786

Researcher

Dr. Naseem RaziAssociate Professor of Law

Faculty of Shari’ah and Law, International Islamic University,

IslamabadE mail: naseem.razi@iiu.edu.pk

# 0923315038917

Title of Research

Evaluating Zakat System in Pakistan in the light of the Sunnah (pbuh) and the Socio-Economic Dynamics

of the Society

Presented at the

2nd Global Forum onIslamic Economics, Finance and

Banking (IEFB),UMT, Lahore: 2017 25-26 January

2017

Key Questions What is importance of zakat in Islam? Why Allah Almighty made zakat an obligation? What is socio-economic condition of Pakistani

Society? Is zakat system of Pakistan in accordance with

the Sunnah (pbuh) and Objectives of zakat? What are major anomalies in the existing zakat

system? How can the existing zakat system be

improved?

Section one

Zaka

t Sys

tem

in Is

lam

ic

Pers

pect

ive

Introduction to zakat

Definition of Zakat: A religious obligation imposed upon the rich people against surplus wealth at a specific level & rate prescribed by the Prophet (pbuh)

Subject –Matter of zakat

Excessive wealth including precious metals, minerals, profit , income, agriculture products and livestock etc

Zakat is one of the five pillars of Islam

Why Allah made Zakat an Obligation?

Logic: Reduction of poverty as Poverty and hunger destroys intellectual

capacity of people Poverty causes ungratefulness to the Lord Hunger leads to crimes and destructs the

peace of a society

(Ibn Khaldun) Allah Almighty intended to ensure fair

distribution of wealth & resources To introduce a system of economic growth/

devlopment

Who described the detail of zakat?

All the issues related to zakat such as the objectives behind the obligation of zakat, type of wealth on which zakat is imposed, quantitative and qualitative value of the subject-matter, conditions of nisab and period, the ways how to collect and how to consume zakat have been described either through revelation or by way of Sunnah (pbuh) and Sunnah of four Caliphs

Objectives of Zakat

To control concentration of wealth “In order that it (wealth) may not become a fortune used by

the rich among you” (59:07) To reduce poverty

“The Qur’an States: “And in their wealth there is recognized right of the beggars and deprived off” (70:24)

To purify the wealth of a person “Take zakat from their wealth in order to

purify them and sanctity them” (9:103)

Is zakat a state-run Or an individual program?

The issue resolved by Allah almighty Himself in the wording “Those who if We give them power in the land,

enjoin establishing al-salat and paying al-zakat and enjoin good deeds (al-ma’ruf ) and forbid prohibited acts” (22:41)

History of Islamic legal system reveals that zakat collection and consumption was ever considered as one of the primary responsibilities of Islamic state

Nisab of Gold & Silver

The Holy Prophet (pbuh) declared silver and gold two separate identities and treated them independently

Nisab of Silver “There is no zakat if silver is less than 5 Awaq (52.5 tola)

Nisab of Gold “There is no zakat if gold is less than 20 dinars (7.5 tola) ( Ibn Qadamah, Al-Mughni,

v.3)

In both ahadith, the Prophet (pbuh) used different measures

Can gold and silver be mingled ?

The issue treated by the traditional Muslim jurists Imam Abu Hanifah and Imam Malik opined that

both may be mingled to reach the level of Nisab

Imam Shafi’i and Abu Thawr and Abu Dawud opined that both would not be mingled rather be dealt independently

Important to note The Prophet (pbuh) and four Caliphs never mingled

them in order to impose zakat (Ibn Qadamah, Al-Mughni, v.2,p.55)

Pre-requisites to pay zakat

The Holy Prophet (pbuh) prescribed certain conditions, the

fulfillment of which is pre-requisite to pay zakat

Surplus wealth & moneyOwnership Minimum level of nisabCompletion of one whole yearAt the rate of 2.5 % in case of gold, silver

and money (Zaydan, Al-

Mufassal, v. 1, p.355)

Section Two

Zaka

t Sys

tem

in

Pakis

tan

Socio-Economic Dynamics of Pakistani Society

Pakistan

Pop:194 M

G. R: 1.95%

Muslims: 96.4%Non M: 3.7%

Economy:

UDSaving:

15%

Service Sect: 58.1%

Avg income /pm: RS.16254.96

Poverty R: 60%

P. line: 1.25 US$

Distribution of Wealth and Resources

Highly Unequal

Land Distribution

5% of the farmers have 64% of farming land

65% of the farmers have less than 2 acr land Distribution of Wealth/ Assets

66% of the Industrial wealth &

87% of the assets of bank & insurance is under the direct

control of 22 families of the ruling class

Zakat System in Pakistan

Pakistan has a mixed system of zakat i.e., state & individual The state- run zakat system was introduced in 1980 as a

part of Islamization of the economy of the country Objectives of state-run system

To establish fair system of collection and distribution of za

To provide to the poor segment all the necessities of the life

To eradicate povertyTo establish a just social order

Flaws in the Contemporary Zakat System

Zaka

t sys

tem

in P

akist

an is

runn

ing

in p

oor

man

ners

with

out s

cient

ific u

nder

stan

ding

of

the

obje

ctive

s of z

akat

. The

re a

re m

any

socio

-eco

nom

ic co

nstra

ints

due

to w

hich

zaka

t sys

tem

has

bec

ome

stag

nant

and

ineffi

cient

in a

chie

ving

its g

oal s

uch

as

1. Ignorance of the prerequisites of zakat

Zakat deducting agencies do not comply the pre-requisites of zakat such as completion of one whole year & verification of wealth as surplus

Zakat is deducted from all PLS accounts even if the account holder saves money for some urgent need or unusual expenditure such as medical treatment, education, and building of house etc

2.Nisab of zakat is against the Sunnah (pbuh)

Nisab of zakat is prescribed in the light of nisab of silver by ignoring the gold while there is a great difference in their worth. For instance, 1 tola gold costs Rs. 50,000 while 1 tola silver costs only Rs 800

Nisab of zakat does not match with the socio-economic conditions of Pakistani Society

Each year, a very small amount is announced as nisab of zakat. In 2016, only Rs 35, 557 was declared as nisab of zakat

3. Lack of harmony between nisab and poverty

Years Nisab of Zakat (Rs)

Poverty Ratio %

2011 Rs. 61,336 43%2012 Rs. 51,086 45.7%2013 Rs. 41,872 47%2014 Rs. 38,810 51%2015 Rs. 33, 641

(PSB)60%

(WBRs)Q. Can a person with a saving of Rs 33,641 be declared rich under the present situation of inflation and economy?

4. Utilization of zakat for public projects

The zakat is spent on state owned projects such as hospitals, educational stipends , donations for natural calamities, emergency relief etc., from which all the people get benefits including rich

The size of zakat is determined as annual budget for each district that is used for all public projects rather misused

5. Waste of zakat by way of unusual expenditure

A large amount of zakat is waste due to mismanagement of collection and disbursement

Under the head of unusual expenditure, a big amount of zakat is misused

In this way, the purpose of zakat cannot be achieved and poor people cannot get more benefits

5.Inadequate system of audit of ZCCAs

The Zakat Collecting and Controlling Agencies (ZCCAs) are considered as audit free and are careless in preparing proper record for audit

In the Auditor General of Pakistan’s Annual Report 2014, the auditors pointed out many severe discrepancies at ZCA which totaled Rs 3.952 million in 2013

6. Corruption

Charity accounts more than 1% of GDP (WBR) in Pakistan yet

Due to corruption in collection, allocation and distribution of zakat, the purposes of zakat cannot be achieved

During 2015, Pakistan scored 117th worst rank in corruption amongst 144 countries (Transparency Int., 2016)

7.Lack of Confidence on the ZCAs

Years Zakat Collection by ZCAs

2012 Rs 3.910 billion2013 Rs 2.541 billion

2014 Rs 1.381 billion

2015 Rs 1.128 billion

8.Individual disbursement of zakat

The people has option to distribute zakat by themselves The much of zakat (70%) is given to madaris which

cannot be audit Other 30% of zakat is distributed by way of utility

packages or money during the month of Ramadan In this way, zakat system is unable to provide actual

relief to the poor

Conclusions &

Reco

mm

enda

tions

Conclusions

This article thus, concludes that zakat itself is a complete economic system, a system of social justice if taken in its broader meanings and objectives

That Islam gives us concept of a “state-run zakat system” because only state policies can meet their objectives easily and can make a society self-made and prosperous

Zakat in fact, an obligation upon the rich segment of society and the criterion to be a “rich person” is prescribed in the light of the socio-economic conditions of each society

Con. . .

In Pakistan, the nisab of zakat is prescribed by ignoring the socio-economic conditions of the people and thus, against the objectives of zakat &Sunnah of the Prophet (pbuh)

That the prerequisites of zakat deduction are also ignored by the stake holders

That the zakat system has failed in achieving its goal That the corruption and mismanagement is also a great

cause in the failure of zakat system in Pakistan

Recommendations

The contemporary zakat system should be reformed thoroughly

That silver and gold should be treated separately as done by the Prophet (pbuh) and by the companions

The Nisab of money should be prescribed in the light of the Nisab of gold not of silver

All types of corruption should be eliminated from zakat system

Individual-run zakat system should be abolished & zakat should be collected by the state agencies

Cont. . . Zakat amount should be invested in long & short

term economic plans such as cottage industry , factories

Only poor people should be given chance to work there as employees

The profit should be utilized to establish more factories or industries at each town to make the poor self-made/ prosperous

It will be in accordance with the Sunnah (pbuh): “Take zakat from rich and spend on their poor”

The End

Than

k Yo

u So

Muc

h fo

r

Liste

ning

Me

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