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Zakah and Ushr System: A Review

The zakah and ushr system in Pakistan was introduced through Zakat and Ushr (Organisation) Ordinance, 1979, issued on June 24, 1979, for the establishment of zakah organisations at national, provincial, district, subdistrict and local (village/ward) levels. Subsequently Zakat and Ushr Ordinance, 1980 was promulgated on June 20, 1980. The provisions relating to zakah came into force immediately while those relating to ushr, which is zakah on agricultural produce, were made operative on March 15, 1983.

At the federal level, the Zakat and Ushr Ordinance, 1980 is administered by the Zakat and Ushr Division, Ministry of Finance. Policies are formulated by the central zakat council. It exercises general control and superintendence over the affairs of zakah and ushr in the country.


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District zakat and ushr committees are responsible for exercising control over the affairs of the district, area and local zakat committees.

Local zakat committees form the backbone of the system. These committees identify a mustahiq (deserving of receiving assistance from the zakah fund). Amendments as introduced in the Finance Bill 1994-95 have rendered the provincial tier ineffective, hence the centre deals directly with the district organisations.

Assets liable to zakah deduction have been listed into two schedules of the ordinance. In respect of eleven assets specified in the first schedule, zakah is realised on compulsory basis at the rate of 2.5 percent of the face value, paid-up value, surrender value, etc., of the assets as on the valuation date (1st day of Ramazan) for each zakah year based on Hijra calendar. In respect of other assets specified in the second schedule, zakah may be paid either to a zakah fund or directly to mustahiqin (deserving persons on the basis of self-assessment).

Total collection of zakah during the year 1994-95 was 2871.69 which was highest ever since the inception of zakah and ushr system in Pakistan. A statement showing the year-wise collection of zakah from 1400-15 H (June 1980 to February 1995) is placed below.

The zakah amounts are credited to the central zakah fund which is maintained by the State Bank of Pakistan in a separate account, distinct from government accounts.

Voluntary zakah donations (atiyaat) and grants are other possible sources of income but so far their size has been negligible.

Ushr (literally meaning one tenth) is levied on the produce of landowners exceeding 948 kilograms of wheat or other crops of the same value. Year-wise assessment on real collection of ushr between 1982-83 and 1992-93 may be seen at Appendix II. Ushr amount does not form part of the central zakah fund. The local zakat committees were responsible for this work as voluntary agencies, at times unaware of the importance of the task and lacking the knowledge of revenue matters. Local influences also impede the task of assessment and collection. Resultantly, ushr which could have been a major source of providing assistance to the deserving individuals in the rural areas has failed in achieving the objective. The assessment and collection has declined continuously.  Now the  task of ushr  collection  has  been assigned to the provincial revenue department with the hope that under the new arrangements ushr collection will rise to the expected figures.

YEAR-WISE COLLECTION OF ZAKAH

ZAKAH YEAR                                            (RS IN MILLION)

 

1400-01 H (20.6.80 to 3.7.81)

844.25

1401-02 II (04.7.81 to 22.7.82)

798.51

1402-03 H (23.6.82 to 12.6.83)

855.19

1403-04 H (13.6.83 to 31.5.84)

1011.33

1404-05 H (01.6.84 to 21.5.85)

1230.86

1405-06 H (22.5.85 to 10.6.86)

1439.01

1406-07 H (11.6.86 to 28.4.87)

1513.66

1407-08 H (29.4.87 to 17.4.87)

1944.19

1408-09 H (18.4.88 to 07.4.89)

2590.01

1409-10 H (08.4.89 to 27.3.89)

2444.03

1410-11 II (28.3.90 to 17.3.91)

2705.530

1411-12 H (18.3.91 to 05.3.92)

2612.06

1412-13 H (06.3.92 to 23.2.93)

2558.15

1413-14 H (24.2.93 to 11.2.94)

2609.75

1414-15 H (12.2.94 to 01.2.95)

2871.69

                                   Total

27628.16

 

Mr. Khalid Nazir

 

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.