Q. You have explained that women’s jewelry kept for personal use is exempt from zakah. I understand that the jewelry should be held with no intention of re-sale. Suppose that a woman decides to sell some of her jewelry in order to buy new articles, or to replace the old ones with a new model, will she have to pay zakah, and from what date?
Ilyas Ahmad
A. I have repeatedly said that when a woman’s jewelry is held for personal use no zakah is due on it. The only jewelry that is zakatable is that held as investment or as commercial commodity. Suppose that a woman runs a jeweler’s business, she treats all the jewelry in her shop, or in her keeping, as commercial commodity and pay zakah on it in the same way as any businessman treats the stock in his shop or office. If she has jewelry of her own, which she holds for personal use, those articles of jewelry are exempt from zakah. If she later decides to sell some of these, for whatever reason, no zakah is payable on the proceeds of the sale. However, it becomes part of her property that is liable to zakah on her next zakah date in the normal way. If she uses the money to buy new jewelry and she spends it all before her next zakah date is due, she does not pay zakah on it.
What should be clear is that the important point is the intention, not the re-sale. While the jewelry was held by the woman, the intention was that it was a personal article. Hence, no zakah. If circumstances change leading to a new intention, we deal with this new intention when it takes place. Changing an article of jewelry is like changing an article of clothing. However, if the cash received is still held in cash on the next zakah date, it becomes liable to zakah. If the new article of jewelry is intended as an investment, then it is zakatable from the moment it is acquired according to the rules of zakah and when it becomes due.
Zakah and Income Tax
Q. I pay income tax on my salary, as it is deducted at source. The income tax is more than the zakah due on what I have. Am I still required to pay zakah?
S.A. Kabir
A. Zakah has nothing to do with income tax. The two are incomparable either in the amount due or the purposes for which they are used. Nor can they be compared with regard to the authority that supervises and administers them. Moreover, income tax has different rules of assessment. The law also permits what it calls tax avoidance, but not tax evasion. Zakah, on the other hand, is an act of worship, and with worship one does it because he is a believer who wishes to do his duty. He resorts to neither evasion nor avoidance. Rather, he pays more than his duty in order to earn greater reward from God.
Income tax pays for the government’s expenditure, including the salaries of employees, the services the government provides, such as education, roads, health services, police, rubbish collection, transport, etc. Many of these are outside the domain of zakah, which is payable only to eight classes of beneficiaries, numbered in Verse 60 of Surah 9. The Prophet has made it clear that no one other than these eight can benefit by zakah in any way.
On the other hand, zakah is payable on capital and income, while income tax is levied only on income. The two cannot be compared.
It is often that people ask whether they can adjust their zakah against income tax. The answer is always: No. However, income tax must still be paid, because the Prophet says: “A different claim is levied on wealth other than zakah.” He did not specify it, leaving it to the relevant authority to determine.