Zakah is one of the five pillars of Islam. It is a religious duty as well as a financial obligation. Al-Dihlawi analyzed the institution of zakah on these two grounds. In his opinion, one objective of zakah is the moral development of oneself (tahdhib al-nafs) and so personal, individual inner purification. It prepares a person to adopt high human values and to abandon bad habits like miserliness, selfishness and jealousy. It is a source of winning Allah’s pleasure and improving one’s angelic qualities. Hence why zakah is bracketed with prayer in the Qur’an in so many places (Hujjah, 2: p. 39).
Another objective of zakah is to help society generally given it is comprised of weak and needy elements, which are frequently exposed to calamities. If there is no such provision, these people may die and perish. In a city there are many people who are engaged in the management of public affairs and the fulfillment of citizens’ needs, so they are unable to earn their livelihood. This also requires that there should be financial arrangements in place to take care of them, and this is borne by well–to– do citizens (ibid). Zakah is also a permanent source to meet such needs.
After the imposition of zakah, the need was felt to fix its rates such that one who seeks to reduce their contribution may not diminish it and the one who wants to violate the system is unable to do so (ibid). According to al-Dihlawi, the fixing of the amount of zakah is one of the innovations of this last chosen Shariah, as in earlier Shariahs it was an undetermined right of the poor and orphans to the wealth of the rich (Tafhimat 2: 136). This amount is not so trivial that the rich may not take it seriously and it cannot cure their miserliness. Nor is it too heavy that they feel it difficult to pay (Hujjah, 2: p. 39). In other words, the amount fixed in zakah is an average and is highly reasonable. Similarly, in fixing the time for its collection, the period is not so short as to be unable to sustain it, nor is it so long that it becomes ineffective with the needy and poor only receiving money after a long time. A yearly collection period is something that is an accepted norm in all nations (ibid). Again, since various economic activities like trade trips from far away places, the harvesting of crops, and picking of fruits generally requires one year’s duration, an annual collection of zakah is the best (ibid: 2: p. 40). As far as zakah bases are concerned, the points considered are exactly those that are characteristic of a good tax that has acceptance by all sound thinkers
and that has pious rules affixed to it such as collection from productive property, levying on those who have the ability to pay, for example, the rich and prosperous; it is also collected from treasure trove which is obtained without much effort, and it is also imposed on those who are engaged in earning and productive activities (ru’us al-kasibin) (ibid.), with the condition of fulfilling nisab (zakatable assets above the maximum exemption limit).
There is a consensus that zakah is levied on those assets that grow or that have the ability to grow if put to work, such as crops, cash, merchandise and precious metals. Ability to pay is also a consideration, and the criterion is full ownership of nisab (above the maximum exemption limit of an asset). Treasure trove has the highest rate of zakah – equating to one-fifth but there is no zakah on the basis of only being earning men. In the imposition of jizyah, however, it is considered. However, a sturdy, earning person is not entitled to receive zakah.
Normally, there are four types of rates of zakah: one-fortieth or 2.5 percent, one-twentieth or 5 percent, one-tenth or 10 percent and one-fifth or 20 percent. According to al-Dihlawi, sources of earning in most countries are in four sectors, namely, merchandise, agriculture, with artificial means of irrigation, crops grown through rainfall, and treasure trove or mines. Accordingly, four types of rates have been fixed. The variation is based on high yield and low cost or labour involvement (Hujjah, 1: p. 102; 2:44; al-Budur, p. 287). That is, where yield is highest or cost is lowest, the highest rate is fixed and vice versa.3 There is thus an important economic causation behind fixing the various zakah rates which has many implications but al-Dihlawi is silent on its application in changing situations.That is, if in a different time and place the situation is reversed and in various sources of income the involvement of labour or high yields and low costs are altered, can one argue for modification of zakah rates?
In his work al-Budur al-Bazighah (p. 287), al-Dihlawi wrote that the lowest rate is in cases of money, gold and silver assets because they are the support for people’s living and their means to acquire all necessary objects, so people feel the highest injury in departing with such. It means the rule of equal sacrifice is also observed in fixing the various rates. The principle of equal sacrifice requires that 'the burden of
taxation should be so distributed that the direct real burden on all tax payers is equal' (Dalton, 1964, p.63).
As far as the exemption limit or nisab is concerned, al-Dihlawi tried to show that it is the minimum amount needed to provide the upkeep for an average family. For example, zakah is levied on agricultural produce when it reaches five wusaq.4 In his opinion, the minimum number of family members comprises husband, wife, and a child or a servant. The daily consumption of people is a maximum quantity of a mudd.5 With this rate, if they consume for a year, the amount would suffice for the whole family and something would be left for other needs (al-Budur, p. 287; Hujjah, 1: p. 102; 2: p. 43). Similarly is the exemption limit of five uqiyah6 of silver, as this amount is sufficient for the expenditure of a family for the whole year if prices are suitably stable (ibid p. 2: p. 43). In fixing zakat al-fitr as one sa‘7 of dates or barley, the same objective is observed, that is, a family’s one day diet (ibid. 2: p. 44). It may be noted that 4 mudd equal one sa‘. Earlier, al- Dihlawi said that the daily consumption of people was a maximum quantity of a mudd. Perhaps this is for a single person. By one sa' or four mudd foodstuffs he means this as necessary for a family nucleus. However, one can object to this on the basis that al-Dihlawi’s analysis presumed the minimum number of family members while normally this is not the case. True, but a family’s assets are not confined to a particular kind of income/wealth. Taken together, various forms of assets and their nisab is enough to support a larger number of family members.