Zakat on Saved Money

Question:

I am a student who is taking a year off to work and save money so that I can continue my studies the following year without taking any loans. I wanted to know if the money I made while working on this time off was subject to zakat.

Answer:

In the name of Allah, Most Compassionate, Most Merciful,

When one’s appointed date of Zakat arrives, one has to pay Zakat on all of one’s Zakat-able assets, regardless of what purpose one saved and put aside the wealth.

Imam al-Haskafi (Allah have mercy on him) states:

“The reason for the obligation of paying Zakat is the address of Allah Most High “Pay Zakat”. The condition for this obligation (of paying zakat) is the passing of one year with the wealth remaining in one’s possession, and the wealth being a medium of exchange (thamaniyya) such as dirhams and dinars as they are specified for trade in their original creation, hence Zakat is obligatory (on dinar, dirham, gold, silver and cash in general) regardless of why they were held onto, even if one held onto money for the purpose of financial support.” (See: Radd al-Muhtar ala al-Durr al-Mukhtar, 2/267)

In light of the above text from one of the foremost works in the Hanafi School, it becomes clear that one has to pay Zakat on wealth even if that wealth and money was saved and gathered for a specific reason, such as marriage, study or some other reason. The only condition is the passing of one lunar year.

Thus in conclusion, the money you saved in order for you to continue your studies next year is also subject to Zakat. However, if you spend this money before the passing of one year, you will not have to pay Zakat on it.

And Allah knows best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

Question #: 4911
Published: 06/01/2005