ISLAMIC ECONOMY (ISB 566)
ZAKAT IN STATE OF KEDAH DARUL AMAN
GROUP: BA249 2A
NAME OF LECTURER: MDM HUSNIYATI BINTI ALI
RAIHANA IZZATI BINTI MUHAMAD RASHID
AMIRA FARZANA BITNI AZMI
Table of Contents
INTRODUCTION OF ZAKAT 3
Meaning of Zakat 3
Type of Zakat 4
Who Can Receive Zakat? 5
Important of Zakat 6
INTRODUCTION TO ZAKAT INSTITUTIONS 7
LEMBAGA ZAKAT NEGERI KEDAH DARUL AMAN 8
History of Establishment Zakat In Kedah 8
Organization Chart 10
Statistic Collections of Zakat 12
Collection of Zakat According to the Type in Year 2012 - 2016 13
Contribution of Zakat in Year 2011 - 2016 14
Zakat means purification of soul, character, life and wealth. Zakat purifies the human soul by keeping a person away from illegal sources of earnings, eliminating the love for materialism and by overcoming the sense of pride for being wealth. Wealth is dear to everyone but who spends wealth on others attain goodness and purify. As Quran says in surah al taubah :
" take alms out of their property, thought wouldst cleans them and purify them thereby "
Zakat is a certain fixed portion of the wealth and property that muslim is obliged to pay yearly for the benefit of the poor in the muslim community. The payment of zakat is obligatory, as it is one of the five pillar of Islams, zakat is the Major economics means for establishing social justice and leading the muslim society towards prosperity and security. Every muslims who owns a fixed, minimum amount of wealth (called Nisab), and who satisfies certain other condition, must pay zakat, the Quran mentions zakat in many places. For examples Allah (S.W.T) says :
" Take sadaqah (obligatory charity ) from their wealth in order to purify them and sanctify them with it, and invoke Allah for them. Verily your invocations are a source of security for them and Allah is All –Hearer , All- knower. " (9 : 103)
The objective of the report below is to show the study of zakat in the state of Kedah. Institution of zakat in Kedah which is called " Lembaga Zakat Negeri Kedah Darul Aman " has pooled their information of zakat in their state at a website. The information below have been state in the report, the study have been made to show the meaning and the consequence of the information. In addition, the conclusion from the information also have been made to show the relationship between the result of the collection and the contribution of zakat.
INTRODUCTION OF ZAKAT
Meaning of Zakat
Zakat is one of the most important pillars of Islam. It is mandatory for every Muslim who is financially stable, to pay zakat to the poor and needy. Zakat is an act of worship which every Muslim should perform to help the unfortunate Muslims. In Quran, zakat is discussed for a number of times.
" And be steadfast in prayer and regular in charity: And whatever good ye send forth for your souls before you, ye shall find it with Allah " (Qur'an 2:110)
According to Islam, zakat is meant to be paid in order to purify the wealth. Therefore, those Muslims who have enough wealth have to give a little amount which is 2.5% of your wealth to the poor and needy. It is the duty of wealthy people to serve the underprivileged community by helping them in every possible way. Zakat is not a voluntary charity but an obligation. Muslims pay zakat every year in order to purify their wealth and to seek blessings from Allah. By giving Zakat, a Muslim is acknowledging that everything we have is Allah's and we do not really own it. Thus, we should use it to remember Allah and help those who are in need. It is also an act to help us free from excessive desire and greed and also help us to learn self-discipline and honesty.
We should pay zakat on any surplus wealth under our procession. This includes:
Gold, silver and other jewellery / ornaments
Money that we lend to others
Shares and stocks
Cash saved in bank, home or given for committee
Property which is buy for investment purpose
Type of Zakat
There are two types of Zakah. The first type, the one most people are familiar with and the example used above, is called Zakat al Mal.
Zakat al Mal
Zakat al Mal is paid on accumulated wealth over a year. So it's not based on earnings like income tax. Instead, the amount to be paid is based on whatever amount of wealth a person has in their possession. This would usually entail savings, gold and silver jewelry, stocks, produce, cash, livestock, etc. Muslims then must pay 2.5% of this accumulated wealth as Zakaat. But not all Muslims are required to pay Zakah. Those people that fall below a certain wealth threshold, called Nisab, are excused.
Zakat al Fitr
The other type of Zakah is Zakat al Fitr. This must be paid by all Muslims with enough food for one day. The amount to be paid for Zakat al Fitr is much lower than Zakat al Mal. Zakat al Fitr is paid by the head of the household on behalf of all family members, both young and old. The amount for Zakat al Fitr varies along the countries.
There is profound wisdom in these two types of mandatory charity. Zakat al Mal is paid by the wealthy to the poor and needy. But Zakat al Fitr are paid by all, both rich and poor. Because of this, even the poor earn reward for giving in charity and they also have a chance to help those who are even more in need.
Who Can Receive Zakat?
Zakat cannot be given to anyone in need. There are eight kinds of people to whom zakat can be given as mentioned in Quran:
" Indeed, [prescribed] charitable offerings are only [to be given] to the poor and the indigent, and to those who work on [administering] it, and to those whose hearts are to be reconciled, and to [free] those in bondage, and to the debt-ridden, and for the cause of God, and to the wayfarer. [This is] an obligation from God. And God is all-knowing, all-wise. " – Al-Tawbah, 9:60
Al-Fuqara: They don't have enough wealth to meet the basic necessities of life.
Al-Masakin: These people don't have any type of income or possessions.
Zakat Collectors: The administrators or organizations who are authorized to receive zakat to distribute among the poor people.
Those who converted to Islam: People who newly converted to Islam and have no means to survive because of detachment from family.
Slaves and Captives: Those who are kept as slaves. Your zakat can help freeing captives or slaves.
Debt-Ridden: Those who have no means to pay off their debts.
In the cause of Allah: Those who are fighting in the path of Allah are entitled to receive zakat.
The Wayfarer: A traveler who is left alone in another land and is in dire need of money to get back to his home.
Important of Zakat
Besides the fact that zakat is obligatory act of worship in Islam and that Muslims get immense blessings by paying zakat, there are other reasons of how zakat is an important factor of muslim community.
Helping the Community at large
The most important benefit of zakat is that it helps building the society. If everyone keeps on saving the money and spend on themselves, then the less privileged will always remain poor. Therefore, with the help of zakat, people learn to support others in need. Zakat gives all the muslims an opportunity to create a huge impact in the lives of deserving people.
With the help of zakat, your money circulates in the whole economy. As zakat is an obligatory act, muslims who are financially stable, pay zakat to the needy. This way, money gets out of the ones who are wealthy enough and reaches those who are not much privileged.
Act of Sacrificing
In today's world, wealth has become an important aspect of life which everyone loves to have. Therefore, when a person pays from his wealth in the form of zakat, it means he/she is sacrificing wealth in the path of Allah.
INTRODUCTION TO ZAKAT INSTITUTIONS
Zakat institutions are the institutions responsible in managing the collection and distribution of zakat funds. In the Quran, the main categories of zakat expenditure are clearly described. The Quran also mentions the appointment of officials to collect and distribute zakat which should be in the form of either a department of the state or at least a public fund managed entirely by a public body. Hence, the state has the responsibility of collecting and distributing zakat in a well-organized system as prescribed by Islam. In addition, zakat involves the Muslim society as a whole. Hence, certain ulama' like Imam Syafie suggests that zakat must be paid to the authority. Furthermore, since zakat nowadays has become an important part in an Islamic part in an Islamic society, the opinion of Imam Syafie becomes more practical.
The main objective of zakat is the achievement of socio-economic justice. Zakat can provide an alternative to the shortcomings of the secular economic system as the main focus of zakat is to alleviate poverty through the transfer of wealth from rich to the poor. The Islamic system of zakat places human welfare and well being of individual human beings as important objectives in achieving socio-economic justice. Proper distribution of zakat funds will ensure that the poor in a community may enjoy a decent standard of living or at least be able to overcome or reduce poverty. It is the responsibility and amanah of the institution of zakat to achieve the goals and objectives of zakat.
In the case of zakat institutions, the efficiency of zakat institutions is important since the institutions play extreme crucial role in determining major economic variables. Besides, as institutions that manage financial resources, there are intense public awareness and scrutiny on the management of zakat institutions in Malaysia especially in terms of the lack of accountability of the management. Public concern on the efficiency of zakat institutions arises as issues of misuses of zakat funds and frauds by amil have continued to be unresolved issues. For example, a mainstream major Malay newspaper, Utusan Malaysia (2001) reported that the institution of zakat in Malaysia is still inefficient as there are still a growing number of the poor and needy in Malaysia. It was reported that this situation is due to the inefficient management of zakat distribution since total zakat collection is increasing every year. Efficiency is crucial to ensure proper zakat administration. However, efficiency may not be the only contributing factor for the increased number of poor people. Nevertheless, an investigation on the efficiency of the institution is important to evaluate the extent of zakat institutions' efficiency in Malaysia.
LEMBAGA ZAKAT NEGERI KEDAH DARUL AMAN
To be a catalyst for socio-economic development for Muslims especially in Kedah.
Managing collection and distribution of zakat with trust, competence, fair and effective through:
The best services and facilities for payers and asnaf zakat
Collaborate with various parties
Efficient and dynamic human capital development
Latest technology app
Improved review of all time
History of Establishment Zakat In Kedah
The date of establishment of zakat of Kedah based on the date of Notice of Adjudication of the Terms concerned with the matter of zakat is at 19 Jamadil End 1355 equivalent to 5 September 1936. Notice issued by Syeikhul Islam Office through Majmaul Syeikhul Islam comprising Haji Ismail B Hj Mohd Saleh, Haji Yaakob Bin Hj Ahmad and Haji Abdul Ghani B Hj Awang. Majmaul Syeikhul Islam was formally established in 1936 to replace Syeikhul Islam which began in 1901. The matter pertaining to zakat matters is one of the main points of concern of Majmaul Syeikhul Islam (some references to Majma 'Masyikhatil Islam) are matters related to zakat management. The Riyal Rite of zakat and the Blessings of Muslims in the State of Kedah also recorded the year 1355 H as 1936 M as the date of the start of zakat spread was officially made to the people of Kedah. It is believed to be an earlier date, but the official note on the establishment a committee through the administration of the law was 1355H equivalent to 1936M.
The people have complained to Syeikhul Islam Negeri Kedah Syeikh ,Wan Sulaiman Bin Wan Sidek (1874-1935) at that time in connection with the giving of zakat which is not perfect and not reach the needy asnaf. Hence, Syeikhul Islam has submitted this matter to the Regent at that time DYTM Tengku Mahmud Ibnu Sultan Ahmad Tajudin (1876-1973). So, when asked by the Regent how the proper collection of Zakat should be answered then the Syeikhul Islam "shall zakah return to the original obligation which zakat paid to ulil amri in one place". It was agreed by the Regent and then ordered the people to hand over zakat to the amil-amil appointed by ulil amri. At the beginning of this order, zakat was issued according to the needs of the farmer, ie how much of the 8 asnaf would be given to amil. Then until one moment is created a 4/8 law of zakat yields shall be handed over to the appointed amil while the remaining 4/8 shall be paid to the payer to be awarded to the local people. In 1955 there is a zakat law (enactment of the State of Kedah State Zakat) that is a zakat of padi must be paid 100% or 8/8 to the appointed amil, so take this Zakat collection for so long only zakat padi.
In 1984-1997, ulil amri appointed Dato 'Syeikh Mahmood Naim as the Secretary of Kedah State Zakat Committee. He then expanded the zakat payment to all areas of obligatory zakat. Initially, zakat of rice was transferred to zakat of income which was included in the results of the halal effort undertaken by one individual. Alhamdulillah, the result of zakat collection performance continues to increase every year.
The effort to further strengthen the zakat institution of Kedah through the enhancement of zakat laws has been emphasized by the Kedah Zakat Committee to ensure a complete law which includes not only zakat padi, but also other zakat property created. This ongoing effort has finally come to fruition when in 2015, the enactment of the Kedah Darul Aman State Authority (LZNK) was introduced to replace the Kedah Darul Aman State Zakat Department (JZNK) enactment. This enactment as well as witnessing the management of LZNK continues to excel in ensuring more asnaf out there is defended.
Statistic Collections of Zakat
Collections of Zakat Year 2010 – 2016 (RM)
From the graph above, we can see there are the increasing numbers of collection of zakat from 2010 until 2016. But as in 2012, there is decreasing in the collection. The decreasing about RM5.5 million shows that there are some factor that drive towards the decline of the collections. Factors of the decline are reports from the community about the unsatisfactory of zakat management, dishonesty in distribution of zakat by zakat Institution, leakages in zakat payment, and deviation of excess amount of zakat by zakat employees. The report above will give negative perception to the community especially to the zakat payers that contribute to zakat Institution. This matter have causing them to pay zakat directly to the Asnaf without going through the official channel of zakat.
From the situation above, zakat institution should promote society confidence on its zakat management in order to attract more payment and ensure its success as a function of social justice. This formal institution is important for reducing leakages and therefore increase collection by which zakat can be distributed more efficiently.
Collection of Zakat According to the Type in Year 2012 - 2016
According to the table above, the most collection according to the type of zakat is from zakat on income. It is happen as the increasing number of people that their income hits the nisab threshold. So, these people are eligible to pay zakat. From year 2012 until 2016, we can see that the number of collection in zakat on income increasing. From the situation, we can conclude that there is increasing number of people that their income hits the nisab threshold. Second most collection of zakat is zakat on business. The increasing number of the collection of zakat on business from year 2012 until 2012 can be conclude that there is increasing number of entrepreneurship in the state. Then, the following most collection is from zakat on savings, zakat on wheat and other type of zakat. The increasing amount of collection in total from year 2012 until 2016 shows that, there is increasing in awareness of paying zakat of the community. This shows a better achievement to the zakat institution of Kedah. This achievement must be maintained and enhanced to bring social improvement.
Contribution of Zakat in Year 2011 - 2016
According to this table above, we can see from 2011 until 2016 the most highest group of asnaf in Kedah that have been receive zakat is miskin. So we can conclude that miskin is most generous group that are eligible to receive zakat in Kedah because their population in Kedah is highest than other group of asnaf. Then it followed by Fisabilillah group as much as we can know fisabillah is one of the people that who striving in the way of ALLAH. Then is it followed by fakir miskin , then followed by ibnu sabil , muallaf and lastly is al gharimin. As a conclusion we can see that propotion zakat based on asnaf , the highest amount from 2011 until 2016 of group that have been receive zakat is miskin which get 31 million to 67 million. and the least amount of group is fell into al gharimin which get between 20000 until 30000 only the proportion of zakat.
Zakat is one of the vital and most significant features of the Islamic finance and economics system. Unfortunately, for all of us ''zakat '' which is one of the five pillars of islam, has been reduced to just a ritual which we perform once a year and most of us don't bother to perform it also a a ritual. The concept of zakat is the foundation stone of the Islamic finance and economic system. Islamic economic system is best alternative to interest based economy because interest based economy have many inherent consequences like instability, shaken by periodic crises and requiring massive bailouts. So to overcome all these difficulties and loopholes there must be a system which contain all set of rules based on a foundation of social justice, with the government responsive to the needs of society, individuals members of society committed to ethical standards in all their dealings. Then from that we can the fully functioning Islamic financial system as envisaged in the quran and interpreted by the prophet be put into practice. In the meantime, the best we can hope for is a system that proceeds methodically on the roadmap that we have tried to outline and with a strong commitment to ethical regulation, supervision and enforcement in order to develop the essential foundation of the Islamic financial system.