Zakat is a mandatory charity on the part of solvent Muslims who have a minimum amount of wealth after their own consumption, which is usually paid during the holy month of Ramadan. But there is no religious binding that Zakat has to be paid only in the month of Ramadan.
Those who are eligible may settle his or her obligation at any point of time of a year, Islamic lunar year to be precise. Nevertheless, there is a growing trend across the Muslim world to collect and distribute Zakat during Ramadan. Many Muslims choose the first day of Ramadan every year to calculate their Nisab, the minimum threshold of wealth required to be eligible for paying Zakat. On a particular day of a lunar year, if the market value of someone's wealth becomes equivalent to or more than the required minimum, s/he has to pay at least 2.5 per cent of the wealth as Zakat.
The main principle of Zakat is to collect and distribute part of the surplus resources of well-off Muslims to assist in improving the living standard of the poor and the needy members of their community within a period of time. The ultimate objective is to eliminate poverty and create an equitable society in the end. So, Zakat is not only an obligatory charity but also an economic tool in Islam. Being recognised as one of the five core pillars of Islam, it is important to determine the right amount of Nisab so that a Muslim can pay Zakat properly.
There are two standards - gold and silver - to determine the Nisab. If any Muslim possesses at least seven and a half tolas or vori (87.50 grams) of gold or equivalent amount of money after dispensing all necessities and clearing liabilities in a year, it is the Nisab in gold standard. Similarly, possession of minimum 52.50 tolas or vori (613 grams) of silver or equivalent amount of financial wealth is Nisab in silver standard.
There are some differences of opinion among the Islamic scholars on which standard to follow to calculate Nisab as there is a big difference in the market prices of gold and silver. Many argue that except gold or gold ornaments, Nisab for all other financial assets and wealth have to follow silver standard. They add that by following silver standard, anyone having minimum amount of surplus wealth will be eligible to pay Zakat which is beneficial to the poor and needy people who are eligible to receive Zakat. Some argue that except for silver or silver ornaments, Nisab for all other financial assets and gold or gold ornaments have to be in gold standard. The third view leaves it to the choice of the Zakat payers to follow gold or silver standard on calculating Nisab for financial assets (like cash, bank balance, bond etc).
Let's check the difference in this connection. On March 23, per-gram price of 22-carat silver was Tk 147. Thus, total price of 613 grams of silver stood at Tk 90,111. If any individual wants to sell silver, s/he will get around 20-percent less from the quoted market price. So, actual value of 613-gram silver stands at Tk 72,090 and it is the Nisab amount in silver standard. Again, on March 23, per-gram 22-carat gold price was Tk 8,370, according to Bangladesh Jewellers' Association (BAJWS). So, the quoted market price for 87.50 grams of gold stood at Tk 732,375. By deducting 20 per cent from it, one will get Tk 585,900 and it is the Nisab value in gold standard.
Clearly is there a big difference between gold-standard Nisab and Silver-standard Nisab. By following the silver standard, more people will be subject to pay Zakat as the threshold is lower in this case. At the same time, there is a chance to exclude many people who really need Zakat due to their low income and having tiny assets. In Bangladesh, it is not surprising that many low-income people possess a net balance of one lakh taka at the end of a year, which means they have Nisab amount of wealth in silver standard and so are obliged to pay Zakat. And a Zakat-payer cannot be a Zakat- receiver no matter how needy or poor he or she is.
In Bangladesh, different charity organisations used to collecting and distributing Zakat and encouraging eligible Muslims to follow silver standard on estimating their due Zakat. As there are no national guidelines regarding the Nisab for Zakat, it sometimes creates confusion. So, the government may consider declaring indicative or suggestive Nisab amounts on gold and silver standards in a particular day. It may help the Zakat-payers to calculate their due amounts accurately. A national guideline for Zakat may also be developed.
Early this year, the national parliament passed a fresh law on collection and distribution od Zakat under government management. The objective of the move is to streamline the existing structure of Zakat collection and distribution procedure by the Zakat Board of the Islamic Foundation, Bangladesh. The new law, titled Zakat Fund Management Act 2023, replaces the Zakat Fund Ordinance 1982 and outlines a number of measures to make the management of Zakat efficient.
The new act seems to be limited to the management of Zakat by the government only. Under the act, a national Zakat board has to be formed which will be entrusted with the task of designing policies to collect, distribute, manage and operate Zakat in the country. It is not clear whether the policy will be applicable to the private management of Zakat also though the act has empowered the board to create a government Zakat fund. Rules and regulations under the act have yet to be developed. It is necessary to fast-track the work in this regard to streamline the overall Zakat management in the country.
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