ANALYTICAL STUDY OF CHALLENGES OF ZAKAT

DISTRIBUTION IN INDIA

BY

SABAHUDDIN

A research paper submitted in fulfilment of the requirement

for the degree of Master of Science in

Islamic Banking and Finance

IIUM Institute of Islamic Banking and Finance

International Islamic University Malaysia

AUGUST2014

ii

ABSTRACT

Poverty is a very challenging phenomenon in the contemporary world. To address this

phenomenon United Nation set some Millennium Development Goals in 2000. But

these MDG could not bring any significance change in the lives of poor. To the date

more than 1.2 billion people are living under the poverty. However, Islam has

addressed this issue in a very effective manner under the concept of Zakat. It has

proved its efficiency several times in the history. Some Muslim majority countries are

trying to adopt Zakat as a tool of alleviation and eradication of poverty but there are

still some challenges. In this study, these challenges were determined to examine the

situation of Zakat distribution in India. In India, there is no formal way to manage

Zakat. It is distributed in unorganized, chaotic and on individual basis. This study is

all about to find out and analyze the challenges of Zakat distribution in India. This

study came up with some challenges such as absence of accountability and

transparency. Secondly, the system of Zakat collection and distribution is very

conventional and outdated. Thirdly, thehuge amount of fund goes to Madaris which do

not serve purpose of Zakat. As a result, poor and needy stay deprived and their

economic situation is exacerbating day after another day. Fourthly, Zakat is

distributed randomly. There is complete absence of planning and strategy of allocation

of Zakat fund. Finally, People are losing trustworthiness from the Zakat managers.

These are the main challenges of ineffectiveness of Zakat distribution in India. This

study has made some recommendations to manage Zakat in better way.

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iv

APPROVAL PAGE

I certify that I have supervised and read this study and that in my opinion it conforms

to the acceptable standards of scholarly presentation and is fully adequate, in scope

and quality, as a research paper for the degree of Master of Science in Islamic

Banking and Finance.

…………………………………….

Mustafa Omar Mohammad

Supervisor

This research paper was submitted to IIUM Institute of Islamic Banking and Finance

and is accepted as a fulfilment of the requirement for the degree of Master of Science

in Islamic Banking and Finance.

..…………………………………...

Syed Musa Bin Syed

JaafarAlhabshi.

Dean, IIUM Institute of Islamic

Banking and Finance

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DECLARATION

I hereby declare that this Research Paper is the result of my own investigations, except

where otherwise stated. I also declare that it has not been previously or concurrently

submitted as a whole for any other degrees at IIUM or other institutions.

Sabahuddin

Signature …………………………………… Date ………………………...

vi

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF

FAIR USE OF UNPUBLISHED RESEARCH

Copyright © 2014 by International Islamic University Malaysia. All rights reserved.

ANALYTICAL STUDY OF CHALLENGES OF ZAKAT

DISTRIBUTION IN INDIA

No part of this unpublished research may be reproduced, stored in a retrieval

system, or transmitted, in any form or by any means, eletronic, mechanical,

photocopying, recording or otherwise without prior written permission of the

copyright holder except as provided below:

1. Any material contained in or derived from this unpublished research may

only be used by others in their writing with due acknowledgement.

2. IIUM or its library will have right to make and transmit copies (print or

electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieval system

and supply copies of this unpublished research if requested by other

universities and research libraries.

Affirmed by Sabahuddin

……………………… ……. ………………..

Signature Date

vii

I hereby dedicate this Research Paper to my beloved Parents who raised me on the

principles of Islam and to my friend Habib Mohtashim who was the reason to join the

Institute of Islamic banking and finance at International Islamic University, Malaysia.

viii

ACKNOWLEDGEMENTS

First and foremost, I am thankful to Allah SWT, the Most Gracious and the Most

Merciful for giving me the chance to pursue Master Degree. Without His blessings I

would not have the strength and patience to complete this study successfully.

I would like to express my sincere gratitude to my supervisor Dr.Mustafa

Omar Mohammed for his guidance, patience, ideas, efforts and valuable teachings and

advices throughout the entire process of writing this research paper. I would not be

able to complete this study successfully without his assistance, guidance, and

supervision.

I also want to convey my deepest appreciation to all my interviewees for

assisting me through providing valuable interviews required for this study. I would

like to thank my all my senior fellows for helping me to complete the core objective

part of this research paper through their insightful comments.

I would also like to register my special thanks to all IIiBF lecturers for their

teachings and support in successfully completing my Master program. I would also

like to extend my heartfelt thanks to the staff of IIUM Library who work hard to

maintain library to be user friendly. Last but not least, I record my deepest gratitude

to my parents, my siblings for their love, care and deep concern for me in their life.

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TABLE OF CONTENTS

Abstract ................................................................................................................... ii

Abstract in Arabic .................................................................................................... iii

Approval Page .......................................................................................................... iv

Declaration ............................................................................................................... v

Copyright Page ......................................................................................................... vi

Dedication ............................................................................................................... vii

Acknowledgements .................................................................................................. viii

List of Tables ........................................................................................................... xi

CHAPTER ONE: INTRODUCTION .................................................................. 1 1.1 Introduction ........................................................................................... 1

1.2 Zakat Management and Challenges ...................................................... 5

1.3 Challenges of Zakat Distribution .......................................................... 7

1.4 Problem Statement ................................................................................ 9

1.5 Objectives of Study ............................................................................... 10

1.6 Scope and Limitations of the Study ...................................................... 10

CHAPTER TWO: LITERATURE REVIEW ..................................................... 11 1.2 Introduction of Zakat............................................................................. 11

2.1.1 Zakatable Items ............................................................................ 13

2.2 Historical Development of Zakat. ......................................................... 14

2.3 Zakat Management ................................................................................ 15

2.3.1 Zakat Management in the Contemporary World ......................... 15

2.3.2 Zakat Management in Pakistan .................................................... 16

2.3.3 Zakat Management in Indonesia .................................................. 20

2.3.4 Zakat Management in Malaysia .................................................. 21

2.3.5 Zakat Management in India ......................................................... 23

2.4 Issues and Challenges in Zakat Distribution ......................................... 25

2.5 Summary ................................................................................................ 31

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY .......... 32 3.1 Introduction ........................................................................................... 32

3.2 Research Instruments ............................................................................ 33

3.3 Contents Analysis. ................................................................................. 34

3.4 Limitations of the Study ........................................................................ 35

3.5 Summary ............................................................................................... 36

CHAPTER FOUR: FINDINGS AND RESULTS ............................................... 37 4.1 Findings & Analysis .............................................................................. 37

4.2 Summary ............................................................................................... 47

CHAPTER FIVE: CONCLUSION AND RECOMMENDATION ................... 48 5.1 Conclusion ............................................................................................ 48

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5.2 Recommendations ................................................................................. 52

BIBLIOGRAPHY .................................................................................................. 53

APPENDIX 1: INTERVIEW QUESTIONS ........................................................... 56

APPENDIX 2: INTERVIEWS ................................................................................ 57

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LIST OF TABLES

Table No. Page No.

3.1 Data Analysis Theme 25

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CHAPTER ONE

INTRODUCTION

1.1 INTRODUCTION

Poverty is a major problem of the modern world. The threshold of poverty is very

high, based on the recent statistics more than 1.2 billion people are living under the

poverty line (World Bank Report 2013). In the region of Saharan Africa alone, almost

half of the population is living on less than $1.25 a day. Saharan Africa saw the

number of people living in the extreme poverty rise steadily, from 290 million in 1990

to 414 million in 2010. Statistics show that even most progressive countries among the

least developed African countries could not succeed to alleviate their people from

poverty. For example, Uganda alone is a house of 7.5 million absolute poor people and

13.00 million “insecure non poor” people which account of 67.4 of its population

(Uganda Poverty Status Report 2012).

Similarly, poverty in most of the OIC-member countries as more than 50

percent of their population is extremely poor. Among these countries are Burkina Faso

(56.5%), Chad (61.9%), Guinea (70.1%), Mali (51.4%), Mozambique (74.7%), Niger

(65.9%), Nigeria (64.4%), and Sierra Leone (53.4%). The incidence of poverty in

Bangladesh (49.6%), Benin (47.3 %), Comoros (46.1 %), guinea-Bissau (48.8 %) and

Uzbekistan (46.3 %) is also very high (Shirazi and Fouad 2009).

This incidence of poverty does not only prevail in least developed countries

but it is also common to the developing countries. However, due to socio-economic

progress in many countries in the region saw a reduction in poverty level although a

significance number of people are living under the poverty line.For example, India

alone is a home to 363 million poor or 29.6 percent of the Indian population is living

2

below poverty (Report of the Expert Group to Review the Methodology for

Measurement of Poverty 2014).

Ironically, many poor people living in developed countries such as in the

United States are also experiencing poverty. For instance, statistics shows that in

1959, 22.4 percent of all persons were poor according to the official measure in the

USA. This was cut by half by 1973 in the USA because of rapid economic growth and

the expansion of safety net programs in the aftermath of the War on Poverty. But

nothing much happened for the next four decades. The poverty rate has never fallen

below the historic low of 11.1 percent reached in 1973, and only in the booming

economy of the late 1990s did it come close to that mark. Instead, the trend over the

past 40 years consists of ups during recessions and downs during economic

recoveries, but no long-term progress (Poverty and Inequality Report 2014).

To address the problem of poverty, the United Nation set eight Millennium

Development (MDG) Goals giving priority to the eradication of poverty. The World

Bank recommended dual approach: a) efficient labor-intensive growth based on

appropriate market incentives, physical infrastructure, institutions and technological

innovation; and b) adequate provision of social services, including primary education,

basic health care and family planning services.

In 2000 UN targeted to halve the proportion of people living below poverty

line or suffering from hunger by 2015. However, it is unfortunate that there is not as

yet much accumulated research evidence of the extent of such impact (Manning

2010). But the World Bank (2013) claimed that the first goal has been achieved five

years ahead of its deadline 2015. Evidence for this claim is straight forward due to a

higher initial headcount ratio in India or China where poverty reduction in these

3

countries contributed a greater relative weight in the calculation of the global poverty

headcount (or headcount ratio) (Reddy and Minoiu 2007).

This claim however still remains hard to be proven because still 1.2 billion

poor are living in the world and in some region especially Sub Saharan Africa poverty

saw a steady rise. Poverty and Inequality Report (2014) states that the goal of the war

on poverty have not been achieved. It is also substantiated when ShaZukang, under-

secretary-general for economic and social affairs admits that too little is being done

too slowly to significantly improve conditions, especially for the poor. The General

Assembly realized this fact and proclaimed 2008-2017 as the Second Decade for the

Eradication of Poverty in resolution 62/205 of 19 December 2007 (Rethinking Poverty

Report on the World Social Situation 2010). The World Bank contradicts itself when

it projected that by 2015; about 970 million people would still be living on less than

$1.25 a day in countries classified as low- or middle-income in 1990. Instead, Sub-

Saharan Africa and Southern Asia would each be home to about 40 per cent of the

developing world population living in extreme poverty.

The initiatives taken by the international community failed towards poverty

eradication mainly due to two reasons. Firstly, although the amount of development

assistance has increased over the past decade, the richest states have failed to meet

their commitment to donate 0.7% of the gross national income. G8 countries also

failed to meet a promise to double aid to Africa by 2010, made at a summit in

Gleneagles, in Scotland in 2005.1Rippin (2013) stated that the Millennium

Development Goals were perceived as a mere donor agenda and a lack of ownership

and commitment was a direct result of this perception. Thus, while the MDGs had a

1http://www.bbc.com/news/world-11364717

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highly motivating effect on donors, their effect on developing countries was much less

promising.

Secondly, the funds which were allocated to achieve MDGs could not reach

their targets. According to Professor Jeffrey Sachs, an MDG adviser to UN Secretary

General Ban Ki-moon, the rich countries focus on their own project rather than

pooling their money into global fund which is designed to support developing

countries.2 Furthermore, the problem is aggravated because the least developed

countries are suffering from weak and autocratic political system. It has estimated by

an African Union study (2002) that the corruption cost the continent roughly $150

billion a year while aid given to sub-Saharan Africa by the developed countries was

only $22.5 billion in aid.3 It also has been reported that these aids were used in other

projects of countries instead of allocating to eradicate poverty. Subsequently, the poor

were no longer the first beneficiaries of the fund.

The institution of Zakat could provide remedy for the failure of poverty

eradication discussed above, especially to address the lack of commitments of donors

and corruption. To address these two problems of poverty Islam through Zakat has

made it an obligation and levied a certain amount of wealth on every wealthy member

of the society which has to be paid annually under the concept of Zakat. As Qur’an

states that "And those in whose wealth there is a known right, for the beggar who

asks, and for the unlucky who has lost his property and wealth, (and his means of

living has been straitened”(AL Quran 70: 24-25).

The donors are responsible to ensure that Zakat has reached to the targets

unlike MDGs aids. Furthermore, donors are not allowed to expect any compensation

from the poor unlike MDGs’ donor countries. As it is reported, that the donor

2http://www.bbc.com/news/world-11364717.

3http://www.cfr.org/africa-sub-saharan/corruption-sub-saharan-africa/p19984

5

countries influence politically on the management of developing and least developed

countries and manipulate their economic sources behind the aids they provide to the

poor countries on the name of MDGs. It can be estimated that the nominal illicit

outflows from developing countries amounted to US$946.7 billion in 2011, up 13.7

percent from US$832.4 in 2010 (Kar & Leblanc, 2013).

In addition to that, Zakat posses a very distinguished mechanism of

distribution of Zakat fund that challenge poverty on a very micro level due to the

following some characteristics. Firstly, Zakat fund is only disbursed among the people

who fall in (specific eligible categories for Zakat fund) Asnaf. Secondly, Zakat fund is

rewarded to poor recipients intending to alleviate them from poverty line. Finally, the

Outflow of Zakat fund is not allowed until needs of the local citizens are fulfilled.

With such characteristics, Zakat provides the best remedy for the eradication of

poverty.

However, currently Zakat is facing some challenges regarding distribution of

fund. This is due to lack of awareness about distribution, absence of institutional

support for Zakat distribution, lack of crystallized concept of Zakat distribution and

lack of coordination of Zakat institutions. In the next section contemporary Zakat

management and challenges will be discussed.

1.2 ZAKAT MANAGEMENT AND CHALLENGES

Since the inception of Zakat, its fund used to be collected and distributed by the

Islamic state. Prophet (PBUH) used to send administrators to collect Zakat from rich

people and distribute it among the poor. This system continued until the last Islamic

caliphate in 1892. During this long period Zakat had proved its efficiency many times.

Governors of Egypt and Yemen used to send surplus fund to the capital of Islamic

6

state of Madina. Even during the time of Umar bin Abdal Aziz, Zakat collectors in

North Africa had difficulty finding people worthy of receiving Zakat locally.

But the rise of colonial powers and collapse of Islamic caliphate debunked the

institution of Zakat. It disturbed the connection of the institution of Zakat with the

state. It rendered Zakat a voluntary ineffective institution. Since the last four decades,

Muslim scholars started to discuss Zakat and its potential impacts on Muslim society.

As a result once again many Muslim countries started to show their interest in

incorporating Zakat in the systems.

In 1968, Zakat was institutionalized in Indonesia and established at provincial

government- sponsored Zakat centers. In 1980, Pakistan introduced a very

comprehensive Ordinance on Zakat and Usher. All Zakat and Usher affairs are dealt

by ministry of religious affairs (MORA) Islamabad. In 1991, Malaysia introduced a

new corporate style of Zakat collection. Saudi Arabia introduced a centralized Zakat

system and Kuwait also implemented partially centralized system of Zakat collection

and distribution. However, there are majority of the countries who did not pay heed to

regulate institution of Zakat for example Qatar, Emirates, Bangladesh, India and

others. In these countries Zakat is collected and distributed privately.

However, in many countries institution of Zakat has experienced a tremendous

development in terms of infrastructure, human capital delivery system and governance

transparency, but still there are issues and challenges of Zakat management to be

addressed in order to realize the potentials of Zakat such as eradicating poverty and

elevating people’s living standard nationally and internationally. No matter how good

the system is developed, if it does not cater for the needs of the community especially

the poor and needy, such institution is considered inefficient (Mohammad et al.,

7

2011). In order to empower institution of Zakat all over the world a number of

challenges and issues have to be addressed.

1.3 CHALLENGES OF ZAKAT DISTRIBUTION

Zakat management all over the world faces several challenges and issues in terms of

collection and distribution the most important are: First, lack of public awareness in

paying Zakat. For example, people in Malaysia are strongly aware that Zakat in an

obligation in Islam but they merely know when and on what types of wealth Zakat is

obliged (Nadwi et al., 2014). Lack of awareness about basics of Zakat and it actual

recipients may lead to inappropriate distribution of Zakat fund. Second, the absence

of institutional support on Zakat collection and distribution. Malaysia has shown a

tremendous interest in instituting Zakat but still Zakat remain optional unlike taxation

(Abdul Aziz & Abdullah 2013). Subsequently, only 160,000 out of approximately 2

million Muslims population in Selangor (8%) are paying Zakat.

Third, the absence of the standardized concept among the existing Zakat

management bodies. As in Malaysia, there are separate bodies for each state to

regulate religious affairs which have differences in the interpretation and

implementation of Zakat in their states. This scenario has led to the issues of Al-

Awlawiyyat (prioritization) in distributing Zakat money (MdSaad&Abdullah 2011).

It was argued that for certain states, priority is not given to the poor and hardcore poor

categories of asnaf. It seems that this practice is inconsistent with the main objectives

of Zakat which is to alleviate poverty (Aida 2012).

Forth, lack of coordination among Zakat institutions. In the countries where

Zakat is institutionalized not centralized, lack of coordination might create a problem

of overlapping, especially on distributing the Zakat funds. In addition it might create a

8

stiff and unhealthy competition among Zakat collection centers (Hudayati & Tohirin

2010). It is reported that some institutions sometimes have surplus of Zakat fund while

others have deficit.

Fifth, prospective payers. Zakat institutions are suggested to improve the

ability of Zakat collection and distribution centers to identify not only those who

should pay Zakat, but also to trace down the prospective Zakat payers. AbRehman et

al. (2012) also stressed that Zakat institutions need to be more proactive in raising

awareness among prospective Zakat payers instead of waiting at the Zakat counters. It

is only possible by organizing briefing sessions on the Zakat to Students, public and

workers in different organization. There should be enactment of seasonal trainings and

short courses.

Sixth, capacity building. Eradicating poverty and helping people out is an

inspiration of all people. But giving poor a sum of money does not seem a real and

long term solution. It may give people a short term relief. Rather, it would create a

dependency on Zakat receipts which would not help them in enhancing their standard

of living. If the authority change the way financial assistance is given including in the

form of financing their children’s education or sending them to training centers to gain

certain skills; this would improve the future employability of the family members. The

poor person who has acquired the necessary skills from training given should be given

adequate capital from the Zakat fund for him/her to start a business venture. This

capacity building approach is an effective way to change the condition of the poor

from being a Zakat recipient to one who pays out Zakat (AbRahman et al., 2012).

As a result these issues which are applicable to the almost all Zakat institutions

in Muslim societies render the institution of Zakat inefficient in the distribution of

proceeds. AbRehman et al. (2012) highlighted the issue of inefficiency in Zakat

9

institutions might affect the objectives of Zakat. Bureaucracy problem in Zakat

institution play a negative role in terms of distribution. There are complaints made by

the public that Zakat does not reach the targeted group due to lack of publicity by the

authority or lack of knowledge on the part of the community (AbRahman et al., 2012).

1.4 PROBLEM STATEMENT

The institution of Zakat is one of the most important institutions in Islam. It is an

instrument of redistribution of wealth.It has played a vital role in the eradication of

poverty. It has continually functioned since its inception until secular powers took

over the Muslim states. These powers debunked the connection of institution of Zakat

from the states. Subsequently, Muslims were forced to pay Zakat privately in order to

fulfill their religious obligation which downgraded this important institution of Zakat

to just a mere donation.

But after achieving freedom from the secular colonial powers, Muslims started

to revive Islamic economic discipline including institution of Zakat. Many Muslim

countries showed their interest to incorporate or institute Zakat into the system for

example Indonesia, Pakistan and Malaysia. However, still Zakat is facing many

challenges and issues related efficiency of its management, awareness about Zakat,

collection and distribution, prospective payers, lack of institutional support, lack of

coordination among Zakat institutions and capacity building of payees.

These issues have been highlighted by several literatures in Muslim countries.

But there is no formal study that has been conducted in India in order to determine the

issues and challenges facing Zakat distribution. In this study a general literature

survey in the challenges of Zakat distribution will be conducted in order to determine

issues and challenges of Zakat distribution in the Muslim countries. These issues and

10

challenges would be examined in the current situation of Zakat in India to be critically

analyzed.

1.5 OBJECTIVES OF STUDY

Although, the management of Zakat has undergone many improvements in terms of

infrastructure, human capital, delivery system and governance transparency in some

countries like Indonesia, Pakistan and Malaysia, there are still some challenges and

issues before Zakat management that need to be studied and examined to ensure

implementation of Zakat. The main objectives of this study are:

i. To review/ survey literature in the challenges of distribution of Zakat.

ii. To examine the current situation of Zakat distributio in India.

iii. To critically analyze the challenges of Zakat distribution in India.

1.6 SCOPE AND LIMITATIONS OF THE STUDY

This study has some limitations in terms of coverage and data collection. This study

focuses only on the reviewing the literature in the challenges of Zakat distribution in

order to examine and analysis the current situation of Zakat distribution in India.

Therefore, other juristically controversial issues do not come within the purview of

this study (because of their irrelevance or semi relevance to the actual outlook of this

study). However, It might discus some of them which are highly related to the topic

and suggest some recommendations to enhance the study.

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CHAPTER TWO

LITERATURE REVIEW

This chapter includes introduction of Zakat, historical development in the

implementation of Zakat. In the second section, the current practicing models of Zakat

in different Muslims countries including situation of Zakat are reviewed. Lastly, the

challenges before these Zakat models are determined.

2.1 INTRODUCTION OF ZAKAT

Zakat is one of the five pillars of Islam. It is an obligatory form of worship prescribed

by Allah the almighty. Allah commanded in the Qur’an: “so establish Salah and give

Zakat, and hold fast to Allah” (Al-Qur’an 22:78.) In order to define Zakat accurately,

it should be seen from three aspects linguistically, theologically and legally. Zakat

literally means to grow and to increase. Linguistically, Zakat means cleansing or

purification of something from dirt or filth (Almujam Al waseet 1972). Theologically,

“it is an obligatory duty (Fard) on every Muslim and Muslimah possessing wealth

equal to or exceeding the prescribed amount of Nisab.”As Qur’an says "And those in

whose wealth there is a known right, for the beggar who asks, and for the unlucky

who has lost his property and wealth, (and his means of living has been straitened)”

(Al-Qur’an 70, 24-25).

In the other verse, Allah the almighty commands to pay Zakat in “Of their

goods, take alms, so that you might purify and sanctify them” (Al-Qur’an 9:103).

Maududi (1988) discussed further that a person’s wealth is impure if he does not pay

the right of Allah’s servant from the wealth bestowed by him. It also means growth or

increase which has two dimensions; first, spiritual development by pleasing Allah, and

12

second, redistribution of income (as Islam forbids accumulation and hoarding) which

will lead to greater enjoyment and in turn, will stimulate production and growth.

Legally, Zakat means transfer of ownership of specific property to specific individuals

under specific conditions (Rahman 2012).

Due to being one of the five fundamental obligations and most important tool

of redistribution of wealth in Islam, aspect of Zakat distribution articulated very

succinctly in Qur’an “As-Sadaqat(here it means Zakat) are only for the Fuqara' (poor),

and Al-Masakin (the poor) and those employed to collect (the funds); and for to attract

the hearts of those who have been inclined (towards Islam); and to free the captives;

and for those in debt; and for Allah's Cause (i.e. for Mujahideen - those fighting in the

holy wars), and for the wayfarer (a traveler who is cut off from everything); a duty

imposed by Allah. And Allah is All-Knower, All-Wise” (Al-Qur’an 9:60).

This verse mentioned eight categories and confined the distribution of Zakat

fund in these categories. Although some fuqaha (jurists) believe that Zakah proceeds

must be equally distributed between to these eight categories, but the majority of

them agree that these two (poor and needy) categories make up the main recipients of

Zakat and they must be paid as much required to satisfy their basic need provided

there are sufficient fund (Kahaf). The categories of Zakat recipients are defined as:

1. Faqir: This group of people whose property is below the Nisab threshold. They are

poor and destitute and need other people’s help to survive, either because of their

physical inability, old age or others.

2. Masakin: Consist of the poor or in other words needy who does own nothing.

3. Amilin:Those who work in administering and managing matters related to Zakat.

Inclusive in this category are the officers and members of the staff appointed by the

state to manage Zakat matters such as calculation, collection and disbursement. This

13

group of people is entitled to be paid from the Zakat fund (BakarandMahyuddin

2011).

4. Muallafat al Qulub: This group of people are those whose hearts are reconciled to

the Islamic religion. Those in this category include those who have close relationship

and strong commitment to solidify Islam such as people who recently embraced Islam

and gave up their all things including wealth, property, and relative for the of Islam.

Jurists decree that it must only be done by a collective decision through the Islamic

government or national organization of Muslim minorities (Kahaf n d).

5. Riqab: To free slaves. In the current situation, the slavery system has long been

abolished. These days, however, the interpretation has been extended to those who are

oppressed such as Muslims who are restricted from performing their duties under the

rule of non-Muslim reign (Bakar&Mahyuddin 2011)

6. Gharimin:People who are in debt. Muslims who are in debt and have no resources

to pay their debts considered acceptable in Islam such as being in debt to get basis

amenities to sustain their lives and those under their care.

7. Fi sabilillah: Fighters in the cause of Allah to promote Islam such as students and

those who are in the war to protect Islamic countries from the invasion of enemies of

Islam (Bakar&Mahyuddin 2011).

2.1.1 Zakatable Items

There are several opinions about Zakat payable items. The first opinion considers that

Zakat is only imposed on four types of gold and silver, freely pastured, cows, camels,

and sheep agricultural products (barley, wheat, dates and resin). The second opinion

which is hold by majority expands it by including views of some contemporary

scholars who include in the Zakat base the return on fixed assets used in the sectors of