Q4. What are the categories of wealth on which Zakat is due?
There are, in general, the following categories based upon commonality of either the Nisab or the rate at which Zakat is calculated for different types of wealth. They are:
- Personal wealth, which includes the following.
- Money beyond the normal level needed for everyday expenses,
- Gold and silver,
- Jewelry (only the gold and silver content),
- Business wealth (trade inventory, cash, income, profit)
- Money held in restricted funds such as retirement funds when they are freed for use.
- Agricultural produce, which is further classified into the following.
- Produce from cultivated land
- Produce from non-cultivated land
- Items that are mined or extracted from the Earth including any buried treasure that is discovered. If this is done as a business, like in mining, and oil, it may be classified along the lines of a business.
- Live stock, which is further sub-divided into following three categories.
- Sheep lamb, and goats
- Cows and buffaloes (domestic, not wild)
- All other animals
- There is no Zakat on these animals that are raised as a hobby. If these animals are raised for business, the profit derived from this business will be handled as the profit gained from any other business, viz. As a part of the “Personal wealth” category. There will be no tax on its inventory since its exact count cannot be established with certainty. For example, animals in a fish farm.