Can an Islamic State Levy Modern Taxes?
deals with the income and expenditure of a state. It consists of
the efficient management of taxes and other sources of revenue,
proper budgeting and effective control over state expenditures. In
this chapter, we would study in detail the sources of revenue,
while in the next chapter we would discuss budget and expenditure
of the Islamic state.
Sources of revenue
of the public treasury (Bait-ul-Mal) in the Islamic state in the
time of Prophet Muhammad (PBUH) and early caliphs included Zakat,
Ushr, Khums, Fai, Jizyah and Kharaj. The first five sources have
been mentioned in the revealed book of Islam, while the sixth
arose out of the extended application of the Fai properties of the
Islamic State. These sources were tapped and utilized by the state
to defray its essential expenses incurred on discharging various
functions, and also with a motive to distribute wealth among the
poor and destitute classes of the society. Let us discuss these
sources briefly as under.
to the start of this chapter]
‘Zakat’ or ‘Zakah’
literally means ‘growth’ or ‘increase’ or ‘nourishment’ Another
derivative of this word carries the sense of purification. Thus,
Zakat means ‘to grow’, ‘to increase’ or ‘to purify’. It is because
of the fact that Zakat helps the purification of human soul from
miserliness, selfishness, lust and greed of wealth and, thus, it
paves the way for its growth and development. Technically, Zakat
is a compulsory contribution, a sort of tax which is collected
from the rich and distributed among poor or spent by the state for
the welfare of the needy and helpless.
Zakat is levied on
the authority of the Qur’an and Sunnah. The Qur’an says !
“establish worship, pay the poor-due (Zakat) and bow your heads
with those who bow (in worship)”. (2:43). At another place, the
Qur’an enjoins upon the prophet of Islam to collect Zakat in these
words: “take alms of their wealth, wherewith thou mayst purify
them and mayst make them grow and pray for them. Lo! Thy prayer is
an assuagement for them. Allah is Hearer, Knower” (9:103). The
Prophet of Islam has been quoted by Mishkat-ul-Masabih on the
authority of Ibn Umar as follows: “Islam is built on five things;
to bear witness that there is no God but Allah and that Muhammad (PBUH)
is His Messenger; to establish prayer; to pay Zakat; to make
pilgrimage; and to keep fast in Ramadan”.
Zakat is not only a
tax but also an act of worship. It is one of the five fundamental
articles of faith for a Muslim. It is the corner-stone of the
financial structure of the Islamic State. Next to Salat (prayer),
Zakat is the most important of the religious obligations enjoined
on the followers of Islam. The importance of Zakat in Islam can be
judged from this very fact that the Qur’an mentions Zakat for more
than eighty times, while for twenty seven times commandments
regarding Zakat are found in close connection with obligatory
prayers. Hadrat Muhammad (PBUH), the Prophet of Islam, not only
established a model system of collection and disbursement of Zakat
but also made rules and regulations of this levy. Zakat is not a
private charge but it is a State institution as referred to in the
verses 60 and 103 of chapter 9 and verse no 41 of chapter 22 of
the Holy Qur’an. Practice of the Prophet also establishes that
system of Zakat was set up in the Islamic State as governmental
institution. After the demise of the Prophet of Islam, when some
people declined to pay Zakat, Hadrat Abu Bakar, the successor of
the Prophet, declared war on them to enforce Zakat as a state
following rules and regulations govern the system of Zakat:
According to jurists and scholars, Zakat is imposed
on the wealth of a person who is (a) Muslim (b) adult (c) sane (d)
free and (e) solvent. However, Zakat is payable on the wealth of a
minor as well as on the wealth of an insane person and that is
paid by the guardian. As it is a religious duty, it is obligatory
on a Muslims only and no non-Muslim is obliged to pay it. A slave
and insolvent debtor is also not liable to its payment.
Nisab of Zakat or the minimum limit of wealth which
attracts liability of Zakat has also been fixed at various levels
in case of different categories of wealth. Nisab in case of gold
is 20 Misqal or 7.5 tolas or 3 ounces. In case of silver, it is
200 Dirhams or 52.5 tolas or 21 ounces. In case of camels, it is 5
in numbers. In case of cows, it is 30 and in case of goats and
sheep, it is 40 in numbers. Articles of trade and general
merchandise qualify for Zakat when their value is equal to Nisab
Rate of Zakat in case of gold and silver is 2.5%,
in case of cattle wealth it varies between 1% to 2.5%, while in
case of articles of trade it has been fixed at 2.5%. Assets of
modern times like shares and stocks, cash and coins, investments
and debentures, etc. are also charged to Zakat at the rate of
No Zakat is due on property before a year elapses.
Ibn Umar reported that the Messenger of Allah said; ‘Whoever
acquires wealth, there is no Zakat therein till a year passed over
it” (Tirmizi). For the purpose of Zakat, the Muslim financial year
begins with the month of Ramadan. Advance payment of Zakat is also
permitted like the advance payment of Income Tax these days.
Deduction of Zakat at source is also reported to
have been initiated by the early Muslims as Muawiyah introduced
the system of deduction of Zakat from pensions.
For the purpose of levy of Zakat, properties or
goods are divided into two categories; goods of increase and goods
of no increase. Goods of increase are real and capable of
measurement such as animals, gold and silver, articles of trade,
etc. Goods of no increase are buildings and personal effects. On
the principle of productivity, Zakat is levied on the former but
not on the latter.
classification for the purpose of charging Zakat is that of
Amwal-e-Zahirah (visible or apparent wealth) and Amwal-e-Batinah
(invisible or non-apparent wealth). Example of the former is farm
produce, sheep, cattle, etc., while example of the latter is gold,
silver, cash, etc.
Properties which were subjected to Zakat in the
early Islamic State included gold and silver, animal wealth,
articles of trade, etc. During the reign of Hadrat Umar, horses
were also subjected to Zakat where they were bred and traded on a
revolution and technological development have brought in their
wake certain properties and assets which were not known in the
early days of Islam such as; industrial machinery, bank or
currency notes, bank deposits, bonds, securities, shares, stocks,
debentures, certificates of credit, bills of exchange, insurance
policies, provident funds, certificates of investment etc. Modern
jurists and scholars of Islam are almost unanimously agreed that
these assets are chargeable to Zakat in an Islamic State.
The following properties and assets have been
exempted from the levy of Zakat:-
a) Personal effects like clothes, articles of
furniture, household goods except ornaments and utensils of gold
Horses and asses for conveyance or Jihad.
Arms or weapons for personal use.
Cattle employed in farming or transportation of
Tools of a professional for his personal use.
Slaves and servants.
i) Food for the owner and his family.
land and factory
building and machinery etc.
Zakat cannot be lawfully paid to members of the
tribe of Hashim who was the great grand-father of the prophet of
Islam. It cannot be paid to Non-Muslims. Servants and slaves are
also not eligible for Zakat when it is paid to them in
consideration of their services. A person possessing Nisab
property is also not eligible for it. One’s ascendants and
descendants are also not eligible for Zakat. Wife and husband
cannot pay Zakat to each other. Similarly, according to some
jurists Zakat cannot be spent on the construction of a Mosque.
Zakat is levied only on what remains after
satisfaction of one’s basic necessities. Wealth for Zakat is
computed after deducting the amount of debt which the assessee
owes to the others. All the wealth and assets owned by an assessee
are not clubbed together for the purpose of Zakat because every
category of wealth has its own Nisab and its own rate. In case of
joint ownership of wealth, the share of each partner is considered
separately. Zakat can be collected or paid in kind or cash,
whichever method is convenient. Zakat on visible or apparent
wealth is assessed and collected by the Islamic State but in case
of invisible or non-apparent wealth Zakat can be assessed and
determined by the Zakat payer himself. However, in this case also
Zakat should be paid to the State.
to the start of this chapter]
one-tenth. It is a tax on agricultural produce. It is frequently
used in the sense of Sadaka and Zakat, because no strict line is
drawn between Zakat and Ushr in Fiqh books. The term Ushr is not
found in the Qur’an, but two verses (2:267 and 6:141) are taken to
refer to it and it is on the authority of these verses that ushr
is levied. The Qur’an says:
O Ye! Who believe! Spend of the good things which
ye have earned and of that which We bring forth from the earth for
……..Eat ye of the fruit thereof when it fruiteth,
and pay the due thereof upon the harvest day, and be not
Keeping in view the
above - mentioned Qur’anic mandate, the prophet of Islam Hadrat
Muhammad (peace be upon him) levied Ushr on agricultural produce.
The following rules
and regulations framed in the light of the Qur’an and Sunnah of
the prophet of Islam govern the levy of Ushr:-
Ushr is collected on the agricultural produce of
Ushr lands. Concept of Ushr lands was developed by the Muslim
Jurists and scholars in Fiqh books. Briefly speaking the lands of
those who accepted Islam, and which remained in their possession,
as Makkah, Madina, Taif, Hijaz, Yemen and other Arabian
Territories are included in Ushr lands. Lands granted by the Imam
to Muslims as fiefs, lands obtained by Muslims from the state
lands of Al-Swad etc., are also included in Ushr lands.
Jurists have classified the agricultural produce in
two categories for the purpose of determination of Ushr dues:
Firstly, farm produce like corn and vegetable and secondly, garden
produce like fruits, honey, etc. In the view of Imam Abu Hanifa,
Ushr is chargeable on all farm produce such as corn, vegetables
and fodder. On the other hand, Imam Shafii, Imam Malik and Imam
Abu Yusuf have opined that no Ushr is chargeable on the produce
which cannot be stored or measured. Thus, according to them, Ushr
is not chargeable on vegetables and fodder. So far as garden
produce is concerned, Imam Abu Hanifa subjects all kinds of fruit
to Ushr, while Imam Shafii is of the opinion that Ushr can be
imposed on dates and grapes only.
According to Ahadith and Sunnah of the Prophet of
Islam, Ushr is levied at the rate of one-tenth or 10% of the
produce in case of land irrigated by natural sources like rain,
springs or streams. However, the rate of Ushr is one-half i.e.
1/20 or 5% of the entire produce in case of land watered by
artificial means of irrigation such as wells, buckets etc. The tax
is charged before deduction of any expenses on account of
cultivation or production.
Nisab or minimum amount of agricultural produce
which is liable to Ushr is 5 Vasqs or 948 Kg. in weight. If the
produce is less than that, no Ushr is chargeable.
Ushr on agricultural produce is paid at the time of
harvest when the crops are reaped or fruits are taken away. The
Qur’an says; “…. And pay the due thereof upon the harvest day…..”
(6:141). Thus, period of one year is not essential for levy of
Ushr like Zakat on gold and silver.
Ushr is payable only when there is actual produce,
the land is Ushr land and the producer or the owner of the produce
is a Muslim. Owner may be an adult or a minor, a man or a woman, a
slave or a makatab, Ushr will have to be paid. Even a Waqf is
subjected to Ushr.
In case the
owner of the land has himself cultivated it, he will be charged to Ushr. If the land has been given on lease or rent by the owner and
has been cultivated by the tenant or leaseholder, then the tenant
or the leaseholder would by paying the Ushr because he is the
owner of the produce (Abu Yusuf).
i.e. when the land is given to the tenant on the basis of produce
sharing, Ushr would be paid by the landlord if the seed has been
supplied by him. If the seed is supplied by the tenant, then the
land-owner and the tenant, both of them, would be paying Ushr
according to their shares in the produce.
If the land
is leased or rented to a Zimmi, the Ushr would be paid by its
Muslim owner, because by renting the land to a non-Muslim, he has
deprived the state of its right to Ushr.
If the crops are destroyed on account of natural
calamities or theft, there would be no Ushr. If the owner gets
compensation for destruction of the crop, then he would be paying
Ushr out of such compensation.
to the start of this chapter]
one-fifth. It is the share of the Islamic state which was
collected from the following:-
Spoils of war or war booty is subjected to Al-Khums
at the rate of one-fifth on the authority of Al-Qur’an. The Qur’an
says; “and know that whatever ye take as spoils of war, Lo! A
fifth thereof is for Allah, and for the messenger and for the
Kinsman (who hath need) and orphans and the needy and the
wayfarer, if ye believe in Allah and that which We revealed unto
Our slave on the Day of Discrimination, the day when the two
armies met. And Allah is able to do all things” (Al-Anfal 8:41)
spoils of war used to be the major source of revenue of the
Islamic State during its expansionist period, particularly during
the period of the Prophet and the right-guided caliphs.
Khums on the produce of the mines or mineral wealth
was charged by the Islamic State at the rate of 20%. However, Imam
Shafii and Imam Hanbal are of the view that mines should be
charged to Zakat at the rate of 2.5%.
Khums on Treasure-Trove or Rikaz is also charged by
the Islamic State. The finder or discoverer of such treasures, be
he a Muslim or Zimmi, gets four-fifth, while one-fifth goes to the
Khums is also levied on what is extracted from the
sea like pearls, ambergris, etc. It is reported that Hadrat Umar
levied Khums on the pearls and appointed Yaali-b-Ummayah as tax
to the start of this chapter]
Jizyah is derived
from ‘Jaza’ which means ‘recompense’ or ‘compensation’. It is a
tax imposed by an Islamic State on its non-Muslim subjects in lieu
of protection given to their lives and properties. The non-Muslims
are called Zimmis or protected or covenanted people. The tax is
also called ‘tribute’ or ‘poll-tax’.
Jizyah is levied on
the authority of Al-Qur’an (Chapter 9, verse 29) which commands
the believers : “Fight against such of those who have been given
the scripture as believe not in Allah nor the Last Day, and forbid
not that which Allah hath forbidden by His messenger, and follow
not the religion of truth, until they pay the tribute (Jizyah)
readily, being brought low”.
Rules framed in
respect of Jizyah in the light of the Qur’an, Sunnah of the
Prophet and practice of the right-guided caliphs are as follows:-
Though Jizyah was initially imposed on people of
scripture (Ahl-e-Kitab), later on when the non-Arab countries were
conquered by the Muslims it was imposed on all non-Muslim
communities of every faith. However, it is levied on able-bodied
adult male non-Muslims who are capable to participate in war but
who do not join the defence forces of the Islamic State.
The following classes of Zimmis (protected people)
are exempt from the payment of Jizyah tax:-
Males below age of puberty.
All sick, blind or crippled.
Priests and monks.
Persons who join military service.
The destitute, poor and beggars.
Insane and mentally retarded persons.
The Prophet of Islam imposed Jizyah at the rate of
one Dinar or 12 Dirhams per person per annum. However, during the
reign of Hadrat Umar, the rates of Jizyah were raised according to
the income level of the tax-payers. For the rich, the rate was
fixed at 4 Dinars; for the middle class, it was fixed at 2 Dinars,
and for the lower class it was retained at one Dinar. Disabled and
poor Zimmis who have been reduced to begging or who have been
over-taken by a calamity are not only exempted from Jizyah but
also are eligible for support from the public treasury of the
No harsh or oppressive measures to collect Jizyah
were allowed under the instructions of the right-guided caliphs.
Since Jizyah was imposed on non-Muslims for the protection of
their lives and properties, it is not chargeable when the Islamic
State is unable to provide such protection. There are many
examples in the history of Islam when the amount of Jizyah
collected from the non-Muslims was refunded to them in times of
war because the Islamic State found itself unable to defend the
No doubt, Jizyah has been subjected to bitter
criticism by the non-Muslim scholars, yet there is ample
justification for imposition of Jizyah on non-Muslims by the
Islamic State. Muslim scholars and jurists have held the
imposition of Jizah tax on zimmis as justified on the following
In the Islamic State every adult Muslim citizen is
obliged to take up arms for its defence when the State is
attacked. In the case of non-Muslim citizens, there is no such
compulsion. Therefore, non-Muslim citizens are required in all
fairness to compensate the Muslim community in sharing of
financial burdens. However, those non-Muslims who participate in
war are exempted from the payment of Jizyah.
The Muslim citizens of an Islamic State pay Zakat
to the state while the non-Muslims are exempted from it. In this
situation, the non-Muslims are rightly expected to contribute to
the State Treasury for sharing the civic burdens of the Islamic
State. It is interesting to note that the rate of Zakat is much
higher as compared with rates of Jizyah. In case of a wealthy
Muslim the incidence of Zakat would be in thousands while in case
of a wealthy non-Muslim the amount of Jizyah would be only 4
Dinars at the most.
to the start of this chapter]
Fai means ‘to
return’, ‘to revert’, ‘to come back’. When the Muslims conquered
enemy countries by armed force they gave name of Fai to
perpetuated incomes obtained once and returned again each year.
The term Fai is applied in the Qur’an and the Sunnah exclusively
to war gains—whether consisting of lands or tribute or
indemnities—which are obtained from an enemy who has laid down
arms before actual fighting has taken place.
Revenue from Fai is
derived by the Islamic State under authority from the Qur’an. The
Qur’an says: “And that which Allah gave as spoil unto His
messenger from them, ye urged not any horse or riding-camel for
the sake thereof, but Allah giveth His messenger lordship over
whom He will. Allah is Able to do all things. That which Allah
giveth as spoil unto His messenger from the people of the
townships, it is for Allah and His messenger and for the near of
kin and the orphans and the needy and the wayfarer, that it become
not a commodity between the rich among you. And whatsoever the
messenger giveth you, take it. And whatsoever he forbiddeth,
abstain (from it). And keep your duty to Allah. Lo! Allah is stern
in reprisal. -(59: 6-7)
Thus according to
the Qur’an, Fai means such of properties of the unbelievers as are
returned to the Muslims without war. It is not to be distributed
like booty among the soldiers, but the whole of it is for Allah
and His apostle. From the Sunnah and Practice of the Prophet of
Islam it is evident that the Prophet himself used to manage Fai as
the head of the Islamic republic.
After the death of
the Prophet, when Iraq, Iran and Egypt were conquered by Muslim
armies, there was a controversy among the Muslims concerning the
lands of these countries. Companions of the Prophet at the request
of caliph Hadrat Umar held meetings to discuss and deliberate upon
the issue. Imam Abu Yusuf in his book Kitab-ul-Kharaj gives a
lengthy and interesting account of these debates. Abdul Rahman,
Zubair and Bilal backed by the army generals were of the view that
the conquered lands sould be divided among the soldiers just like
other categories of booty from which one-fifth is taken out for
the Muslim community and four-fifth is distributed among the
participating soldiers. On the other hand Hadrat Umar backed by
Ali-b-Abi Talib and Muadh-b-Jabal was of the opinion that these
lands should be retained in state control and should not be
distributed among the soldiers. The reasons why Hadrat Umar wanted
to retain lands in state control were that he wanted a regular
source for the government for war expenses, for the pay of
soldiers and other state officials and also for the purchase of
arms. Moreover, he wanted to retain the land in the state control
as Fai belonging for all time to the whole Muslim Ummah for the
benefit of all future generations. At last Hadrat Umar succeeded
in persuading the members of Shura with his convincing arguments
to agree to his point of view. Thus, it was decided that the
conquered lands of these countries would be considered Fai
property and would be kept under state control for the benefit of
all Muslim Ummah including future generations. Income from these
lands would be considered Fai revenue and would be utilized for
common benefits and for state expenses in the light of the Qur’an
and the Sunnah.
to the start of this chapter]
6- Al- Kharaj
revenue, tax, rent, rate, lease, produce, income, wages, etc.
received from land which the Muslim jurists call Kharaj land.
According to Imam Abu Obaid, Kharaj is rent or produce received
from land. It is, in fact, an agricultural tax received from
non-Muslim owners of the lands.
Kharaj was levied
by the early Muslims on the authority of the Qur’an, on the basis
of the interpretation of the verses numbering from 7 to 10 of
surah 59 called Al-Hashr. Sanction for the levy of Kharaj is also
found from the practice of the Prophet of Islam who gave the
conquered lands of Khaiber to the Jews (who were previous owners
of these lands) on the agreement that they would pay half of the
produce to the Islamic State.
It has already been
discussed in detail under the head Fai that Hadrat Umar, after
consultation with his Shura, retained the conquered lands of Iraq,
Iran, Egypt and other provinces under State control. The State in
turn permitted the previous owners of these lands to cultivate the
lands on behalf of the state and pay a definite part of the
produce as a tribute to the public treasury. This tax which came
to be called Al-Kharaj was fixed either per unit of land in the
form of cash or share of the harvest in kind. Once the lands was
declared as Kharaj land, Kharaj Tax continued to be paid by the
tiller even if he embraced Islam.
Soon after taking
over the conquered lands in the State control, Hadrat Umar set to
re-organise the system of revenue. Survey of these lands was
carried out and Kharaj was imposed according to the rates fixed
per unit of land on different categories of crops. The system was
set up so efficiently that the revenue from Kharaj rose before the
death of Hadrat Umar to an impressive level of 12.80 crore Dirham
in Iraq, in Egypt it rose to 1.20 crore Dinar and in Syria it
amounted to 1.40 crore Dinar.
Some of the rules
and by-laws of Kharaj are briefly stated as under:-
Kharaj has been historically charged on either of
the two basis i.e. on fixed rate or on proportional basis. Hence
the jurists have classified Kharaj into two types; fixed Kharaj
levied at a fixed amount per unit of area; proportional Kharaj
which is charged in the form of a definite portion of the produce,
for example, one-half or one-third etc. During the times of Hadrat
Umar fixed Kharaj was charged while in the Abbaside period
proportional Kharaj was levied.
Kharaj is charged on the Kharaj land. Whether the
owner is minor or adult, free or slave, Muslim or Zimmi, does not
make any difference.
The land once declared as Kharaj land continues to
remain as such even if the owner becomes Muslim or he sells the
land to a Muslim.
In case of destruction of the entire crop by some
natural calamity, no Kharaj is charged if the land is being
subjected to proportional Kharaj.
No Ushr can be levied on land which is Kharaj land.
No Kharaj is payable on the habitations or houses
of the land-owners.
In case of payment of Kharaj every facility is
given to the tax-payer and very lenient treatment is accorded.
Hadrat Ali issued special instructions to the Kharaj collectors
not to attach household effects, clothes, cattle and implements of
the farmer in the recovery of Kharaj.
to the start of this chapter]
Apart from the six
major sources of revenue narrated above, the following
miscellaneous revenues also contributed towards the public
treasury of the early Islamic State:-
Hadrat Umar introduced import duties which were
charged on the articles of trade and merchandise imported into
Islamic State. Abu Musa Ashari, the Governor of Iraq apprised the
caliph about the fact that the Roman and Persian Governments of
the neighbouring countries were levying import tax on the Muslim
traders who visited their countries to sell their articles of
trade. So the Islamic State also levied a tax of 10% on the goods
brought into Muslim territories by Harbi traders as a reciprocal
measure. Later on, the tax was also extended to the Zimmi and
Muslim traders at the rate of 5% and 2.5% respectively. These
import duties on mercantile goods are called ‘ushur’ by the Muslim
jurists. In the modern world these taxes are called import duties
or custom duties or tolls.
Income from public domain or the lands owned by
Bait-ul-Mal is another source of revenue in an Islamic State.
Income from Waqf properties (Properties or lands
donated by generous persons to the Islamic State for charitable
cause) is yet another source of substantial revenue for the
Other minor sources include the following:-
Income from lease or license to exploit or use
certain things belonging to Islamic State.
The proceeds from things found on the highways when
there is no claimant of such things.
Property found in the hands of thieves and high-way
robbers when there is no owner to claim it.
Estates of persons leaving no heir and no will.
Property of apostates confiscated by the State.
Property of Zimmi-rebels guilty of treason.
Income from forests, etc, etc.
to the start of this chapter]
8- Can an Islamic
Levy Modern Taxes?
Can an Islamic
state impose taxes such as Wealth tax, Income tax, Customs Excise,
Sales tax, Gift tax, Capital Gains tax, Property tax, etc., on its
Muslim citizens in addition to Zakat? This question is being hotly
debated these days. The issue cannot be resolved easily since
there are no clear instructions either in the Qur’an and the
Sunnah in the favour of or against the proposition under debate.
Some people argue that an Islamic state cannot charge taxes
besides Zakat from its Muslim subjects, while others are of the
opinion that the State, in case of need, is well authorised to
levy taxes in addition to Zakat. Interestingly, both the groups
try to build up their arguments from the Qur’an and the Sunnah and
also quote the early jurists in order to prove their contention.
Since there is no direct injunction of the Holy Qur’an or of the
Sunnah which would either authorise the Islamic state to impose
taxes or would prohibit it to do so, there is no need of analyzing
and discussing the arguments of both the groups of contenders.
However the study
of the Qur’an, the Ahadith and the practice of the Prophet of
Islam, the conventions of right-guided caliphs, the opinions of
the jurists of Islam and the experience of states through history
reveals that some sort of justification can be found enabling the
Islamic state to impose extra-Shariah or worldly taxes in
addition to Zakat for funding emergency needs and for meeting the
huge expenses of its welfare functions. Such justification has
been found by the scholars on the following grounds:
The activities of a modern Islamic state have
expanded, like any other modern state, due to socio-economic
changes brought about by the industrial revolution and the
progress made in science and technology. In addition to performing
the traditional functions of a conventional state, a modern state
is expected to provide socio-economic infrastructure for
industrial development, education and medical relief, means of
communication and transport, employment and civil amenities, etc.
Thus, the need for finances has increased for meeting the huge
expenses on newly assumed manifold responsibilities by the state.
But on the other hand, the sources of finance like Khums on spoils
of war, Fai, Kharaj and Jizyah etc. which were available to the
early Islamic state are no longer available to a modern Islamic
state. So a modern Islamic state has to impose taxes to supplement
its Zakat revenues for meeting its ever-growing expenses.
The Qur’an prescribes the heads of expenditure of
Zakat funds of an Islamic State when it says: “The alms are only
for the poor and the needy and those who collect them and those
whose hearts are to be reconciled, and to free the captives and
the debtors, and for the cause of Allah, and (for) the
wayfarers…..” (9:60). Thus, the Zakat revenues can be applied by
the Islamic state only on the expenditures enumerated by the
Qur’an. It has no discretion to utilize Zakat funds on the heads
of expenditure other than listed by the Qur’an. Therefore, the
government of an Islamic state has to impose taxes in order to
meet its expenses other than those to which Zakat revenues can be
In another verse, the Qur’an says: “It is not
righteousness that ye turn your faces to the East and the West:
but righteous is he who believes in Allah and the last day and the
Angels, and the Scripture and the Prophets and giveth his wealth
for love of Him, to kinsfolk and to orphans and the needy and
wayfarer and to those who ask, and to set slaves free; and
observeth proper worship and payeth the poor due (Zakat)……..”
(2:177). This verse of the Qur’an is making the rich liable (in
addition to the payment of Zakat) to spend their wealth for their
kinsfolk, for orphans, for the poor and the needy and also for the
emancipation of slaves and assistance to the wayfarer. Many
jurists see in this verse a clear authority enabling the Islamic
state to impose taxes in addition to Zakat for the purpose of
meeting its expenses on such welfare activities.
another verse, the revealed book of Islam ordains: “And they ask
thee what they ought to spend. Say: That which is superfluous”
–(2:219). From the world “afw” (superfluous) used in this verse,
many scholars like Maulana Maududi understand that it provides
clear scope for taxation besides Zakat.
There is a well known Hadith which says: “There are
other claims too on the wealth of a person besides Zakat.” This
Hadith is interpreted by the scholars to authorise the Islamic
state to impose taxes besides Zakat when the state needs funds for
its expenditures. Moreover, the Nisab and rates of Zakat have been
prescribed by the Prophet of Islam and the same cannot be changed,
according to the opinion of many of the jurists. Thus, the Zakat
revenues cannot be increased beyond a certain limit and,
therefore, are unable to meet the ever-growing expenses of the
state. Therefore, the state will have to explore additional
The early jurists of Islam have unanimously held
that the Islamic state can impose extra-Shariah taxes or
compulsory contributions (whom they call Nawa’ib) in case of
emergency needs like war, flood, earth-quake, cyclone, outbreak of
epidemic, etc. The Holy Prophet himself asked for contributions
for the Battle of Tabuk and his companions even contributed all of
History bears witness to the fact that taxes in
addition to Zakat were levied even in the early period of Islam.
Hadrat Umar imposed duties on imports which were called Ushur in
those days. He also included the horses (which had not been
subjected to Zakat in the time of the Prophet) in the list of
properties chargeable to Zakat.
It is a cardinal principle of Islamic Jurisprudence
that anything which is for the welfare of the Muslim Ummah can be
done provided it is not explicitly prohibited by any Injunction of
the Qur’an and Sunnah and it also does not violate any tenet of
Islam. Thus, the Islamic state can impose taxes to augment its
Zakat revenues for the welfare of the Ummah provided in doing so
no Injunction of Islam is violated.
On the basis of the
above-mentioned arguments, it has been held that the Islamic state
is authorised to levy and collect taxes like Income tax, Wealth
tax, Property tax, Customs, Excise, Sales Tax, etc. in addition to
Zakat from its Muslim citizens provided the following conditions
Taxes should be levied for emergencies,
contingencies or genuine needs of the state and not for benefit of
the ruling classes.
Tax proceeds should be prudently applied and
honestly spent for the welfare of all in the public interest
without any discrimination.
Principles of equity, justice and fairness should
govern the charge, assessment and collection of taxes.
When the objective or the purpose of imposing a
certain tax is achieved, that tax should be withdrawn.
And the last condition is that the rules and
regulations and the tax laws and procedures should not be
inconsistent with or repugnant to any injunction or provision of
above-mentioned provisions are met the Islamic state can levy as
many taxes as are required to meet its expenditure.
to the start of this chapter]