I had saved money over a period of seven years for my son`s higher education. The money was saved in a education scheme and the funds were transferred to my account in April 2005.
Mu' meneen Brothers and Sisters,
As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)
One of our brothers/sisters has asked this question:
Dear brother Burhan,
I had saved money over a period of seven years for my son`s higher education. The money was saved in a education scheme and the funds were transferred to my account in April 2005. These funds will be spent during the next year. Is zakath payable on this money and how do I compute the zakath amount.
Appreciate your response in light on the Sunnah and Islamic jurispudence.
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Zakah on savings
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Dear and beloved brother in Islam provided the total net worth of the believer is above the prescribed nisaab of 7.5 tolas of gold (appx 85grams of gold or equivalent value appx US$1,000.00), regardless of the purpose of the savings, annual zakah would liable on the excess amount or savings which have been in ones possession for one calendar year.
Thus in your case, if you have not paid the zakah on the savings for the seven years, you will need to calculate your contribution each year to the savings and fulfill the zakah for each of those seven years. Once you spend the funds for whatever purposes, then obviously there would be no zakah payable for the corresponding yearbut since you have been saving for the past seven years, it would be piety and righteousness that not only you pay the zakah dues for this year on those savings, but you should accurately calculate your contribution towards those savings for each of the seven years and fulfill your past-zakah dues.
Thus if for example your annual contribution towards the savings were $1,000.00 then your yearly past-zakah dues for the seven years you held your savings would be as follows:
Years Your Contribution Total Zakah due
Year-1 $1,000.00 $1,000.00 $ 25.00
Year-2 $1,000.00 $2,000.00 $ 50.00
Year-3 $1,000.00 $3,000.00 $ 75.00
Year-4 $1,000.00 $4,000.00 $ 100.00
Year-5 $1,000.00 $5,000.00 $ 125.00
Year-6 $1,000.00 $6,000.00 $ 150.00
Year-7 $1,000.00 $7,000.00 $ 175.00
Thus the total past-zakah dues liable upon you (according to the above example) would be $700.00.
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Your brother and well wisher in Islam,