ASSIGNMENT
Islamic ECONOMICS
Welfar Nabeel Sami Name Department Political science 1st Year (BS) Class Miss Sumera Ishrat Teacher D-of-Sub
S ocial Work -1-
INTRODUCTION In the Name of Allah, the Beneficent, the Merciful. “…… O My Lord! Relieve my mind. And ease my task for me; and loose a knot from my tongue. That they may understand what I say” –(Al-Qur’an 20:25-28). The most dominant economic systems of the world in the present century are capitalism and socialism. Capitalism is based on the private ownership of the means of production, distribution and exchange. In capitalistic economy, the profit motive constitutes the prime stimulus to productive exertion and the price mechanism determines what things shall be made and in what quantities and what conditions. Thus chief features of capitalism, in brief, include: existence of unrestricted economic freedom, unrestricted private ownership, profit motive, free market, competition and institution of interest. Socialism, on the contrary, believes in the public or state ownership of means of production, distribution and exchange. It suppresses economic freedom, abolishes private property and claims to achieve economic equality. Chief features of socialism, in brief, include state ownership of means of production, non-existence of private property, centrally planned economy, and establishment of totalitarian state under dictatorship of proletariat. Both capitalism and socialism are secular systems and their aim is the same i.e. the achievement of material well -being of their followers although the methods adopted by them for achieving this end are diametrically opposed. Interestingly both capitalism and socialism have failed in resolving principal economic problems of humankind. Thus the economic crisis of our age remains as deep and disturbing as ever. In this situation of despair and despondency, humanity is anxiously looking forward to a system which could deliver it from the present economic mess created by the dominant economic philosophies of the modern age. Islam perhaps offers that system. In this book a sketch of the Islamic Economic System is being presented which has been prepared in the light of the Islamic teachings. Teachings of Islam on economic matters are widely scattered in the Holy Qur’an, books of Ahadith, and writings of classical Muslim jurists. Through in-depth study and intensive research, verses of the Qur’an, Ahadith of Prophet Muhammad (PBUH), conventions of prophet’s companions and right-guided caliphs, and views of classical jurists on economic matters have been collected, analysed and classified under various subjects. The arrangement of these subjects follows the conventional style of a textbook on economics with a view to make it communicable to the readers of modern economics. All the aspects of the economic system of Islam have been discussed in detail in the light of the Verses of the Qur’an and Traditions of Prophet Muhammad (PBUH). Translation of the Verses of the Qur’an has been taken from Marmaduke Pickthall’s renowned translation “The Meaning of the Glorious Qur’an.” Ahadith have been taken from standard translations of various Ahadith compilations particularly from Al-Hadith of Maulana Fazlul Karim. Before concluding I must pray to Allah “O, my Lord! Increase me in knowledge” so that I may be able to do some more valuable services to Islam. -2-
INDEX S.#
Description
Zakat
1
2
3
1.1
Categories
1.2
Obligatory
1.3
Voluntary
1.4
Minimums And Amounts
1.5
Eight Categories Of Individuals May Receive The Zakat
1.6
Ineligible Recipient
1.7
Zakat In Sufism
1.8
Schedule of Zakat
Page No. 4
5
6
7
Fitra 1.1
Root Of Word
1.2
Sunan Al-Fitrah
8
Waqf 1.1
Funding Of Schools & Hospitals
9
4
Bait-ul-Mal
10
5
Difference B/W Zakat & Fitra
11
5
Reference
12
6
Conclusion
13
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ZAKAT (Arabic: زكاةIPA: [zækæh], sometimes "Zakāh/Zekat"[1]) or "alms giving", one of the Five Pillars of Islam, is the giving of a small percentage of one's possessions (surplus wealth) to charity, generally to the poor and needy. It is often compared to the system of tithing and alms, but it serves principally as the welfare contribution to poor and deprived Muslims, although others may have a rightful share. It is the duty of an Islamic community not just to collect zakat but to distribute it fairly as well. Every year they give 2.5 percent of their wealth away to the poor. Zakāt is sometimes referred to as sadaqah and its plural, sadaqat. Generally the sharing of wealth is called zakat, whereas the sadqat could mean the sharing of wealth as well sharing of happiness among God's creation, such as saying kind words, smiling at someone, taking care of animals or environments, etc. Zakat or sadaqah is worship as means of spiritual purification. It is the only tax sanctioned to the state according to Islamic law or sharia. Muslim jurists agree that zakat is obligatory on the Muslim who has reached puberty, who is sane, who is free, and who owns the minimum assigned, nisab throughout Islamic history; denying Zakat equals denying the Islamic faith. However, Muslim jurists differ on the details of zakat, which may include rate, the exemptions, the kinds of wealth that are zakatable. Zakatable refers to assets subject to zakat according to Islamic examples and directives. Some scholars consider the wealth of children and insane individuals zakatable. Some scholars consider all agricultural products zakatable, others restrict zakat to specific kinds only. Some consider debts zakatable. Similar differences exist for business assets and women's jewelry. Some require certain minimum nisab for zakatability. The same kind of differences also exist about the disbursement of zakat.[2] The Qur'an does not provide the definition of zakatable wealth nor does it provide the required percentages in zakat. It is left to Sunnah to give, by example or by directives. It must be realized, however, that the Qur'an mentions a few kinds of zakatable possessions, such as gold and silver, crops and fruits, earnings of trade and other business enterprises and what is drawn from beneath the earth (natural resources). Muslims fulfill this religious obligation by giving a fixed percentage of their surplus wealth. Zakat has been paired with such a high sense of righteousness that it is often placed on the same level of importance as offering Salat.[3] Muslims see this process also as a way of purifying themselves from their greed and selfishness and also safeguarding future business. [3] In addition, Zakat purifies the person who receives it because it saves him from the humiliation of begging and prevents him from envying the rich.[4] Its importance and centrality to Islam results in the "punishment" for not paying when able being very severe. In the 2nd edition of the Encyclopedia of Islam it states, "...the prayers of those who do not pay -4-
zakat will not be accepted".[3]
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1.1
C
ATEGORIES
There are two categories of charities in Islam - obligatory and voluntary
1.2
O
BLIGATORY
1. Zakat on gold, silver currency and jewellery 2. Zakat on cash or its equivalent such as bonds, shares of joint companies etc. 3. Zakat on rented buildings, plants (factory), and fixed capital 4. Zakat on commercial assets such as inventories, work in process etc. 5. Zakat on livestock 6. Zakat on agriculture 'Ushr 7. Zakat on honey and animal products 8. Zakat on mining and fishing 9. Almsgiving on self, Zakat al-fitr (fast-breaking zakah)
1.3
V
OLUNTARY
1. Donation to build mosques and Schools 2. Helping non-Muslim
1.4
M
INIMUMS AND
A
MOUNTS
3. It is not written anywhere in the Qur'an that the faithful must give a specific amount, in fact it
goes so far to say that there is no specific amount or rate. However, most Muslims pay 2.5% of their income as is specified in the books of Muhammad al-Bukhari and Muslim ibn al-Hajjaj. 4. It is an obligation on Muslims to pay 1/40 (2.5%) of the wealth, which they have had, for a full
lunar year , 1/40 (2.5%) of goods used for trade, and 5% or 10% of certain type of harvests depending on irrigation. Exempt from Zakat are a person's house and personal transportation. 5. Zakat is not mandatory on harvest if the total did not reach the minimum limit (nisāb) of about
653 kg (1,440 lb) of crops [5], nor on gold amounts if the owner has less than 85 g (3.0 oz) of gold or less than 595 g (21.0 oz) of silver. [6] 6. The Qur'an specifies that Zakat should be paid upon receipt of income in the passage : 7. ...eat of their fruit in their season, but render the dues that are proper on the day that the harvest is gathered. —Qur'an 6:141 , Sura Al-An'am Most Muslims calculate and pay their Zakat at the end of the lunar year as said above. In some communities this is frowned upon . -6-
1.5
E C IGHT
ATEGORIES OF
I
NDIVIDUALS MAY
R
ECEIVE THE
Z
AKAT
1. The needy (Muslims or non-Muslim)- Fuqara' 2. Extremely poor (Muslims or non-Muslims) - Al-Masakin 3. Those employed to collect - Aamileen 4. Those whose hearts are to be won - Muallafatul Quloob 5. To free the captives - Ar-Riqaab 6. Those in debt (Muslims or non-Muslims) - Al Ghaarimeen 7. In the way of Allah - Fi sabil Allah 8. Wayfarer (Muslims or non-Muslims)- Ibnus-Sabeel
As a general rule, the recipient must be a living Muslim who does not possess wealth equal or an excess of a prescribed threshold amount nisab. Those who do not give money are either poor or will go to prison.
1.6
I
NELIGIBLE
R
ECIPIENT
The following recipients are not eligible to receive the obligatory due (Zekat) 1. Descendants of the family of Muhammad 2. On behalf of a deceased person for shrouding, burial or payment of debts 3. In places where Muslims are financially capable of entertaining such projects as construction or maintenance of mosques, schools and similar projects (usually developed countries) 4. In places where Muslims are financially weak (Third World), Zekah can be used for construction or maintenance of mosques and schools
1.7
Z
AKAT IN
S
UFISM
While Zakat plays a large role in the Muslim religion, "classic Sufi sources portray the Sufi as standing outside the system of Zakat". This is because a traditional Sufi will own no property and therefore they will pay no Zakat. Now this places them in a class with the poor who are allowed to receive the benefits of Zakat, but they are not allowed to receive what others are able to give due to their "greater spiritual wealth". [3] It must be noted that the Muhammad lived his life at this level, so simple were his needs and possessions that he never qualified for the nisab due to him donating most of his earnings on a daily basis.
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FITRA Fitra, or fitrah (Ar. ) فطرة, is an Arabic word meaning ‘disposition’, ‘nature’, ‘constitution’, or ‘instinct’. In a
mystical context, it can connote intuition or insight. According to Islamic theology, human beings are born with an innate knowledge of tawhid, which is encapsulated in the f itra along with intelligence, ihsan and all other attributes that embody what it is to be human. It is for this reason that some muslims prefer to refer to those who embrace Islam as reverts rather than converts, as it is believed they are returning to a pure state. The perfect embodiment of fitra was Abraham and Muhammad. Narrated Abu-Huraira: Allah's Apostle said, "No child is born except on Al-fitra (Islam) and then his parents make him Jewish, Christian or Magian (Zoroastrian), as an animal produces a perfect young animal: do you see any part of its body amputated?"
R
1.1
1.2
OOT OF
W
ORD
•
To split or cleave
•
Implies opening up and coming out
•
Verb means 'to bring forth', 'to originate', 'to kne ad and shape dough'.
S
UNAN
F
AL-
ITRAH
Fitrah has a physical component as well as a spiritual one. The fitrah of the human body is its beauty and perfection as created by God. Although created perfectly by God, humans are permitted to enhance their appearance through means approved by God, such as clothes, bathing, and perfumes. These are changes to surface appearance, but not to one's essential fitrah. However, radical changes to one's body to suit personal taste or social fashion are condemned as unlawful changes to fitrah. Procedures to remove or hide deformities resulting from disease or injury are seen as restoring fitrah, rather than changing it, and are therefore allowed.[1] The sunan al-fitrah (lit., "customs of nature") are a collection of hygienic or cosmetic practices enjoined by Muhammad as consistent with fitrah: 'A'isha reported: Muhammad said: Ten are the acts according to fitra: clipping the moustache, letting the beard grow, using the tooth-stick, snuffing water in the nose, cutting the nails, washing the finger joints, plucking the hair under the armpits, shaving the pubic hair and cleaning one's private parts with water. The narrator said: I have forgotten the tenth, but it may have been rinsing the mouth. (Sahih Muslim, II.502) [2] Certain other practices, e.g. tattooing, plucking the eyebrows, wearing wigs or hairpieces, or filing down the teeth, were specifically discouraged or forbidden by Muhammad as contrary to fitrah. -Subhan'Allah
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WAQF (A waqf (Arabic: وقف, pronounced [wæqf]; plural Arabic: أوقا, awqāf; Turkish: vakıf ) is an inalienable religious endowment in Islam, typically denoting a building or plot of land for Muslim religious or charitable purposes. It is conceptually similar to the common law trust.) The term waqf literally means detention. The legal meaning of Waqf according to Imam Abu Hanifa is the detention of specific thing in the ownership of waqif and the devoting of its profit or products "in charity of poors or other good objects". Imam Abu Yusuf and Imam Muhammad Says: Waqf signifies the extinction of the waqf's ownership in the thing dedicated and detention of all the thing in the implied ownership of God, in such a manner that its profits may revert to or be applied "for the benefit of Mankind". There is no direct injunction of the Quran regarding Waqf, but there is a Ahadees which says "Ibn Umar reported, Umer-Ibn-Al- Khitab got land in khyber, so he came to the prophet Muhammad(PBUH) and asked him to advice him about it. The Prophet said, if you like, make the property inalienable, and give the profit from it to charity. Waqf means the permanent dedication by a Muslim of any property for any purpose recognized by the
1.1
F
UNDING OF
S
CHOOLS &
H
OSPITALS
After the Islamic waqf law and madrassah foundations were firmly established by the 10th century, the number of Bimaristan hospitals multiplied throughout Islamic lands. In the 11th century, every Islamic city had at least several hospitals. The waqf trust institutions funded the hospitals for various expenses, including the wages of doctors, ophthalmologists, surgeons, chemists, pharmacists, domestics and all other staff, the purchase of foods and medicines; hospital equipment such as beds, mattresses, bowls and perfumes; and
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repairs to buildings. The waqf trusts also funded medical schools, and their revenues covered various expenses such as their maintenance and the payment of teachers and students.
BAIT-UL-MAL Bait ul-mal is an Arabic term that is translated as "House of money" or "House of Wealth." Historically, it
was a financial institution responsible for the administration of taxes. It served as a royal treasury for the caliphs and sultans, managing personal finances and government expenditures. Further, it administered distributions of zakah revenues for public works. Modern Islamic economists deem the institutional framework appropriate for contemporary Islamic societies. It is better to explain the concept of Bait-ul-Mal, as envisaged by early Muslims who founded it, before we proceed to dilate upon sources of its income and heads of its expenses. “Every property which belongs to Muslims in general and not to any Muslim in particular constitutes a part of the assets of the public treasury (Bait-ul-Mal). It is not necessary that the property should be actually in the vaults (hirz) of the treasury for it to be considered an asset of the treasury, because the conception of Bait-ul-Mal refers to the destination of the property, not to its actual location. Therefore, every expenditure which must be incurred in the interests of the Muslims in general is a liability of Bait-ul-Mal and when it is made, it is considered to have been made by it, whether or not it has actually been paid out of the vaults of Bait-ul-Mal; this is for the reason that a revenue which has gone into the hands of the public collectors or has been directly spent by them is really a part of the income and expenditure of the Bait-ul-Mal itself, and therefore, subject to the regulations governing the same”.[2] The revenues which accrue to the Bait-ul-Mal of the Islamic state have been placed by the classical jurists of Islam under three categories. They are : 1. the ‘Zakat’ and ‘Sadaqah’ revenues; 2. the ‘ganimah’ revenue or spoils of war; 3. the ‘fai’ revenues such as Jizyah and Kharaj. Since the revenues falling under the second and third category are no longer available to a modern Islamic state, the same would be substituted by the modern taxes. The above mentioned classes of revenue are maintained distinctly under separate heads or titles by the Baitul-Mal as the items of expenditure to which they can be allocated are different in Shariah. The Zakat and Sadaqat revenues can be applied to the heads of expenditure as prescribed by the Qur’an (in its verse 60 of chapter 9) which relate mainly to the welfare of the poor; whereas other revenues are spended by the Islamic state at its discretion to fulfil its multifarious responsibilities such as establishment of law and justice, defence, civil administration, transport and communication, economic development, education and health and social action programme. A full-fledged proper organisation of Bait-ul-Mal existed during the Muslim rule right from the time of Umar Farooq, the second caliph of Islam. Central Bait-ul-Mal existed at the capital of the empire under the direct control of the caliph, whereas at provincial level the Bait-ul-Mal was controlled by the governor of the province. It appears that all the requirements and needs of the government and the society used to be met by Bait-ul-Mal which supervised public revenues and public expenditure, helped the poor and performed almost similar functions which the ministry of finance performs today. In addition to that, it also performed the - 11 -
functions of a central bank except issue of currency, and control of credit and interest rates which are modern devices.
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DIFFERENCE DIFFERENCE BETWEEN ZAKAT FITRAH AND ZAKAT ON WEALTH Zakat Fitrah
Zakat on Wealth
Aim on every person
Aim on wealth
Paid within stipulated time Amount is low and all Muslims are required to pay the same amount
No stipulated time Dependent on the amount of wealth the giver has
Fitra: 1
in Islam the fitrah is an important financial duty. Its main aim is to financially support to those people who are poor and do not have proper money to spend their Eid.
2
It is obligatory and it starts in the month of Ramadan and finishes before the starting of Eid prayer.
3
The amount is low and all the Muslims are required to pay the same amount. If anyone could not give
full amount of fitrah he can give half amount also but it is obligatory on all the Muslims.
Zakat: 1
in Islam the zakat is an important financial duty. Its main aim is to financially support to those people who are poor and do not have proper way to live their life.
2
Zakat can give any month of the year,it has not stipulated time.
3
Each Muslim calculates his or her own Zakat individually. For most purposes this involves the payment each year of two and a half percent of one's capital.
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REFERENCES 1
Zakat
1. Fiqh al Zakah (Vol. I), Dr. Yusuf al Qardawi Author introduction Explanatory Issues page xix 2. Robinson, Neal. Islam; A Concise Introduction. Richmond; Curzon Press. 1999
3. ررررررر رررررر رررر - رررررر رررررررر - رر.رررر ررر ررررر 4. Zakat on IslamCity.com 5. Qur'an 9:60 At-Tawba
2
Fitra
1. J.M. Cowan (1994), The Hans Wehr Dictionary of Modern Written Arabic
2. John Esposito (2003), The Oxford Dictionary of Islam 3. M. Masud (1996), Islamic Legal Interpretation: Muftis and Their Fatwas
4. Imam Ali, Nahjul Balagha: Sermons, Letters & Sayings of Imam Ali Al-Kulayni, al-Usul mina ‘l-Kãfi, vol. 2, p. 13; al-Bukhãri, Sahih, vol. 2 (Beirut: Dãr al-Fikr, 1401) p. 104
3
Fitra
1. Gaudiosi, Monica M. (April 1988), "The Influence of the Islamic Law of Waqf on the Development of the Trust in England: The Case of Merton College", University of Pennsylvania Law Review 136 (4): 1231– 1261
2. Hudson, A. (2003), Equity and Trusts (3rd ed.), London: Cavendish Publishing, ISBN 1-85941-729-9 3. Morelon, Régis; Rashed, Roshdi (1996), Encyclopedia of the History of Arabic Science, 3, Routledge, ISBN 0415124107
4 1.
Bait-ul-Mal Quoted by M. Umer Chapra: Islam and the Economic Challenge.
2. Nicolos P. Aghnides: Muhammadan Theories of Finance.
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