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Understanding the Difference Between Zakat and Tax in Islam

If we look at the issue from a Sharia perspective, we can see that Zakat is not a tax at all, but rather one of the five pillars of Islam.

by TNN Editor - 29 Apr, 2023 1544

Sadia Bibi

Recently, a friend sent me a video clip in which a Mufti-like person was claiming on a TV channel that Zakat is also a tax. He argued that if someone has paid as much tax as Zakat was due on him, then his Zakat has been paid.

Since then, I have been pondering deeply over how these TV scholars can make such claims with such confidence, despite the fact that their language shows no hint of hesitation as if they are reciting a verse from the Qur'an or delivering a ruling from the Ummah (Ijmah-consensus or agreement of the Muslim scholars on particular issue).

If we look at the issue from a Sharia perspective, we can see that Zakat is not a tax at all, but rather one of the five pillars of Islam. Taxation, on the other hand, has a different nature and often falls under the category of oppression. Let me explain the difference between Zakat and tax.

Also Read: Erstwhile Fata’s zakat funds transferred to KP govt

Zakat is one of the five basic pillars of Islam and an important obligation from Allah Almighty. It is not optional to omit it. Islam uses both morals and laws to meet the needs of others, in the form of Zakat. Wealthy individuals are required to pay a portion of their income at a fixed rate on cash and land produce, which is then distributed among the needy. This is one of the first duties of an Islamic government.

There is also a difference between Zakat and Ushr. The rate of Zakat is 2.5% on taxable property, while Ushr is 10%. Ushr literally means a tenth part, while in religious terms it is the Zakat of the produce of the land. If the land is rainfed (i.e. on which no expenditure is incurred), then one-tenth is to be paid, otherwise (i.e. on land with expenditure on tube-well, etc.) one-twentieth is to be paid. For instance, if you have harvested one hundred sacks of wheat from rainfed land, you will give ten sacks, and if you have harvested from irrigated land, you will give five sacks.

As far as taxation is concerned, it can be applied ad hoc in objective circumstances, and the money obtained from it should be spent in trust for the safety or welfare of the nation. But if life goes on without it, then taxation is considered cruelty.

There are eight uses of Zakat or Ushr mentioned in the Qur'an, and it is not permissible to use them for any other purpose. On the other hand, there are dozens of uses for tax, and the government can spend it as it likes. The matter of expenditure is very sensitive and quite different from Zakat.

Zakat is obligatory to be paid once a year, while some taxes are applied daily, some monthly, some annually, and some depending on the occasion. It should be distributed from the wealthy people of an area to the poor of the same area. Taxes are collected from both the poor and the rich, and the collected amount is then allocated to various departments and used for different purposes. If there are few poor people in an area, the remaining Zakat is collected and deposited into Bait al-Mal.

Today, famine, poverty, and lack of blessings are common in the country, perhaps the biggest reason for this is non-payment of Zakat. Whatever the reason for not paying Zakat in full, whether it is because the majority of Muslims are not aware of the wealth on which Zakat is obligatory, or it is the intoxication of wealth that is generally ingrained in human beings, like the wine that does not want to leave the bottle. A greedy person is not willing to give up his wealth in the form of obligatory charity.

The government's system of Zakat and Ushar collection is not in accordance with Sharia principles, and the funds collected are often misused and embezzled by corrupt bureaucrats for their personal gain, instead of being spent on the needy and poor or on Shariah expenses. Therefore, careful Muslims spend their Zakat on their wealth in appropriate ways, which is perfectly legitimate.

Although Zakat has been mandated to be spent by the wealthy to assist the poor and needy while maintaining their dignity, the government nowadays collects Zakat but fails to fulfill its obligations, and taxes everything. Therefore, I am surprised on what basis Mufti Sahib considers Zakat and tax to be the same and equal. Can you tell me whether it is possible to agree with the opinion of the said person?

Sadia Bibi is a computer science student and also writes blogs on various topics.