Difference Between Zakat And Tax Essay - 2066 Words



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Difference Between Zakat And Tax

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First I would like to say that Zakat is related to religion and tax is related to government. In no way Zakat and tax can go together; they are different in many respects. While zakat has a religious sanctity, tax is not like that. Tax is collected from all citizens of a country. The government collects tax for the overall development of the country; On the other hand, Zakat is only imposed on Muslims. Zakat is fixed as per the Holy Quran and cannot be changed by any person. Zakat is a permanent system whereas tax is not. Zakat is calculated at 2.5 percent of the annual income of a person or a family. On the contrary, the government has certain rules and regulations for fixing tax. While there is no change in the percentage of Zakat given, the government has the right to make changes in the tax from time to time. There are also differences in the sources between Zakat and Tax. While Zakat has fixed sources, the sources of tax vary according to the needs. Tax comes as direct and indirect tax. Zakat is given out of the surplus wealth or earnings. There are certain conditions for giving Zakat and is only distributed to certain people. Zakat should be given to poor people, to free captives, to those who are in debt, those employed to collect funds, for Allah’s Cause and for wayfarer. Zakat is also given once in every year. While Zakat is not that compulsory, tax is compulsory. Every citizen irrespective of being rich or poor has to pay tax. Unlike Zakat, the government forces tax on the citizens. Zakat is a means of salvation for the persons who pay it. Difference between Zakat and Tax:

Zakat is a religious obligation; tax is the economic need of the state.
1. Zakat is levied only on Muslims. Tax is imposed on Muslim and non-Muslim alike. 2. Zakat is a duty, which must be paid under all circumstances; taxes can be remitted. 3. The rate of Zakat has been fixed by the Holy Quran and

Sunnah. This rate is unchangeable. Tax-rates are fixed by the Government according to the prevailing circumstances and are changeable. 4. The heads of expenditure of Zakat have also been fixed by the Holy Quran. 5. Zakat fund is collected from the rich and expended on the poor. Tax revenues are expended for the benefit of all, rich or poor. (k) Economic Importance of the Zakat System:

1. Circulation of Wealth:
In the capitalist system wealth continues to accumulate in a few hands. In the laissez-fare economy there is no limit on earnings. The capitalist system brings into existence two distinct classes: the Haves and the Have-nots. Islam firstly declares it illegal to use unfair means for accumulation of wealth. Secondly, even in the lawfully earned wealth of a person Islam prescribes a legal share for the poor sections of the Society. Thus wealth starts flowing from the rich to the poor. The Holy Quran states this purpose in the following words: “…So that it (the wealth) does not remain circulating

among your rich people only.”                              [59: 7] When wealth is transferred from the rich to the poor the collective demand in the economy increases. To satisfy this demand there is an inevitable growth in production. As a result new job opportunities open up for the people. The cycle continues and the overall economy flourishes by leaps and bounds. 1. 2.      Just Distribution of Wealth:

The payment of Zakat narrows the wide gulf between the rich and the poor. The standard of living of the poor people begins to improve. As a result the friction between the two classes disappears and their relations become harmonious. 1. 3.      A Remedy for Unemployment:

The jurists are of the opinion that professional people i.e., tailors, iron smiths, launderers, butchers etc. should be given monetary grants to buy tools of their trade. A cultivator should be granted capital from the Zakat fund to buy a plot of land to grow crops. Besides, as we have said earlier, the system of Zakat will increase employment... Show More

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