Zakat and Ushr introduction and the rate by which the amount is deducted

2. Zakat & Ushr

3. Group #2

4. Introduction
Zakat:
One of the five pillars of Islam. Only imposed on
Muslims, it is generally described as a 2.5% tax on
savings to be donated to the Muslim poor and needy.
Ushr:
A 5% tax on the harvests of irrigated land and 10%
tax on harvest from rain-watered land. The term has
also been used for a 10% tax on merchandise
imported from states that taxed the Muslims on their
products. Caliph UMAR ibn Al-Khattab was the first
Muslim ruler to levy ushr

5. Introduction
• The Qur’an says :
– “O Believers ! expend in Allah’s way the best
portion of the wealth you have earned and of
what We have produced for you from the earth.”
(2 : 267)

6. Introduction
• According to some jurists, ‘ushr is not
obligatory on those vegetables and fruits
which are not stored, but if the grower sells
them in the market, he will have to
pay Zakat as on other trade goods if he trade
capital amounts up to the Nisab limit of 200
dirhams or more in the beginning and the end
of the trade

7. Definitions
• Administrator General:
– It means the person appointed as such under
section 13 and includes an officer authorized by
him to exercise or perform any power or function
under the ordinance 1980
• Assets:
– It means assets liable to Zakat as provided in the
zakat and ushr ordinance 1980

8. Definitions
• Attiyat:
– Voluntary donations to zakat funds, otherwise
than on account of zakat or ushr and includes
sadaqat-e-nafila
• Chief Administrator:
– It means a person appointed as such under
section 15 and includes an officer authorized by
him to perform the function of chief administrator

9. Definitions
• Deducting agency:
– It means a Bank, post office or other institution
referred to in the sixth column of the first
schedule
• Deduction date:
– It means in respect of the assets mentioned in the
first schedule, the date or dates on which zakat is
to be deducted at source and which is or are
specified in the fifth column of that schedule

10. Definitions
• District committee:
– It means a committee constituted under section 16 of
the zakat and ushr ordinance 1980, or in case of ICT,
the islamabad zakat and ushr
• Nisab:
– Nisab in relation to assets liable to zakat except
agriculture produce and animals fed free in pastures
means 612.32 grams of silver, or cash or gold or goods
for trade or any assets liable to zakat under shariah.
– 87.48 grams, in case of gold

11. Definitions
• Surrender Value:
– The sum payable by an issuer or cancellation of
life insurance policy or annuity
• Survival Benefit:
– The amount payable according to life insurance
policy conditions, during the currency of the
policy, on survival of the life assured to the
specified data as stipulated in the policy

12. Definitions
• Valuation date:
– Valuation date means:
• In respect of assets liable to zakat the first day of the
zakat year
• In respect of produce liable to issuer such date or dates
as may be prescribed or as may be notified by the
admin general or by chief admin
• Zakat year:
– The year according to hijra calendar for which zakat is
chargeable

13. Chapter 2
Charge and collection of Zakat

14. Charge and collection of zakat
• Section 3 of the zakat and ushr ordince, 1980
deals with the charge and collection of zakat.
Zakat shall be charged on the basis of
following principles:
– Zakat is to be charged for each zakat year on the
first day of ramadhan
– Zakat is to be charged compulsory on each saahib-
e-nisaab
– Zakat is to be charged at the rate of 2.5%

15. Deductions
• Zakat is deductible at source may be reduced
only on account of debts which have been:
– Primarily secured by that asset
– Used for the creation of an asset on which zakat is
deductible
– Obtained from the deducting agency having
custody of the asset securing the debt and of the
asset created under clause

16. Exemptions from Zakat deductions
• The exemptions are as follows:
– Assets of non muslims
– Person who is not a citizen of Pakistan
– Person files a declaration on grounds of faith and fiqa
– Person excluded from the definition of sahib-e-nisab
– Assets frozen under the order of competent authority
– Assets of the persons deceased on or before the
deduction date
– Assets acquired with or held in foreign currency

17. Chapter 3
Charge and collection of Ushr

18. Charge and collection of zakat
• Section 5 of the Zakat and ushr ordinance 1980,
deals with the charge and collection of ushr:
– Ushr is to be charge on such date as may be
prescribed or notified by admin general or chief
admin.
– It is to be charged from every land owner , grantee,
allottee, lessee, land holder.
– The ushr shall be the first charge on the produce
– It shall be collected in cash.
– Ushr is to be charged at the rates specified in the
schedule.

19. Exemptions
• The individuals like land owner, grantee, or
alottee shall be exempt from the compulsory
levy of ushr if :
– He is eligible under shariah to receive zakat
– The produce from his land is less than 948kg of
wheat or equivalent in case of other crops

20. Assessment and collection of ushr
• The provincial revenue department shall assess and collect ushr
• In case of lease the liability of the lessor and lessee to pay ushr
shall be equitably apportioned between them by the tehsildar
• An assessee may file an application within 30 days to assistant
commissioner for the revision of assessment
• Assistant commissioner may at any time either on his on motion
or the application of an adult muslim residing within his
jurisdiction, make an order enhancing the liability assessed
under sub section 1 or 2
• The decision should be made within one month after the
application receive.
• The demand under sub section 1 ,4 or 5 shall be paid by the
assessee and deposited into district zakat fund.
• Tehsildar or mukhtiarkar shall proceed to recover the amount if
it were an arrear of land revenue.

21. Chapter 4
Zakat Funds

22. Establishment of Zakat Funds
• Central zakat funds:
– The zakat deducted at source
– The zakat paid into it voluntarily
– The transfers, if any from the provincial zakat
funds
– The grants, atiyyat and any other receipts
including voluntary contributions

23. Establishment of Zakat Funds
• Provincial Zakat funds:
– The transfers to it from the central zakat funds
– The zakat paid into it voluntarily
– The transfers, if any, from the district zakat funds
– The transfers, if any, from the local zakat funds
– The grants, atiyyat and any other receipts

24. Establishment of Zakat Funds
• District Zakat Funds:
– The transfers to it, from the provincial zakat funds
– The proceeds of ushr to be deposited in the
personal ledger account of the district zakat funds
– The zakat into it voluntarily
– The transfers, if any, from the local zakat funds
– The gramts, atiyyat and any other receipts

25. Establishment of Zakat Funds
• Local zakat funds:
– The zakat paid into it voluntarily
– The transfers to it from the district zakat funds
– The transfers to it from the provincial zakat funds
– The grants, atiyyat and any other receipts

26. Utilization of Zakat Funds
• The zakat funds shall be utilized for the puposes:
– The zakat shall be given to the needy person, poor
particularly orphans and widows, and disabled
persons eligible to receive zakat under shariah for
their rehabilitation
– For the homeless people due to natural calamities,
like floods and earthquakes
– Expenditures on collection and administration of zakat
and ushr
– In any non-interest bearing instrument as is permitted
under shariah
– Any other purpose permitted by shariah

27. Chapter 5
Organization & Administration

28. Central Zakat Council
• It consists of:
– A chairman
– 4 persons to be nominated by the president in
which 3 shall be ulema
– 1 person from each province to be nominated by
the president
– 2 women who shall not be less than 45 years of
age
– The chief admins

29. Central Zakat Council
– The secretary to the govt. of Pakistan in the ministry
of finance
– The secretary to the govt. of Pakistan in the ministry
of religious affairs, zakat, ushr and minorities affairs
– The secretary to the govt. of Pakistan in the ministry
of health
– The secretary to the govt. of Pakistan in the ministry
of education
– The admin general who shall also be the secretary of
the council

30. Provincial Zakat Council
• It consists of:
– A chairman
– 5 persons whom 3 shall be ulema nominated by the
governor
– 2 women who shall not be less than 45 years of age
– The secretary to the provincial govt. in the finance
department
– The secretary to the provincial govt. in the local govt.
department
– The secretary to the provincial govt. in the social
welfare department
– The chief admin who shall also be the secretary of the
council

31. District Zakat and Ushr Committee
• Consists of:
– A chairman
– 2 women who shall not be less than 45 years of
age
– Deputy commissioner of the district
– 1 non official member of each tehsil, taluqa or sub
division in the district
– The district zakat officer who shall also be the
secretary of the committee

32. Tehsil, Taluqa or Sub Divisional Zakat
and Ushr Committee
• It consists of:
– Assistant commissioners
– 2 women members nominated by the district
committee
– 6 members to be elected by the chairman of the
local committee
– The members of the committee shall elect 1 of
their members to be the chairman of the
committee

33. Local Zakat and Ushr Committee
• It shall be constituted for:
– Each revenue estate in settled rural area
– Each deh or village in non settled rural area
– Each ward in urban area