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Income Zakat Nisab

Income Zakat Calculation Calculator

Intention for Income Zakat

“Inilah wang sebanyak RM…………. sebagai menunaikan Zakat Pendapatan yang wajib ke atas
diri saya / pihak yang saya wakil untuk tahun…………. kerana Allah Ta’ala.”

Explanation

Income Zakat

A Muslim, when meeting the required conditions, must pay income zakat each year on all forms of income or salary earned for that year. In fact, the importance of paying zakat is evident in Islam itself, as it is the fourth pillar of Islam: The obligation to pay zakat (for those who are capable).

There are, of course, many benefits of being required to pay zakat. It brings benefits to both individuals and society at large. Among the benefits of zakat are:

• Helps in the development of the ummah and society, as the zakat collected is distributed to the needy, including the poor, orphans, and underprivileged students.
• Unites the ummah in economic matters, where everyone can discuss the best ways to progress together in wealth accumulation.
• Creates relationships among people between zakat payers and recipients – although zakat payers may not meet the recipients, they can see the development and assistance provided through zakat collections.
• Reduces jealousy among people and may even inspire the recipients of zakat to work towards their own wealth, so they too can contribute to the ummah through zakat one day.
• Instills a sense of responsibility within individuals, especially family heads
• Purifies wealth that may otherwise have elements of impurity by paying zakat.
• A way to thank Allah SWT for the blessings by paying zakat on the sustenance given.
• And many more.

Income Zakat Fatwa

Actually, there are two types of income zakat, where an individual may need to pay either one or possibly both if the nisab conditions are met.

The first type is salary zakat. The 56th National Fatwa Committee Meeting for Islamic Religious Affairs Malaysia, held on May 7, 2003, discussed 'Salary Zakat and Its Rate‘. Following the discussion, the committee decided that the basis for calculating income and salary zakat is based on the annual gross income and the zakat nisab imposed is 2.5% of the total income.

The second type is professional income zakat, which applies to individuals without a fixed job(freelance)and therefore do not earn a monthly income. Examples of such individuals include freelance consultants, book authors, event hosts, actors, and so on.

For professional income, the 31st National Fatwa Committee Meeting for Islamic Religious Affairs Malaysia and the Special Muzakarah held on December 9, 1992, discussed ‘Salary Zakat & Professional Income Zakat’. The committee decided that:

1. Muslims can pay zakat on income from salary, and the Inland Revenue Board should provide a zakat rebate on the amount paid.
2. Mandatory zakat to on the annual income of a professional as it falls under Business Zakat.

https://youtu.be/_0BDsImn8GI?si=p9ezgzQu-zPp6VHh

Frequently Asked Questions

Evidence for Income Zakat

"O people who believe! Spend (in the way of God) a part of the results of your good efforts, and a part of what We brought out of the earth for you. And do not deliberately choose the bad from it (then you donate or you make it a zakat)" [Al-Baqarah (2): 267]

In addition, there is also a Hadith (which means): It was narrated by Said Bin Abi Burdah from his father from his grandfather from the Prophet SAW said:

"Almsgiving is emphasized on every Muslim, so the Companions asked: O Prophet of God, what about those who do not get (something to give in charity). His Majesty SAW replied: He does charity with his hands (work), until he benefits himself and then he gives charity (HR Bukhari & Muslim).

Al-athar of the Companions is also a proof that refers to zakat on gross income. Narrated from Abu Ubayd received from Hubayrah ibn Yarim, he said (which means):

"Abdullah ibn Masud gave us a basket containing valuables, part of which was taken to pay zakat."

Meanwhile, according to the Fatwa of the Federal Territory after it was decided by the Consultative Committee on Sharia Law, income zakat refers to the compulsory payment on income that covers any wages, salaries, allowances, remuneration and bonuses (Subsection 34(1) of the Islamic Law Administration Act (Federal Territories) 1993 [Act 505]).

How to Calculate Income Zakat

How to calculate income zakat is as follows. If nisab zakat income is RM23,030 (Nisab Zakat 2023), does this mean you have to pay 2.5% from your income if it is more than this amount in a year? Nope. You only need to pay zakat based on the amount left after deducting all necessary expenses and basic expenses. Here are some examples of income that is required to pay zakat and income that is not required.

Example A:

Ahmad's income is RM1,800 per month. In a year, his income is as much as RM21,600. Since this amount is below the amount of nisab, Ali does not need to pay zakat on income at all.

Example B:

Hamdin's income is RM10,500 per month. In a year, his salary is as much as RM126,000. Therefore, Hamdin has to pay zakat because the amount is more than the nisab of zakat. However, the rate that Hamdin has to pay is not based on the income of RM126,000 earlier. There are expenses allowed to be deducted by Hamdin before the zakat rate is calculated. According to the Selangor Islamic Religious Council, the allowed expenses are as follows, along with the amount that can be deducted:-

1. Personal Expenses: RM14,580
2. Expenses of Working Wife : RM4,944
3. Children's Expenses:

• Under 6 years old: RM2,100 per person
• Aged 7-17 and still studying: RM4,896 per person
• Over 18 years old and still studying: RM7,356 per person

1. EPF (11%): RM13,860 per year for Hamdin
2. Monthly Hajj Savings = RM2,000 X 12 Months = RM 24,000

Therefore, the amount of zakat to be paid by Hamdin that year is as follows: (RM126,000 – RM71,736) x 2.5% = RM1365.60

The amount to be paid by Hamdin is RM1365.60.

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Required Income Amount for Paying Income Zakat

The annual income must exceed the total annual ratio. 

The total nisab July-December 2023 is RM23,030

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