoughProhibited Institution Principal
Bonds and treasury Bills(Which
represent debts and involve Zakah will be pay on the Interest will be donated
Interest) Though Prohibited principal(cost of the bond) to Charitable purpose

Owner Zakah will pay on the basis of Underlying asset

Investment Sukuk Institution Institution should Since is a trust basis
pay Zakah on their rather then a liability
Share of their
profit or their
commission.
Amounts Retained for documentation of the deal
Hamish Jiddiyyag(Security When Clients is Liable to Pay Zakah : When Institution is liable
Deposit to Pay Zakah :
If amount is deposited in Current
account : The rulings of the current If amount is deposited in
account will be applied Current account : The
rulings of the current
If amount deposited in an account will be applied
Investment account : The rulings of
the Investment Account will be If amount deposited in an
applied. Investment account :
The rulings of the
Investment Account will
be applied.

Security Deposits (for Bids) For the Institutions : For the clients : If the
amount is invested
To be deducted from zakatable before refund
assets of the Institutions
 Zakah is
payable
annually
 If deposited in
an investment
account ,Zakah
will be
 calculated
based on the
rulings of
Investments
accounts.
 If the amount
has not been
invested before
refund :
If several years
passed before
refund , The
Zakah is on ly
one year.
Cash Security Deposit: If the amount is invested before refund :
Individuals/Institutions for
obtaining certain services  Zakah is payable annually
such as telephone,
Electronic service renting  If deposited in an investment account ,Zakah will be
shop calculated based on the rulings of Investments
Renting equipments. accounts.

 If the amount has not been invested before refund :

Arboun(Earnest Money)
Commodity Current Asset
If several years passed before refund , The Zakah is on ly one
year.
Seller Arboun
 Seller is the amount To be deducted from
irrespective of the Zakatable assets.
outcome of the
contract
 Seller to pay Zakah
from it as part of the
Zakatable assets
Articles of Trade if the intention is to sell

Real estate
Moveable Asset

Will be zakatable if :

 Include anything offered for sale in current state or

after manufacturing.
  Acquired through buying or otherwise does not
have an impact.

The mere intention to offer themfor sale is sufficient.

Valuation of Articles of trade for Zakat Calculation :

 Selling Market price in the place they exist-------------

According to the Method of their sale(e.g.; retail or
wholesale or if both then whichever is
predominant)

 When other methods of Valuation are extremely

difficult :
Valuation at cost can be used.

 Valuation as of the Zakah Due (accrual) date.

 If the articles of trade another type of Zakaha

Treatment like Livestock or agriculture , They
should become Zakah applicable artilcles of Trade
only.

Payment of Zakah on Articles of Trade :

# In Principle: Cash
# Trade Recession : In Kind from the same
articles of Trade .
Zakah Have to be paid on the goods earmarked for the Buyer after concluding the contract, even
if he has not yet possessed them.

Example : Goods sold in a Salam Contract (and earmarked by the seller), but yet to be delivered.
That is mean :
Seller has to pay Zakat before delivery
Buyer have to pay Zakah after concluding the contract even if he has not possessed .

Commodity stocks prepared for trade---------------------------------

Raw materials in different forms ---------------------------------------
Goods for sale in their original form ------------------ * Zakatable
Goods for sale after being manufactured or modified--- * Valuation: Selling market price as per
the method of sale.
 *Any allocation should not be deducted from zakatable assets

Goods in process & Works under implementation (constructions):

• Zakatable
• Valuation at the day of Zakah accrual:
• At their current market price
• If market price is not available: At cost
Zakatable N.Zakatable Valuation
Industrial accessories (spare parts) N. Zakatable
used in production equipment
Goods in transit Zakatable To be valued for
Zakah at market price
in the place where
they are found
Goods to be sold by others on Zakatable To be valued for
commission (by agency) Zakah at market price
in the place where
they are found.
Goods imported through Zakah should When the goods are
documentary credits covered by the be paid on owned Zakah has to
Institution, including the expenses of the amounts be paid from them
opening the credit and the amounts retained for on the basis of their
retained by intermediary banks: the credit, market value.
and not the
expenses.
Goods prepared for export through Not Zakatable The amounts
documentary credits to the benefit of retained for the
the Institution credit, are neither
subject to Zakah nor
are they deductible
from zakatable
assets, since they
have not yet been
possessed.
But if the goods as part of its finished Zakatable
goods and that are still held by the
Institutions
Intangible rights prepared for trade Zakatable
such as copy right, patent right,
trademarks, and computer software
End of the year stock of raw materials Zakatable Market Value
(primary materials) which are
normally used as ingredients and
remain as components of the goods
manufactured for trade
n supporting materials which do not Not Zakatable
represent ingredients of or remain as
components of the manufactured
goods, such as fuel and cleaning
materials.
Finished goods and goods in process Zakatable Market Price
being manufactured for trade
Rapping and packing materials :

Prepared for trade separately Zakatable

Not Prepared for Trade Seperately : Not Zakatable

a. But Increase the value of the Zakatable

goods
Not Zakatable
b. Does not increase the value of
the goods

Receivables of the institution or the company

If the debt owed to the Institution is a cash amount the Institution should pay Zakah on it
annually.
Receivables X
Bad debts and doubtful debts (X)
Net receivables X
• Zakah on net receivables: Annual basis
• The institution can postpone Zakah until full or partial collection: Zakah for the whole past
period to be paid on collection.
• Zakah on bad debts or doubtful debts: One year after collection of such debts
 When the debt owed to the institution by another party comprises interest that has
arisen from the process of lending and borrowing or from rescheduling of the debt

Zakah is only on the principal amount.

Any interest income should be distributed for charitable purposes.
Applications relating to Receivables in the items of financial statements(Balance
Sheet)
Zakatable Note Zakatable

Debtors(Receivables arising Zakatable

from goods and services sold on
credit)
Loans, overdraft accounts, and Zakah is only on the
debt bonds including discounted amount paid
bonds (zero coupon) and
accepted bills (discounted bills):

Receipt papers (bills and  Zakah is on the principal amount

promissory notes
• Zakah is on the increment if the paper relates to a
commodity sold on credit
Amounts paid as guarantee from • The institution was not abled to invest it:
contracts
• No Zakah

• Zakah only for one year on receipt the amount

Advance payments on signing
contracts
Prepaid expenses
Accrued income
Legal deposit : It refers to the
amount retained by a bank on
request of the concerned
authorities for the sake of
awarding license to
the Institution.
Murabahah debtors (i.e.,
receivables)
Debtors of Salam goods
purchased by the Institution and
not yet received:
No Zakah(Since the Institution no
longer own it )
No Zakah(This represent expenses of
forthcoming periods)
Zakatable(Receivable
(income earned, but
yet to receive)
At the time of refund : No Zakah(Since the Institution was
Zakah only for one not abled to invest it.
year on receipt the
amount.
Zakah is payable on
total price including
profit
Zakatable
 if the

Zakah is payable by the seller as
part of its cash assets
Istisnaa:
Debtors of Istisna’a goods sold
by the institution:
Debtors of Istisna’a goods
purchased by the institution:
Investment in shares for trading
goods have been
purchased for trading
purposes
Goods purchased for
operating or income
generating purposes
Zakah is payable if
goods purchased for
trading purpose
Zakatable(
Such amounts are part
of Zakatable assets,
and Zakah has to be
paid on them under
the category
of current assets,
because they
constitute cash
amounts)
Zakatable(When such
goods are purchased
for the sake of trading)
Zakatable as articles
for trade
Valuation at:
 Market Price
 If no Market
Price :
By Experts
Debtors in an insurance No Zakah is payable by insurance portfolio
portfolio
Because:

Policyholders’ fund constitute an independent financial

liability.

Policyholders contribute on a donation basis

No surplus distribution to policyholders
Zakah on agricultural produce Nisab for agricultural produce and fruits: 653 kilogram
and fruits No consideration for Hawl(Zakah Year) because
what matters here is harvesting.

Zakah rate applicable to agricultural produce:

Non-irrigated lands 10%
Irrigated lands 5%
Partially irrigated lands 7.5%

Determining Nisab of agricultural produce:

*Different types of the same kind can be added together : Like

same kind of grain or fruit.

• Different kinds of produce cannot be added together (each

kind will have their separate Nisab)

• Different locations of the same kind is irrelevant.

Khars (estimation by experts) Estimation by experts is allowed

can be adopted when the 1/4th or 1/3rd can be left to the owner and the rest become
agricultural products or fruits Zakatable.
are ripe.
Zakah can be paid in terms of value
Works under implementation Not Zakatable
(constructions) relating to
agricultur
Production requirements such Not Zakatable
as fertilizers and insecticides
Rapping and packing materials Not Zakatable

Expenses relating to irrigation, Not deductible from

land development, irrigation zakatable assets
channels and soil woks
Cost of delivery to recipients Deductible from zakatable assets

Zakah on the produce of a Zakah should be paid by the Tenant

rented agricultural land

In case of Muzara’ah or Musaqat Zakah shall be paid

by the two parties proportionately.

Subsidies and concessions In form of cash : In form of land and

related to agriculture equipment :
Included in Zakah base as Not included in Zakah base
part of liquid assets
Zakah on minerals(Minerals here include all stuffs of this kind extracted from the earth or the
sea whether in liquid, solid or gaseous form)

Nisab Zakah Rate Hawl

85 grams of gold based on
continuous extraction
If extraction is suspended for 2.5% No consideration for Hawl
abnormal period, Nisab will
start when the extraction
resumed
If extracted minerals are owned by the state, no Zakah on them
Zakah on livestock Zakatable Not Zakatable
 Camels, Cows, Goats Zakatable
Does not matter whether
owned for milk or progeny

 If Animals owned for Zakatable

trade Valuation has to be selling
Market Price.
  If the animals which Zakatable
belong to the same
owner are found in
the same place or
different places

 Mixed ownership of Zakatable

the animals

 Working animals,
such as animals used Not Zakatable
in land plowing,
irrigation and
carrying

 Animals other than

camels, cows and Not Zakatable unless they are
goats own for trading.

 When animal
products such as Zakatable
milk and wool are
owned for trade

 Horses, mules,
donkeys and all Not Zakatable unless they are
other animals used own for trading.
for work or
adornment

 chickens acquired
for production Not Zakatable unless they are
own for trading.

06. Liabilities : Included: Debts owed by the Institution

Capital
Reserves
Profits
Comprise Zakatable Not Zakatable
Non-current (long term) Become due after One year
liabilities(Such debts usually arise
from purchase of
fixed assets on debt, in addition to
other long term entitlements.)

Current (short term) liabilities Become Due with in One year

Debts owed by the institution(arisen Deducted from Zakah

from obtaining current zakatable base
assets for the purpose of trade)

Debt arise to obtain non-zakatable Should not be deducted from

fixed assets Zakah base
When it is difficult to know the amount of debt that has arisen from acquiring zakatable assets,
the ratio of zakatable assets to total
assets should be used for assessment of such debt which has to be deducted from the Zakah
base. If, for instance, zakatable assets
constitute 40% of total assets, 40% of total debts should be deducted from the Zakah base.

If it is difficult to know the amount of debt that arise for acquiring zakatable assets
Liabilities Assets

Total Debt 50 Zakatable assets 40

It is assumed that: Non-zakatable assets 60
Debt deductible from Zakah 20
base (50x40%)
Total asset 100.00
Debt not deductible from
Zakah base (50x60%) 30
If the debt owed by the Institution has arisen from a Shari’ah- banned
practice such as borrowing with interest, unpaid interests
should not be deducted from zakatable assets, because impermissible
commitments cannot lead to a Shari’ah-recognizable debt.

Interest payable should not be deducted from zakatable assets

Current accounts Not Zakatable(should
be deducted from
Equity of investment account holders Zakatable(investment the zakatable assets
accounts the share of of
the the Institutions
Mudarib or agency fees entrusted with
earned by the investing these
Institution shall be accounts to the
excluded from the benefit of their
deductable amount. holders)

Not Zakatable
Creditors Deducted from
zakatable assets
Payables for:
• Obtaining goods
• Equipment
• Services
Creditors of sold goods of Salam Deducted from
zakatable assets
Creditors of sold goods of Istisna’a: Deducted from
zakatable assets

Creditors of purchased goods of Istisna’a: Deducted from

zakatable assets

Bills and order bonds issued to importers or Deducted from

for interest free borrowings zakatable assets(If
fall due in next Zakah
year)

Short-term loans X Deducted from

Overdrafts X zakatable assets

Accrued expenses Deducted from

zakatable assets

Prepaid (unearned) income Deducted from

zakatable
assets(Unearned
income for
undelivered services
should be deducted
from zakatable
assets)
 Earnest money (‘Arboun) Should not be deducted
from zakatable assets

Current tax payable Deducted from

zakatable assets if
payable in the next
period

Security deposit Deducted from

Zakatable asset

Minority shareholders are liable to pay Zakah on their shareholding

22. In case of Gold, Silver assets in any form zakah on such asset is to be
assessed

A. Net weight

B. Cash Value

C. Both of them

23. Nonthe following which one is the true?

A. The owners of the investment account should pay zakah investment balance
as well as the profit whether such account represent short, long term.

B. As for the Institution in which the account are invested which is represent a
trust not Liability Institution will pay Zakah only on profits or commission.
C. In case of institution to investment account to another, if investment account
earn interest jakah is payable on the principal and the interest is donated to
Charitable Fund.

D. all of them

24. In case of Investment Sukuk , represent a trust rather then a liabilityas part
of the cash assets which one is true on e the following ?

23. In case if Investment account w

A. The owner of the Sukuk holder pay Zakh on the basis of the underlying
asset of the sukuk.
B. Since the Investment Sukuk represent the Trust rather then the liability
then the institutions should pay Zakah on their profits or their commissions.
C. All of them.
D. None of them

25. The Himesh Jidiyaa (security dposit) is the amount paid as a confirmation of
the binding promise to cover the damage cause by the customer breach of the
contract and the zakah payble on this security deposit shoud be paid by :

A. The party which has provided it

B. The party who has received it
C. There is no zakah payable on it
D. Equally by the both the promisor and the IFI
26.The Initial security for the entering Bid as well as implementation as security
which is deducted from the zakatable asset of the Institution , the zakah will be
payable :

A. The owner which has provided it unless he has not been enabled to
invest it before refund .
B. The IFO who has received it.
C. There is no zakah payable on it
D. Equally by the both the promisor and the IFI

27. which one is true if the arboun ( Earnest Money) is deemed as Zakah.

A. To be deducted from the zakatable asset of Buyer

B. Seller to pay Zakah from it as part of the Zakatable assets

C. Seller is the owner of the amount irrespective of the outcome of the contract

D. All of them

28.Which one is true for the valuation of Articles of trade for Zakat calculation?

A. Articles of trade should be valued at selling market price in the place where
they exists.
B. According to their method of sale, Retail, wholesale or if both whichever
the predominant
 C. When others methods of valuation is extermly difficult , valuation cost can
be used.
D. Valuation as of the Zakah (accrual) date.
E. All of them

29. Which one is true for the documentary Credit in case of Zakah Payable ?

A.In case of Documentary Credit Zakah should be paid on the amounts retained
for the credit.

B.When the goods are owned zakah has to be paid from them on the basis of
their market Value.

C. In case of Export for the Documentary Credit Zakah has to be paid for the
finished goods.

D. All of them

30. Which one is true for the ZAkatable investment shares for the sake of
trading ?

A. Zakatable in shares for trading valuation at Market Pricc

B.Zakatable in sharesfor trading valuation If no Market price by experts

C. Both of them

D. None of them

31.Which one is true for the Zakat of Insurance portfolio ?

A. Since the policy holder constitute an independent financial liability , the

Insurance portfolio is Zakatable

B. Since the policyholder contribution on a donation basis , the Insurance

portfolio is not Zakatable.

C. All of them
D. None of them

32. The Zakah of Agriculture and fruits is

A. 653 Kilogram

B. 700 Kilogram

C. 600 Kilogram

D. None of them

33.In case of Zakah on agricultural produce whih one is the true in the following :

A. Estimation by experts is allowed

B. ¼ or 1/3 can be left to the owner and rest become

C. Zakah can be paid in terms of value

D. All of them

34.Which one are not related to agricultural are not Zakatable ?

A.Works under Implementation (construction)

B. Fertilizers and insecticides

C. Rapping and Packing materials

D. all of them

35. Zakah on the produce of a rented land should be paid by---------------------------

A. By the tenant

B. By the Principal

C. Tenant and Principal proportionately

D. None of them

36. In case of Muzara’ah or Musaqat, Zakah shall be paid

A. by the two parties proportionately.

B. By the tenant

C. By the Principal

D. None of them

37. Subsidies and concessions related to agriculture , which one is true ?

A. Cash subsidies shall be included in the Zakah base as part of liquid assets

B. In form of Land and Euipment is not include in Zakah base

C. All of them

D. None of them

38. The Nisab for minerals what has reached--------------------

A. 85 grams of gold based on continuous extraction and Zakat rate is 2.5%

B. 653 grams in Silver based continuous extraction and Zakat Rate is 2.577 %

C. Both of them

D. All of them
07.Provisions : Defination

Provisions represent the amounts retained from revenues at the end of the financial
period so as to cater for probable shortage of assets, or

to meet imprecisely determined or unforeseen commitments of the Institution.

Since provisions are estimates of probable loss amounts and

unspecified commitments, they have to be totally or partially returned back to the

profit and loss account (income statement), if the debt is

collected or the commitment is fulfilled, or if the provision amount is more than it

should have been.

Clasification of Provision :

NotTo be deductible Deductible from

Zakatable asset (Zakatabe) the Zakatable
Provision
asset(Not
Zakatabe)

Provisions relating to fixed assets Zakatable(since fixed assets

are not part of the Zakah
base.)
 Provisions relating to current
assets :

Since Zakah is calculable on the

basis of market value.If current
assets are not considered as part NotTo be deductible
of liabilities. Zakatable asset

If, for any reason, current assets

are valued for Zakah calculation at
book value which happens to be
more than exchange value, the NotTo be deductible
difference between book value Zakatable asset
and market value pertinent to
provisions

Applications relating to provisions

Provision for redemption of It is the cumulative amount of the redeemed part
pre-operating expenses of pre-operating expenses.
This provision is not deductable from zakatable
assets.

That is mean Zakatable

Provision for deterioration in This provision is meant to cater for price
the value of investments in decline in financial markets, or book value, below
shares purchased for cost; in case of valuation at cost or market value
acquisition whichever the less. Such provision is not

Provision for perishable or
slow moving good
Provision for probable
declines in the prices of
goods or financial paper
Provision for leaves
Provision for end of service
and retirement benefits or
pension salary of staf
deductable from zakatable assets.
That is mean Zakatable
In case of slow moving goods the provision is to
cover probable declines in value due
to expiry, obsolescence of type, or slow marketing.
This provision is not deductable from zakatable
assets
This provision is usually made to cater for declines
which
actually take place, and it is not deductable from
Zakatable assets.
That is mean Zakatable
It is the amount deducted from revenues so as to
cater for the commitment of the institution to
compensate staff
for leave entitlements. This provision is not
deductable from Zakatable assets.
That is mean Zakatable
It refers to the amounts deducted from revenues
for
meeting payment of such obligations. Such
amounts are not deductable from Zakatable assets
because they are allocated for disbursement,
but not yet disbursed. They can be deducted only
when they are actually paid or when they become
due for payment during the current
year, but not yet settled.
That is mean Zakatable
Provision for indemnity
Provision for maintenance
Provision for insurance of
fixed assets
Provision for decrease in the
price of currencies
It refers to the estimated amounts deducted from
revenues in order to cater for a confirmed
commitment
relating to an initial legal verdict (before appeal)
stipulating the payment of a specific amount as
indemnity to a certain party. Such provision
is estimated according to the amounts mentioned
in the verdict, and it should not be deducted from
Zakatable assets until it becomes due
for payment by virtue of a final verdict.
That is mean Zakatable
It is an amount allocated for spending, but not yet
spent. It is not deductable from Zakatable assets
This provision refers to the amounts charged to the
revenues of the company to substitute the
premiums that will be paid to insurance companies.
This provision is estimated as per the amounts of its
components. It should not be deducted from
Zakatable assets because it comprises amounts that
have been allocated for spending, but still owned by
the company.
That is mean Zakatable
It is the amount charged to the revenues of the
company to cater for probable decline of the prices
of foreign currencies against the price of the
currency used in the financial statements of the
company. It is assessed on the basis of the
difference between the two prices (purchase price
and market price). Such provision is not deductable
from zakatable assets, because what matters is the
 prevailing exchange price at the time of valuation of
Zakatable assets.

That is mean Zakatable

Provision for taxes It refers to the estimated amounts deducted from

the revenues of the company for settlement of the
unpaid taxes of the current year. Such provision is
assessed according to size of activity during the
current financial period, besides the tax level in the
previous financial periods. This provision is not
deductable from Zakatable assets.

That is mean Zakatable

Provision Is Zakatable
08.Reserves : Reserves are amounts deducted from profits by virtue of law
(statutory reserves), or as required by articles of association of the Institution, or on
the basis of a decision by the general assembly (voluntary reserves). Reserves
provide necessary funds for many purposes such as :

future expansion, facing probable losses, distribution of profits in the years when
no profits are realized, and distribution of the accumulated amounts of the reserves
when they are no longer needed.

Nature and Shari’ah status (Hukm) of reserves

Not Deductible(Not
Deductible(Zakatable) Zakatable)

statutory and voluntary Zakatble(because in

Shari’ah they are not

considered to constitute
debt obligations owed by
 the company, although it
is referred to under
liabilities)

capital account and the not deductable from

issuance premium Zakatable assets.

Applications relating to reserves

Revaluation reserve (capital Zakatable(It results from

reserves) revaluation of fixed
assets at current market
value, and since fixed
assets are not subject to
Zakah

Income reserve Zakatable(It refers to that

part of distributable
profit which is retained
by an administrative
decision in provision for
future need. It is not a
debt obligation owed by
the Institution.

Reserve of profits earned It is not deductable from

from share purchasing Zakatable assets(it is part
operation (institution’s of the profits.)
treasury shares)

Reserve of retained profit It is not deductable from

Zakatable assets.( This
reserve comprises the
profits earmarked for
transference to
 forthcoming years. It
constitutes one type of
income reserves

Reserves Is Zakatable
09. Eight Heads of Zakah Disbursement

Fuqara’ (poor)

Al-Masakin (the poor)

Those employed to collect

To attract the hearts towards Islam

Free the captives

Those in debt

Allah’s cause (i.e., for Mujahidun)

Wayfarer

Shari’ah Supervisory Board may specify the meaning and appropriate

way of application for each one of these categories.

10. Rulings Relating to Zakah Disbursement