Zakat and Khums — The Financial Pillars of Islamic Giving

Two Obligations, One Purpose

Islamic law recognizes that wealth is ultimately a trust (amanah) — not an absolute possession but a divine loan whose conditions include the right of the poor, the community, and the Imam’s mission. Two distinct obligations formalize this:

• Zakat (زَكَاة) — one of the Five Pillars of Islam; 2.5% on accumulated wealth above the nisab threshold, held for a full lunar year
• Khums (خُمُس, literally “one-fifth”) — 20% on net annual savings; an obligation with Quranic authority observed in the Shia/Ismaili tradition

They are complementary, not redundant: Zakat is a one-time annual levy on accumulated wealth, while Khums is levied on new income surplus each year. Together they address both stagnant capital and active income.

Part One: Zakat

The Quranic Command

Zakat is among the most frequently repeated obligations in the Quran, nearly always paired with Salah (prayer):

وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ “Establish prayer and give Zakat.” (Quran 2:43, and numerous other verses)

The word Zakat comes from a root meaning both “to purify” and “to grow” — the giving purifies the remainder of one’s wealth and, paradoxically, causes it to increase through divine blessing (barakah).

خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِم بِهَا “Take from their wealth a charity (sadaqah) by which you purify them and cause them to grow.” (Quran 9:103)

Who Must Pay Zakat

Zakat becomes obligatory (wajib) when three conditions are simultaneously met:

1. Nisab — the wealth reaches or exceeds the minimum threshold (see below)
2. Hawl — the wealth has been held continuously for one complete lunar year (حَوْل)
3. Full ownership — the person has full, unencumbered possession of the wealth

The Nisab Threshold

The nisab is the minimum amount of wealth that must be owned before Zakat becomes due. It is derived from two historical benchmarks:

Which to use? Classical scholars applied the lower of the two values as the nisab — this is the more inclusive approach that ensures more people who can afford to give do so. The nisab value changes daily with precious metal prices.

The Rate: 2.5%

Once nisab is met and hawl passes, Zakat is 2.5% of the total net zakatable wealth.

What Wealth Is Zakatable

Net zakatable wealth = (gold + silver + cash + inventory + receivables) − debts

If this figure exceeds the nisab and a full lunar year has passed since you first reached nisab, 2.5% is due.

The Eight Categories of Zakat Recipients

The Quran specifies exactly who may receive Zakat:

إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ “Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler.” (Quran 9:60)

The eight categories (the masarif al-Zakat):

1. Al-Fuqara — the poor (those with insufficient income)
2. Al-Masakin — the destitute (in even greater need than the poor)
3. Al-Amileen — administrators of Zakat collection
4. Al-Muallafat Qulubuhum — those whose hearts are being reconciled
5. Fir-Riqab — freeing of enslaved people
6. Al-Gharimeen — those in debt beyond their means
7. Fi Sabilillah — causes in the path of Allah
8. Ibn al-Sabil — the stranded traveler

Part Two: Khums

The Quranic Foundation

Khums (one-fifth) has explicit Quranic authority:

وَاعْلَمُوا أَنَّمَا غَنِمْتُم مِّن شَيْءٍ فَأَنَّ لِلَّهِ خُمُسَهُ وَلِلرَّسُولِ وَلِذِي الْقُرْبَىٰ وَالْيَتَامَىٰ وَالْمَسَاكِينِ وَابْنِ السَّبِيلِ “And know that whatever you obtain of war spoils — then indeed, for Allah is one-fifth of it and for the Messenger and for [his] near relatives and the orphans, the needy, and the [stranded] traveler.” (Quran 8:41)

Originally revealed in the context of war spoils (ghanimah), the Imams of the Ahl al-Bayt — in a chain of interpretations preserved in Shia jurisprudence — extended the scope of Khums to include all forms of surplus income and acquired wealth. This extension is grounded in both Quranic ta’wil and prophetic traditions (ahadith) from the Imams.

The Scope of Khums in the Ismaili-Bohra Tradition

In the Dawoodi Bohra tradition, as in Shia jurisprudence generally, Khums applies to:

1. Net annual income — the surplus remaining after permissible living expenses (masraf al-sana’)
2. Mining and excavation proceeds — minerals, treasure, archaeological finds
3. Goods obtained from the sea — diving, fishing beyond personal use
4. Mixed lawful and unlawful wealth — when the halal portion cannot be distinguished

The most practically significant category for most mumineen is the net annual income surplus.

How Khums Is Calculated

Step 1: Determine annual income All income received during your Khums year (sal-e-Khums) — salary, business profit, rental income, investments.

Step 2: Deduct permissible annual expenses Masraf al-sana’ (permitted annual expenditure) includes:

• Food, clothing, housing (for yourself and dependents)
• Transportation for work and daily life
• Medical expenses
• Children’s education
• Religious obligations (Zakat, sadaqah, hajj)
• Any necessary and reasonable living cost

Step 3: Calculate the surplus Net savings = Annual income − Annual permissible expenses

If net savings > 0, Khums is due on the full surplus.

Step 4: Apply the 20% rate Khums due = Net savings × 20% (one-fifth)

The remaining 80% (four-fifths) is entirely yours, halal and blessed.

The Sal-e-Khums — Your Khums Year

Unlike Zakat which follows the lunar year in which nisab was first reached, Khums uses a personal Khums year (sal-e-Khums) — typically beginning from the date you first earned income (when you started working or trading). This date becomes your annual Khums accounting date.

On that date each year, you calculate:

• What came in
• What was spent on permissible living
• What remains as surplus
• 20% of the surplus goes as Khums

Previous savings on which Khums was already paid are not re-assessed — only new surplus income is subject to Khums each year.

Where Khums Goes: The Bohra Tradition

In the Dawoodi Bohra tradition, Khums is divided into two shares:

In the Dawoodi Bohra tradition, Khums is paid through the Aamil Saheb to the Dai al-Mutlaq. This is theologically significant: the Dai is the Imam’s authorized representative (bab) during the period of satr (concealment). Paying Khums through the Dai is equivalent to fulfilling the Quranic obligation of paying it to the Imam — “for the near relatives (Ahl al-Bayt).”

This is one of the concrete ways that the relationship of walayah (love and loyalty to the Ahl al-Bayt through the Dai) manifests in everyday Bohra religious life.

The Spiritual Significance of Khums

The Prophet (SAW) said:

مَا كَرَّمَ اللَّهُ عَبدًا بِمَالٍ إِلَّا ابتَلَاهُ بِهِ “Allah does not honor a servant with wealth except as a trial.”

Khums is the mumin’s response to that trial — the acknowledgment that wealth is a trust, not an entitlement. It is also, in the Ismaili understanding, an act of walayah: by directing Khums to the Imam’s representative, the mumin renews the covenant of loyalty and financial participation in the mission of the Dawat.

The ta’wil (esoteric interpretation) of Khums sees it as more than financial: just as one-fifth of external wealth goes to the Imam, so too must the mumin give one-fifth of their inner spiritual capacity — their time, attention, and knowledge — to the service of the Dawat. The external Khums is a mirror of an internal Khums of the soul.

Zakat vs. Khums: A Comparison

Practical Guidance

Using the Zakat & Khums Calculator — the Rawzat Tools page provides an interactive calculator for both obligations. Enter your current gold and silver prices, assets, debts, and annual income figures to calculate what is due.

When to pay — Zakat becomes due at any time once your hawl (one full lunar year of owning wealth above nisab) passes. Khums is due on your sal-e-Khums date. Many mumineen align their Khums accounting with Muharram, a natural start of the Islamic year.

Always verify with your Aamil Saheb — every individual’s financial situation involves unique considerations. The Aamil Saheb is the local representative of the Dai al-Mutlaq and is the proper authority for Zakat and Khums rulings, advice on borderline cases, and the payment of Khums.

The intention (niyyah) — both Zakat and Khums require the correct intention (niyyah) at the time of payment. Zakat paid without niyyah is sadaqah but may not fulfill the Zakat obligation. The niyyah is the heart’s orientation toward Allah’s command.

See also: Understanding Walayah, Dai Al Mutlaq Institution, Satr Period Hidden Imams, Misaq The Covenant, Bohra Glossary