Islam has a unique concept of wealth, its ownership and distribution. Wealth in Islam is not an end in itself, but a means to higher values. It should be earned, invested and spend in the correct avenues, and it should reward the individual, his family, and the society as a whole. Its rewards span in this life as well as in the hereafter.

One of the most general misperception about Islam is that the religion discourages wealth accumulation among ordinary Muslims as well as among religious officials.

The fact is, Islam actually encourages all Muslims to acquire wealth, subject to three major conditions:

1. Wealth must be accumulated in an absolutely honest manner.

2. Wealth must be managed in a highly responsible manner benefit not only its owner and family, but also the community as a whole.

3. Wealth does not in any way distract Muslims from their strong faith in Allah.

Concept of Wealth in Islam

According to the Islamic concept, wealth is considered as an endowment or a gift from Allah and human beings are considered as trustees on Allah’s resources on earth. These resources are to be wisely earned, not abused, destroyed, wasted or left to become idle. This dual ownership mitigates the selfish and unfair tendencies that often result from a mistaken notion of absolute ownership.

Besides, Islam compulsorily retains a share of produced wealth by paying the zakat to the needy and other charitable deeds, and therefore spreads out wealth in the community.

General understanding of Zakat in Islam.

In Arabic, zakat literally means “growth”, “increase” or “multiply”. This implies the psychological and materials growth in the soul and wealth of the poor who receive the zakat. By paying zakat, the payer will increase the religious merit and the blessings from Allah. Giving zakat will increase the payer’s good deeds and thus increase its rank in the eyes of Allah.

Another meaning of zakat is to “purify”. It refers to the purification of a muslim’s wealth and soul. Wealth purification denotes the mobilization of assets for the purpose of financial growth and justified distribution. Purification of the soul implies freedom from hatred, jealousy, selfishness, uneasiness and greed.

Zakat, or alms giving, is one of the five pillars in Islam. Zakat is the third pillar in Islam, which comes immediately after solat (prayer) and before fasting and hajj (pilgrimage). In Islam, zakat is not simple charity out of our own sweet will. Zakat is a fixed proportion collected from the surplus wealth and earning of a muslim.

Zakat Recipients

It is very important before we pay our Zakat, we need to ensure who are the group or where our Zakat payment should go to.

In the Quran, it is clear that there are eight groups of rightful recipients of Zakat.

  • The poor (al-fuqarâ’), meaning low-income or indigent.
  • The needy (al-masâkîn), meaning someone who is in difficulty.
  • Zakat administrators.
  • Those whose hearts are to be reconciled, meaning new Muslims and friends of the Muslim community.
  • Slaves or captives
  • Debt-ridden group
  • For religious cause
  • The wayfarer, meaning those who are stranded or traveling with few resources.

This is because the spirit or objective of the Zakat in Islam is through zakat payment or the prosperous can uplift the poor, help those who are troubled and comfort those who are in hardship. The law of zakat establishes the rights of the poor to support and help, and releases those who are held captive as slaves or as debtors.

Types of Zakat

Apart from that, there is little public knowledge that there are several types of Zakat that need to be observed by Muslims which are:

  • Zakat Al-Fitrah
  • Zakat Al-Mal/ “On Wealth”
    • Zakat on Income
    • Zakat on Business
    • Zakat on Savings
    • Zakat on Gold and Silver
    • Zakat on Shares
    • Zakat on Livestock
    • Zakat on Crops

Among the categories of Zakat, Zakat on wealth is usually been given less attention as it have a several sub-categories. Zakat on wealth is an annual payment based on the amount of wealth owned by a Muslim individual or organization. The payment is 2.5% out of the total wealth deemed for Zakat. It is obligatory upon any individual Muslim or organization that has completed the condition of Zakat or requirements based on:

  • Nisab (The minimum amount of wealth is equivalent to 85g of market value of gold)
  • Hawl (The minimum period of wealth retention is 1 lunar year)

However, under Zakat on wealth, there are a sub categories that people usually overlooked, which is Zakat on savings. Either it is on own savings (or multiple) or on their dependent, which falls under savings on children.

Do Children Have to Pay Zakat?

According to Imam Shafi’ and Imam Malik, a child who possesses wealth above the nisab (minimum specified value) is liable for zakat, the same as an adult.

Ahmad Husni Abdul Rahman, assistant manager of the Shariah and Special Information Unit of the Federal Territory Islamic Council’s Zakat Collection Centre (PPZ-MAIWP), said that many are still unaware of the requirement. Blaming it on the lack of information around the different types of zakat.

Children with savings above the nisab value are expected to pay zakat according to the rate set by the PPZ-MAIWP. The rate this year is set at 2.5%, while the nisab value has been determined to be RM13,968.

Seeing that children are usually unable to pay the zakat, it can be done for them through their parents or guardians.

Ahmad Husni clarified that “If the child has savings accounts in three different banks, we need to add up the total of all three accounts and if it exceeds the set nisab value, then it is compulsory to make the zakat contributions.

Zakat on wealth is imposed if the lowest balance of the saving meets the nisab and it is kept for one year. The nisab for zakat is the current value of 20 mithqal of gold is 85 grams or silver of 595 grams. The rate of zakat is 2.5%.

For example, the calculation of zakat on savings based on the amount in Table 1 below:

DatesIn (RM)Out (RM)Balance (RM)
31/05/19200 (hibah)19,200


Additional note: The nisab for the hawl is approximately Rm 8,500 (85g of gold at RM 100 per gram).

Included in the balance is RM 200 which is hibah (gift by the banks to the depositor after performing business for a year). Thus, the calculation of zakat is as follows:

Period of hawl: 1 Muharram – 30 Dhul- Hijjah (1 full Islamic year)


NisabRM 8,500
Amount at HawlRM 20,200
Rate of Zakat2.5%
Thus, Zakat on savingsRM 20,200 x 2.5% : RM 505


A similar method is also applicable to calculate zakat on other savings accounts such as, fixed deposit and mudharabah account.  If a child has multiple savings accounts, a standard hawl for all accounts has to be determined. The lowest balance from each account will be added up. If the total amount is more than the nisab, zakat on saving will be imposed.

However, according to the Hanafi School, a child is not liable to pay zakat, even if they possess wealth above the nisab threshold. The first zakat payment will become due twelve lunar months after the child reaches the age of puberty, if they possess wealth above the nisab.


As a Muslim, it is our obligation to fulfill the calling stated in the Quran in order to share the wealth accordingly. To make it more systematic and manageable, you may get in touch with Islamic Financial Planner for more comprehensive approach and calculation.

You can also go ahead and calculate your zakat to get a rough view on how much will you be paying.



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Comment and discuss below on your experience in paying your zakat.