How to Pay Zakat (Money)

Originally, Zakat was Collected in a Specific Month

As zakat was implemented by Allah’s Messenger and his righteous successors, one would not have to be concerned about “how” to pay zakat, when to pay it or to whom it should be given. The ruler’s appointee would inform everyone about all of that and come directly to receive anything due to be paid (well, OK in our age possibly electronically, but you get the idea).

You should note when reading what scholars had to say about zakat that ALL of this fiqh was written well after the original zakat commanded by Allah and implemented by His Messenger had come to an end. Thus any discussions about to whom zakat can be given would originally only be relevant to the ruler and those hired to manage the zakat. Individuals had no need of this information to fulfill this third pillar of Islam.

Absent the Original System, We Must Act on Our Own

Now, however, we as individuals are forced by necessity to take on all of these roles. We have to decide when we will assess and pay our zakat and then, since for most of us the institution of zakat is not there, we have to figure out who or what are appropriate recipients and how to deliver it to them. This is the best we can do in our current situation and it is nonetheless VERY IMPORTANT. Sadly, many of us don’t have even the basic knowledge needed to carry out this new function. It is also very easy to neglect our obligation since there are not enough reminders or discussions on the topic to keep it in our consciousness.

This is serious. Please make sure from this day that you have a plan, know how to do the calculations and are prepared to fulfill this obligation once every year. It is the third pillar of Islam and not something we can afford to ignore or be negligent about.

When Should We Pay Zakat?

Zakat was collected in a specific calendar month, except in the case of dry-able fruits and grains on which zakat was collected at harvest time. This is clear from a variety of narrations including well-authenticated ones that as late as the time of Uthman ibn Affan, there was a specific month of the year when zakat was paid by everyone. This is well established from the fact that we know collectors were sent out. Also, in several authenticated (sahih) narrations, we know that Uthman said on the minbar:

  This is the month of your zakat, so whoever has any outstanding debts should pay his debts in order to establish his true balance and pay his zakat from it.  هَذَا شَهْرُ زَكَاتِكُمْ فَمَنْ كَانَ مِنْكُمْ عَلَيْهِ دَيْنٌ فَلْيَقْضِ دِينَهُ , حَتَّى تَخْلُصَ أَمْوَالَكُمْ فَتَؤَدُّوا مِنْهَا الزَّكَاةَ

What isn’t completely clear is whether this month is Al-Muharram or Ramadhan. There are narrations to support each, but nothing clear or validated enough to establish a ruling.

Muharram is the Beginning of the Year

Since most of us will be doing this by ourselves – starting from nothing as it were – we will first have to PICK which month will be our “Zakat Month”. It seems like Muharram is better supported. It also seems like the best idea since it is the beginning of the calendar year and in Ramadhan we have to give zakat al-fitr. There is already a lot of confusion among Muslims regarding zakat, many believe it is only one thing and it is done in Ramadhan, so keeping them separate by specifying Al-Muharram as the month of zakat would be most beneficial.

ِImam Ash-Shafi’i said (as reported by Al-Mawardi):

And I prefer that the ruler dispatch the collectors to arrive where they are collecting with the beginning of the new year and collect what is due. I like for that to be in the [first] month of Al-Muharram, whether it falls in winter of summer.   وأحب أَنْ يَبْعَثَ الْوَالِي الْمُصَدِّقَ فَيُوَافِي أَهْلَ الصَّدَقَةِ مَعَ حُلُولِ الْحَوْلِ فَيَأْخُذُ صَدَقَاتِهِمْ وَأُحِبُّ ذَلِكَ في المحرم وكذا رأيت السعاة عندما كَانَ الْمُحَرَّمُ شِتَاءً أَوْ صَيْفًا

So, be prepared to pay your annual zakat in the first month of the Islamic year Al-Muharram.

How Do I Know What is Due?

The main item most of us will need to look at for zakat purposes is money. If you have grazing animals, produce honey, do mining or other mineral extraction or produce crops typically dried and stored like dates, raisins or any of the grains, those things will not be addressed here and you will need to look elsewhere.

Zakat is due only on money which has been in your possession for the entire (past) calendar year. Aisha (ra) reported that the Prophet (sas) said:

 No zakat is due on any wealth until the entire year passes over it. (i.e., with it in your possession)  لَا زَكَاةَ فِي مَالٍ حَتَّى يَحُولَ عَلَيْهِ الْحَوْلُ

Reported by Ibn Majah and others and is authenticated (sahih) according to Al-Albani.

Some scholars have made the rather bizarre statement that this means that whenever you get some money, you watch it and see if it remains with you for one year. Clearly, this is one effect of the fiqh of zakat being developed after the demise of the original zakat system. How is such a thing even possible? In the normal course of life money comes and money goes. One cannot possibly tag each Dirham or each Dollar, giving each amount coming in its own “due date” after one year. That simply cannot work. In any case, there is a general principle that dirhams (or dollars) cannot be distinguished from one another. Thus, as long as one’s balance contained some amounts gotten from haraam, the entire fund is haraam to its owner. So, the issue for zakat is our balance over the year, not the dates on which this dollar or that dollar came into our possession.

So, how does this work? You must look at your balance or the total amount of money in your possession throughout the year. The lowest point of that balance represents those dollars which were in your possession throughout the year. The wisdom of this, of course, is that this represents your “surplus” since you had no need to tap into it for the whole year.

How Do I Calculate the Amount Due?

The amount due as zakat on your savings is 2.5% of the amount you owned throughout the year. As explained above, this means your minimum balance at any point throughout the year. One exception would be debts. In most cases, zakat is still due on money which has been loaned out but which you expect to be repaid or as already been repaid. So, let’s say your minimum balance was $10,000 (it doesn’t matter if it is higher at the time you are actually paying zakat at the end of the year), but you had loaned someone $5,000. This loan has either already been repaid or you anticipate that it will be repaid. You would calculate your zakat as $10,000 + $5,000 * 0.025, or $375.00.

If the amount you own at the end of the Zakat Year is more than the amount you owned continuously for a year (your minimum balance over the year), you can VOLUNTARILY pay zakat based on the year-end total. This is an extra good deed and Al-Hassan Al-Basry and others recommended it. However, it is important to understand that this is above the obligatory and so if this is once again implemented in its original form, it would not be lawful for the ruler to demand the higher amount from Muslims.

So remember, after the Hajj and after celebrating Eid Al-Fitr, start preparing to calculate and pay your zakat for the previous year. Be aware of your balance through the year and remember any low points, since the lowest is the basis of your zakat. Let’s get in the habit of reminding each other every year toward the end of Dhul-Hijjah! These are just the first baby steps in bringing this PILLAR of Islam back to life. It’s not enough but it’s a start.


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