booklet by farooq rather

8/3/2019 Booklet by Farooq Rather

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CHARITY &

INVESTMENT

A RECONSTRUCTION OF


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Contents

Preface 03;

Charity 10;

Taxes 24;

Investment 39;

Usury 55;

Principal Plus 77.

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In the name Allah the Beneficent, the Merciful!

Preface

The importance and significance of economics cannot

be overstated. Perhaps the biggest impact and influence on

human life and on animal and plant life, too is of

economics. Both peace as well as war have a lot to do withthe economics; and economics has to do a lot with the peace

and the war. Economics determines the living standard of any

people. Yet economic well-being remains the shattered dream

of mankind which is sharply divided into the rich and the

poor. The two classes do not co-exist; they are polarised and

repulsive of each other. Even inside a rich country the

affluent are luxurious while the others are miserable. There

continue to be millions of the destitute and the starving whoare human in genetics only. Obviously our economics is not a

success story.

An important reason for looking to Islam for a way

out of this failure was its claim that God has sent

Mohammad(saw) as a blessing for all the worlds. The

destitute people do constitute a world of their own. A big

question arises then: is their misery outweighing this blessing

or are they yet to receive it? This informative, notformulative, booklet is a modest attempt to uncover the

Islamic theory of economics which seeks to ensure that no

one is deprived of his livelihood. THOSE WHO DONOT LIKE TO

BELIEVE IN GOD MAY ONLY CONSIDER THE SPEECH AND IGNORE THE

SPEAKER. An attempt has been made to construe afresh the

relative verses of the Quran in their own light and in the light

of sayings of the Prophet (saw). As the very name suggests, only

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the fundamentals or the macros have been discussed; themicro-economic details have been left out.

The macros discussed are broadly three. One is the

Islamic taxation system with particular emphasis on

separation of a defence tax to be levied on wealth instead of

income. Second is the imperative of investment: asserting

that investment is the key to growth and therefore superior to

charity which only ensures existence and that poverty is due

to lack of investment rather than for want of charity. Theseparation of a wealth tax for defence purposes can prevent

us from the scourge of inflation and price hike; and the

investment in Islamic way can lead to a peaceful co-existence

of the individuals/ nations through poverty alleviation.

Nevertheless, for adopting the Islamic economic system

Islamisation is not at all a pre-requisite.

The third macro discussed is of course the prohibited

Riba. Obviously, any discourse on Islamic economics will beincomplete if it does not include Riba. Usury is essentially

an exorbitant rate of interest charged on a debt. And it is

because of this high rate of interest that usury has been

disapproved. The Greek philosophers also advocated its

abolition. Riba has somehow come to be translated as

Usury with the add-up that all interest is banned in Islam,

no matter what the rate. This view received general

acceptance because the need did not arise to delve into it. The

life was simple and the nature of international trade andfinance also was very primitive. The later development

demanded a review of the conventional view. The Non-

Muslims found a convenient way out of usury by

rationalising the interest rates. The Muslims found

themselves at the cross-roads of the conventional view and

the modern requirements. In this dilemma necessity became

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the convenient tool to justify Riba where it was perceived asunavoidable or indispensable.

This approach is nave for more reasons than one. It

purports to bail out Islam from the modern pressures

unwittingly implying a flaw in Islam itself, i.e., its failure to

deliver in the modern times! This view in fact renders Islam an

imperfect code of life. Prohibition ofRiba is too absolute to

allow any legitimization even on individual level only. The

realisation of this flaw has lead to the creation of the so-calledNo-Riba Islamic banking as an alternative whose viability is

sought to be proved over and over again.

Necessity may account for a violation but it cannot justify

the violation. A violation should be known as a violation only.

The approach of necessity assumes that the conventional view is

impeccable. But disagreeing with a commentary does not

imply a disagreement with the text. A complete definition and

description ofRiba has been given in this booklet which plainly discredits the conventional approach. At the same

time it is also pointed out that the sooner the prohibition of

Riba is enforced, the better.

The intellectual freedom permitted in Islam has

encouraged me to be critical of the traditional interpretation

ofRiba and present a reconstruction of the concept. A few

words about this freedom should be helpful in appreciating

the views presented in this booklet. Intellectual freedom in

Islam has been exhibited through a significant incident in thelife of the Prophet(saw) and the revelation of the Quran. Verse

80 of Chapter 9 of the Quran was revealed about the

hypocrites: Whether you ask for their forgiveness or not,

(and even) if you ask forgiveness for them seventy times,

Allah will not forgive them. Some time after the revelation

of this verse the chief of the hypocrites Abdullah bin Ubai

breathed his last. His son came to the Prophet(saw) and

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requested for his shirt to shroud his father and urged foroffering his funeral prayer also. The Prophet (saw) acceded to

both of his requests. But Umar(ra) argued with the Prophet(saw)

saying that the above verse did not permit them to offer

funeral prayer of an open hypocrite. The Prophet(saw) did not

accept the argument of Umar(ra) and maintained that he has

been given the choice to pray or not to pray, therefore he

chooses to pray. Then the Prophet(saw) offered the funeral

prayer of the deceased. Now this example of the Prophet(saw)

made the hypocrites funeral prayer quite permissible for the

Muslim because the Prophet(saw) has the constitutional

authority to interpret and construe the verses of Quran

revealed unto him(saw). However, Allah the Wise intervened

soon to clarify through verse 84 (And never shall thou ever

pray for any of them that dies, nor stand at his grave: for

they have rejected Allah and His apostle and have died as

hypocrites.) that the interpretation of Umar

(ra)

was correct.Thereafter the Prophet(saw) never offered funeral prayer of any

of the hypocrites. This incident is carried thrice in Sahih Al-

Bukhari as Hadith number 2:359, 6:194, 7:688.

The All-Knowing Allah did indeed know that this

difference of opinion will arise. In fact only He permitted it

to arise by revealing the two instant verses with a time gap in

between. The purpose was to exemplify for the Believers that

anyone can have a correct understanding of a thing and that a

correct or incorrect understanding of a point has nothing todo with the status of a person. Failure to understand one

particular thing is not the failure to understand everything;

nor is the clear concept of one particular thing the clear

concept of everything in life. Therefore, this incident did not

change the status of the beloved Prophet(saw) or that of

Umar(ra). Interestingly, the same Umar(ra) has admitted that

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Riba is a subject on which he could not learn more from theProphet(saw).

There are umpteen examples from Quran and Hadith

to show that intellectual freedom in Islam is virtually

unlimited. Scope and space do not permit a full discussion

here. But it would be harsh to this brief reference if we do not

mention one famous Hadith related by Amr bin Al-As(ra) who

said that he has heard Allah's Apostle(saw) saying that if a

judge gives a verdict according to the best of his knowledgeand his verdict is correct (i.e., agrees with the verdict of

Allah and His Apostle(saw)), he will receive a double reward;

and if he gives a verdict according to the best of his

knowledge but his verdict is wrong (i.e., against that of Allah

and His Apostle(saw)), even then he will get a (single) reward

(Al-Bukhari 9:450). Thus the act of giving even an erroneous

judgement is a good deed and not a sin at all.

However, it has to be remembered that while theaforementioned incident of different interpretations of the

said verse (80) was allowed to occur for the purpose of

defining the intellectual freedom, the intellectual freedom is

no more available to the extent of taking a view different to

the view of the Prophet(saw). Only Umar(ra) could do it because

Quran was being revealed and the difference was resolved by

Allah. The religion is complete and it will be undoubtedly

blasphemous now to differ with the view of the Last

Messenger(saw) of Allah on any point. But this does not meanthat we cannot differ with the views of ancient or

contemporary scholars. Actually we should indeed review

many opinions of our ancestors for the simple reason that we

are more knowledgeable than our predecessors (excluding the

Prophet(saw)). That approach will not only conform to the

consequences of the educational evolution of mankind but

will also be upto fulfilment of the supplication of the

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Prophet(saw) himself which he made during his Last Sermon:....... All those who listen to me shall pass on my words to

others and those to others again; and may the last ones

understand my words bet ter than those who l is ten to

me di rect ly . Be my witness oh God that I have conveyed

your message to your people. (Emphasis supplied)A very big question arises here: are we better than our

ancestors because of our more knowledge? The blunt answer

to this big question is an equally big NO. The Quran has predicted in no equivocal terms that majority of the

forerunners in faith will be from those of the earlier

generations and only a minority of them will be from the

succeeding generations. (See 56:10-14) There is no conflict

between this Quranic prediction and the above said

supplication of the Prophet (saw). Knowledge and performance

are two different, if not separate, things. There are

numberless people in the world who are qualified in one fieldbut they are working in another field. A little educated soldier

guarding his nation on the border is more loyal than a

knowledgeable officer who is an enemy agent. It is

abundantly clear from this prediction of the Quran and the

supplication of the Prophet(saw) that to differ with a scholar is

not tantamount to casting an aspersion on his faith.

Nevertheless, the views expressed in this discourse on

the three macros will be better taken as those of a coach than

a referee. All praise is due only to Allah without Whose help

nothing can be achieved. May He show us only the right as

right and give us to obey it; and may He show us only the

wrong as wrong and give us to avoid it! And may He bless all

those who have helped and guided me in this endeavour!

Kashmir; Nov., 2008. Mohammad Farooq

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NarratedAbu Hurairah(RA )

Allahs Apostle(saw) said, I have been sent with

Jawami' al-Kalim, or the shortest expressions bearing the

widest meanings, and I have been made victorious with awe

(cast in the hearts of the enemy), and while I was sleeping,

the keys of the treasures of the world were brought to me

and put in my hand. Abu Huraira(ra) added: Allah's Apostle

has gone, and you people are utilizing those treasures, or

digging those treasures out, or said a similar sentence (Al-Bukhari: 4:220; 9:141; 9:378).

The right hand number is book number, the left the Hadith number.Likewise, in Quranic references the left hand number is the chapter

number and the right hand number the verse number.10


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CHARITY

Consciously or sub-consciously we do like to think

that he who has must continue to have, and to continue to

have he must earn. And practically, to earn has come to

mean to earn anyway. This thinking has been the driving

force of all, individual and collective, human action. Wars

are fought and prevented for economic well being. Colonial

occupations have had economic reasons and goals. Strategic

alliances between countries are essentially economic

enterprises indeed. But even the unprecedented modern

world trade has miserably failed to provide even the bare

food to everyone on earth, let alone a dignified human life.

Even the huge social and charitable spending by thegovernment and other agencies worldwide stands out,

forgivably, as an exercise in futility. We may overlook the

sub-standard living conditions of the poor people around the

world, but we cannot justify the starvation of the millions of

the human beings worldwide.

The concern of economics should be to arrange

sufficient food for all. Certainly we do not live to eat, but to

live we must eat. Economics must circulate wealth fromricher persons to the rich ones. For those in adversity

economics should provide food security so that their

energies remain reserved for profitability. In short, dignity

of human life is the responsibility of economics. Indeed

economics may not be pervasive enough to contain every

opposite factor. For instance, if the population continues to

increase unabated, economics may find itself at the cross-

roads of frustration. But at the same time, it still remains

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arguable that the prosperity due to right economics may go along way to check population over-growth. However, for

economics to be successful the world would have to be

economically united. Economic disunity can be only ill-

afforded. The unpleasant actions of the deprived ones are

directed only against the wealthy people. If a starving

person is not fed by a man of substance, he has nowhere to

commit the theft but in the house of the latter only. Once he

has entered the house for theft, there is nothing to restricthim to the theft of food only. And once he has laid his hands

on a valuable, he is encouraged to stretch his hands farther

and further.

Islam advises unity of mankind by reminding us of

our common ancestry, to name only one reason. Its

argument is that the descendants of common ancestors must

behave like a family. At the same time, however, it does not

negate the existence of nationalities. But it says that nationsand tribes are for facilitating identification and recognition

not for dividing the mankind1.

Within a nation also Islam does not envisage a class-

less society. It justifies the categorization of the individuals

into the rich and the poor: for our trial in what God has

given us2. In Islam riches are a means of trial for the rich as

well as the poor. When a rich person is deprived of his

1 O mankind! We created you from a single (pair of a) male and afemale, and made you into nations and tribes that you may (be able to)know (one another); verily, honourable among you before Allah is he

who is mindful(of Allah), and Allah is the All-Knowing, the All-Aware(49:13).2And He it is Who has made you viceroys on the earth and has raised

you in degrees some above others: so that He may try you in what He

has given you; verily, your Lord is quick in retribution, and He is

indeed the Forgiving, the Merciful (6:165).12


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riches and rendered poor, or when riches are withheld froma poor person, they are tried in poverty 3; and so is a person

tried also when his wealth is with him. Another reason is also

given in Quran for making some people rich and some others

poor. It maintains that if every one were rich, there would

be only crime and dissent everywhere4. The existence of

both the rich and the poor produces the two important things

called fear and hope both manifestations of our inherent

characteristic to look beyond. The rich exercise a good dealof restraint for fear of poverty, and the poor hope to become

prosperous one day. (Simultaneously, the rich hope to stay

rich and the poor are scared of staying poor.) We are born,

and we live and die, on this not-our-own earth without our

choice or consultation. At the time of birth we are too small

to be consulted; and our consent is not sought for our death

either. Still we love this imposed life and we feel so bad

about its end that we never want it to end! We are scared ofdeath for ourselves or for our heirs-apparent. As for life,

we never want to give up hope even when it means self-

deception. But this is what keeps us going on in this

unbreakable jail of an invincible Master Who jails and frees

us whenever He chooses. It is in our own interest, therefore,

that as helpless jailbirds we better obey the Jailor. If we go

chaotic, we alone would see the chaos because this Jailor

does not stay in the jail.

Wealth can be lost for any reason. It can be wronginvestment, unmatched extravagance or any other faulty act

of commission and omission. There can also be a social,

3 See Quran: 2:155.4And if Allah were to enlarge the provision for (all) His Servants theywould indeed rebel on the earth; but He sends down in due measure as

He wills; verily, for He is with His servants Well-acquainted, Watchful

(42:27).13


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political, or even a personal, reason for the adversity of a person who has no control over those circumstances.

Whatever the obvious reason of ones impoverishment, it is

a trial from the Lord. The only defender against the Lord is

the Lord Himself as the best and the surest way to come

out of a net is to surrender to the huntsman. We are caught

in a net when we are not careful. But in spite of all our

carelessness we would not be entrapped if the huntsman had

not laid the trap. These impoverished people, alongwithsome others, are enlisted in the Quran as the only persons

eligible to receive5 the Charity orZakah, the fourtieth part

of a Muslims surplus wealth (over 85 gms. of gold).

Amongst these beneficiaries the more deserving6 ones are

also highlighted. For the purposes of this discourse it is

important to point out that one of the beneficiaries ofZakah

is a distressed debtor7. However, the obligation of the

affluent Muslims to pay Charity is independent of theserecipients. The payers cannot avoid the payment for want of

a recipient, or by questioning the right of a recipient.

Payment of one fourtieth of the surplus wealth at the

end of an accounting year is one of the five fundamental

duties of a Muslim. There are plenty of verses to ordain this

duty unto the Believers8. The edifice of Islam is based on

five pillars of which one is the payment of Charity orZakah.

The collection and distribution ofZakah has to be better

5 See Quran: 9:60.6 See Quran: 2:273.7 Alms are not but for the poor and the needy and those who are incharge thereof; and for those whose hearts are to be won over; and for

(freeing) the captives and the debtors; and for cause of Allah; and forthe wayfarer: (thus is it) ordained by Allah and Allah is the All-

Knowing and the Wise"(9:60).8 See Quran: 2:43, 83, 110, 177, 277; 4:77, 162; 5:12, 55; 9:5, 11, 18, 71;

24:37, 56; 27:3; 31:4; 58:13; & 73:20.14


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institutionalized9, for maximum efficacy. AllahsApostle(saw) instituted Charity in the second year ofHijra

(Migration) at Madina. Charity was prescribed by Allah

through earlier prophets also10. Charity cleanses and purifies

the Believers11(and not their properties).

There are quite a few interesting things about

Charity which though implied are equally significant. One,

its 2.5% rate is very low lovably low when compared to

the modern rates. Two, as a wealth tax it is favourablyrelated to the expenses of a Muslim. If a Muslim has had a

huge income in any given year but his expenses did not

leave him with the minimum surplus, he shall not be liable

to pay Charity for that year. This always tends to reduce the

number of potential payers. Three, the class of people

entitled to receive Zakah is very restricted: implying that the

role this particular tax is intended to play is also limited.

Four, to pay Zakah is mandatory. It can be safely inferredfrom these aspects of Zakah that Islam expects an

overwhelming majority of the Believers to be well off, so

that only the fourtieth part of their surplus wealth suffices to

provide social security to the remaining minority

impoverished from time to time, howsoever. In support of

this inference one can refer to the verse12 in which the

direction to pay Charity is separately given to the wives (ra)

of the Prophet(saw), even as they are ordained to stay in their

homes. In practice, however, Allahs Apostle never retainedhis wealth for so long as to be liable for Charity*1.

9See Quran: 22:41.10

See Quran: 5:12; 7:156; 19:31, 55; 21:73; 22:78; & 98:5.11 See Quran: 9:103.12 See Quran: 33:33.*1 Umar(ra) narrated that the Prophet(saw) used to sell the dates of the

garden ofBani An-Nadirand store for his family so much food as would15


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The purpose of Charity is to ensure that the poor people do not starve. After all, remembrance of God and

starvation do not go in the same direction. Nevertheless,

Islam has not taken this measure of assured sustenance to

keep the poor alive today in order that their poverty is

prolonged to-morrow. This is a limited fulfilment, whileas

their duties are many: they too have been created by God

with the same purpose of his own worship13. By maintaining

that all the people shall not be rich Islam does not endorsepoverty as a divine discrimination. In respect of the property

abandoned by, or taken away from, an enemy without a

formal war the Quran advises the Islamic State that it should

equitably distributed among the poor kindred, orphans, the

needy and the wayfarer, and should not be allowed circulate

among your rich ones14. Here is an express injunction

against making the rich richer and leaving the poor to get

poorer. Thus an Islamic State should take off as a State offair distribution of the acquisitions which shall be

subsequently sustained by proper investment. It may be

added that the spoils that are gotten after an active war are

cover their needs for a whole year. (Al-Bukhari: 7:270) And narratedAisha(ra): The family of Mohammad(saw) had not eaten wheat bread to

their satisfaction for three consecutive days since his arrival at Medina

till he passed away ( Al-Bukhari 7:327); and The family ofMuhammad(saw) never ate wheat-bread with meat for three consecutivedays to their fill, till he met Allah (Al-Bukhari 8:678).[

13I have created jinns and men only for My worship; no sustenance doI require of them, nor do I ask them to feed Me; verily it is Allah Who is

the Provider, the All-Powerful (51:56-58).14 What Allah has bestowed on His Apostle (and taken away) from the

people of the townships is for Allah and for the Apostle and for thekindred, the orphans, the needy and the wayfarer, in order that it does

not circulate among your wealthy people ...... (59:7).16


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substantially for the participants (soldiers) of the war withno scope for the bureaucratic usurpation15.

Besides this mandatory Charity or Zakah Islam

encourages other charitable spending also16. However, the

first thing to say about the discretionary spending is that for

its quantum we are guided by the sayings of the Prophet (saw),

rather than his actions*2. He (saw) has spent every thing as and

when directed by Allah. For us the guidelines have been set

and it is for us to decide what is judicious in a givensituation so that we are neither overgenerous nor niggardly.

The Islamic rule of wealth is that HE WHO HAS MUST SPEND.

There is no substitute for spending. It is only those who

spend that do become the God-fearing17, knowledgeable18

and receive the supplication of angels*3. Indeed the great

15 See Quran: 8:1, 41.16 See Quran: 2:177.*2 Narrated AbuHuraira(ra): Allah's Apostle(saw) said, Neither do I giveyou (anything) nor withhold (anything) from you; I am just a

DISTRIBUTOR, orQasim, and I give as I am ordered (Al-Bukhari: 4:346).Jabir Bin Abdullah Al Ansari(ra) narrated: A man amongst us begot a

boy whom he named Al-Qasim. On that the Ansar said (to the man),We will never call you Abu-al-Qasim and will never please you with

this blessed title. So, he went to the Prophet (saw) and said, O Allah's

Apostle! I have begotten a boy whom I named Al-Qasim and theAnsar

said, We will never call youAbu-al-Qasim, nor will we please you with

this title. The Prophet(saw) said, The Ansarhave done well. Name bymy name, but do not name by my Kunya, FOR I AMQasim (Al-Bukhari:4:345). Qasim was the name of the first son/ issue of the Prophet(saw), so thepeople gave the title (Kunya)Abu-Qasim, or Father of Qasim, to the Prophet(saw).

But Allahs Prophet(saw) said that HE HIMSELF IS Qasim. Muawiya(ra) narrated:

Allah's Apostle(saw) said, If Allah wants to do good for somebody, he

makes him comprehend the religion; and Allah is the Giver and I amAl-

Qasim, or the DISTRIBUTOR, and this (Muslim) nation will remainvictorious over their opponents till Allah's order comes and they will

still be victorious (Al-Bukhari: 4:346).17


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human characteristic of judgement is reaffirmed by aspender since in spending we exercise our discretion to

spend rightly or wrongly. On the contrary, failure to spend

demotes an owner to the level of a sentinel, guarding his

wealth for unknown beneficiaries who shall get it after his

death. This has really semblance of a dog that is never

willing to share.

Approved spending presupposes the existence of

legitimate wealth only and not anything prohibited or ill-gotten19. Trading in stolen poultry will be unlawful,

although poultry trade is legal. Legitimate wealth spent for

any lawful purpose, including even that spent one ones own

family20, is appreciated by Allah the Appreciator. Ones

spending should be indicative of ones wealth also 21. This

is rather difficult for the rich who must apply some amount

17Who believe in the unseen, and establish (regular) Prayer, and

spend of what We have provided to them (2:3).Those who spend, whether in prosperity or in adversity; who restrain

anger and pardon men; and Allah loves those who do good (3:134).18 Those who rehearse the Book of Allah, establish regular prayer and

spend, secretly and openly, of what We have provided for them: hopingfor a commerce that will never fail (35:29).19*3 Abu Huraira(ra) narrated that the Prophet(saw) said that no day breaks

for the people without two angels descending of whom one prays O

God, compensate the spender as he spends, and the other prays O

God, destroy the miser (Al-Bukhari: 2:522).See Quran: 2:168.

20 They ask you what they should spend. Say: Whatever you spend that

is good is for parents and kindred and orphans and those in want andfor wayfarers. And whatever you do that is good Allah knows it well

(2:215).21Let the man of means spend according to his means, and let the man

whose resources are restricted spend according to what Allah has givenhim; Allah does not burden any one beyond what He has given him:

soon will Allah grant relief after difficulty (65:7).18


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of caution also. They are supposed to spend more, but at thesame time they cannot afford to drain out their riches

thoughtlessly22. Extravagance is overspending, or unlawful

spending, on things which are not illegal in themselves. And

it is indeed sinful and Allah does not like the extravagant.

But extravagance has to be distinguished from squandering

which is simply illegal spending, or spending on the things

forbidden rather than desirable. The squanderers are

declared as brothers of Satans who are only rebellioustowards their Lord23.

While the Quranic principle of commercial spending,

or investment, is cloth according to the coat, that of

personal spending is coat according to cloth. In personal

matters the demand or consumption should be directly related

to the supply or affordability. In commercial activity one

must spend what ought to be spent and not what one likes, or

can afford, to spend. This is logical. A person desirous ofplying a bus must pay the price of the bus; he cannot have a

bus by paying the price of a taxi.

Ibn Kathirin his tafsirhas quoted an example from tafsir Ibn Jareerthus: Umar(ra) enquired about Abu Ubaidah(ra) and was told that he is

using coarse cloth and light food. Umar(ra) released one thousandDinar

in his favour and directed the delivery man to see what he (Abu

Ubaidah(ra)

) does of that amount. As Abu Ubaidah(ra)

received themoney, he started using fine clothes and nice foods. When this was

reported to Umar(ra), he said: May Allah bless him! He has acted up-to

the verse that a man of means should spend according .22 O children of Adam! Take your beautiful apparel in every mosque;

and eat and drink but do not overspend: verily He loves not theextravagant (7:31).23

And give his due to the kinsman and the needy and the wayfarer, and

squander not wantonly; verily squanderers are brothers of the Satans;

and Satan is rebellious towards his Lord (17:26, 27).19


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Generally personal contribution and borrowingtogether fund an investment. But one may question the very

wisdom of taking the burden of debt along with the risk of

throwing ones own capital into a business whose result it is

always hard to predict? One has to evaluate two variables: the

inspiration of the lucrative profit, and the scare of the risk of

loss. Ostensibly the second factor weighs heavy and makes a

better reason for not venturing into any business. There is

always a large scope for financial errata in estimates,projections and expectations in spite of all good intentions.

And the resultant loss does not mean loss of ones capital

only; it includes the additional liability for the debts taken.

But then what on earth are millions of entrepreneurs doing?

Are they just gambling? No.

Quran contains an unwavering commandment on

investment and educates the Muslims that it is the Satan who

scares them by his pseudo-promise of destitution if theycommit the mistake of investing their wealth, and induces

them to indulge in lewdness instead of enterprise24. But Allah

promises forgiveness and bounty25 against investment. Satan

creates an inflated apprehension that the investment will fail

and the investor will be ruined. He advises indulgences in

lewdness to retain the pleasure and keep the financial ruin at

bay. Lewdness is open indulgence in morally disapproved

sensual pleasures. Lewdness per se is not antonymous to

investment. It is inversely proportional to investment since ittakes away in an extra large measure the time and energy of

the person which could be highly lucrative if utilized in an

economic enterprise. Likewise, Allahs promises of

24Satan promiseth you destitution and prompts you to conduct

unseemly. And Allah promiseth you His forgiveness from Himself andbounty and Allah is the All-Embracing the All-Knowing (2:268).

25 Ibid.20


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forgiveness and bounty are apparently too diverse to convinceon investment. But actually these are pretty well relevant and

related. The forgiveness wipes out all the errors of judgement

we might make while making an investment; and the grant of

bounty ensures gain from the investment in spite of our

mistakes. Still more significantly, neither of these two

favours is to be besought by us, both of them are promised by

Allah Himself. All we have to do is to use our wealth to do

business.In simple words, success of entrepreneurship is

guaranteed by Allah. The only condition which is pretty

reasonable is that what we spend or invest should be our

legitimate earning and/or what is produced from the earth 26.

Notably the produce of earth is not linked with legitimacy or

equity. The inference therefore would be that land should

never be wasted and must be utilized by whomsoever it is

occupied. (With the Lords guarantee for success of their business, the Believers have the reason to be aggressive

entrepreneurs.) This explains the inability of charity to cause

economic growth. In charity we always have a predetermined

amount to give, so the recipient has to shrink his needs within

the limits of the donation. We cannot compel the donor to

give more than his liability. Likewise, the socialist type of

government business fails because the budget, rather than the

businesses, determines the amount of possible investments.

The government cannot invest more even if it wants to, because its revenues are limited. On the contrary, through

26O ye who believe, spend of the good things which ye have

(honourably) earned and of the fruits of the earth which We haveproduced for you and do not even aim at getting anything which is bad

in order that out of it ye may give away something when ye yourselveswould not receive it except with closed eyes. And know that Allah is free

of all wants and worthy of all praise (2:267).21


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entrepreneurship the business demands and the investoryields. In other words, the business designs the coat and the

investor gets the requisite quantity of cloth.

Charitable spending should be from the surplus

wealth27. However, not all surpluses are for charity28.

Charitable spending is not synonymous with uncontrolled or

wasteful spending. In fact the maximum a Muslim can give

out charitably should not exceed one third of his wealth*4. It

27 They ask you how much they are to spend; say: What is28

beyond your needs. Thus does Allah make clear to you His Signs: in

order that you may consider (2:219).

O children of Adam! Take your beautiful apparel in every mosque;and eat and drink but do not squander: verily He loves not the

extravagant (7:31).*4 Narrates Sad(ra). The Prophet(saw) visited me duringHajjat-ul-Wida (theFarewell Pilgrimage) while I was suffering from a disease which

brought me to the verge of death. I said, O Allah's Apostle! My ailmenthas reached such a state as you see, and I have much wealth, but I have

no one to inherit from me except my only daughter. Shall I give two-

third of my property as alms? The Prophet(saw) said, No. I said, Shall

I give half of my property as alms? He said, No. I said, (Shall I

give) one-third of it? He replied, One-third, even one-third is too

much. It is better for you to leave your inheritors wealthy rather than to

leave them poor and begging people (for their sustenance); and

whatever you spend for Allah's sake, you will get reward for it, even for

the morsel of food which you put in your wife's mouth. I said, OAllah's Apostle! Should I remain (in Mecca) behind my companions

(who are going with you to Medina)? The Prophet (saw) said, If you

remain behind, any good deed which you will do for Allah's sake will

upgrade and elevate you. May be you will live longer so that some

people may benefit by you and some others (i.e., infidels) may get

harmed by you. The Prophet(saw) then added, O God! Complete the

migration of my companions and do not turn them on their heels. But

the poor Sad bin Khaula(ra) (not this narrator Sad(ra)) died in Mecca.

Allah's Apostle(saw) pitied Sad(ra) for he died in Mecca. (Al-Bukhari:22


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is preferable to give even lesser in charity. Lastly, theBelievers are warned against negating all the virtue of

charity by injuring the sentiments of the recipients. Such

conduct has been equated with rejection of faith29. Charity is

however rewarding for the giver, regardless of who has

received it from him*5. Allah the Merciful wants excuses to

shower His blessings; and the Concerned Prophet (saw) missed

no chance to create one. The Prophet(saw) was authorised to

5.693).29

Kind word and forgiveness are better than charity followed by

injury; Allah is the Self-sufficient, the Forbearing.O you who believe!cancel not your charity by reminders or injury like those who spend

their wealth only to be seen by people and believe neither in Allah

nor in the Last Day; theirs are like a rock on which is a little soil, when

rain falls on it, it(just) a bare stone, they will be able to do nothing withthe aught they have earned; and Allah guides not those who reject faith

(2:263, 264).*5Abu Huraira(ra) narrated that the Allah's Apostle(saw) said, A mansaid that he would give something in charity. He went out with his

object of charity and unknowingly gave it to a thief. Next morning the

people said that he had given his object of charity to a thief. (On hearing

that) he said, O God! All the praises are for you. I will give alms

again. And so he again went out with his alms and (unknowingly) gave

it to an adulteress. Next morning the people said that he had given his

alms to an adulteress last night. The man said, O God! All the praises

are for you. (I gave my alms to an adulteress.) I will give alms again.So he went out with his alms again and (unknowingly) gave it to a rich

person. The people next morning said that he had given his alms to a

wealthy person. He said, O God! All the praises are for you. I have

given alms to a thief, to an adulteress and to a wealthy man. Then

someone came and said to him, The alms which you gave to the thief

might make him abstain from stealing, and that given to the adulteress

might make her abstain from adultery, and that given to the wealthy

man might make him take a lesson from it and spend his wealth which

Allah has given him, in Allah's cause (Al-Bukhari: 2:502).23


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collect the Charity from the Believers and also pray forthem30. The rewards of Sadaqah being abundant for the

givers, they hardly needed any supplication. Yet the loving

Prophet(saw) made for them a supplication they needed the

most. He(saw) prayed for their dependants*6. So the Believers

who are desirous of prosperous children should give

Sadaqat and acquire for their dependants the prayers of the

beloved Prophet(saw) of Allah. It is stupid to loose these

rewards for the sake of some words or gestures.***********

TAXES

By making Charity one of the five fundamentals of

Islam Allah has signified that taxation is an integral part of

Islamic way of life: negating the idea that a tax is a fine

imposed for doing well. Well done is well done for others.

Therefore, imposition of production tax, besides Charity, hasalso been sanctioned by Allah in his Book31. Pursuant to this

authorisation the Prophet Mohammad(saw) has prescribed the

rates of this tax. Literally these rates are based on the modes

of irrigation available to the various farmers; prudentially

30 Do take (O Prophet!) alms from their wealth, wherewith they may be

cleansed and purified; and pray for them, verily your prayer will

comfort them; and Allah is the All-Hearing, All-Knowing (9:103).*6Ibn Abi Aufa(ra) narrated that whenever a man brought his alms to theProphet(saw), he would say, O God! Bestow your blessings upon the

family of so-and-so. When my father came to him (with his alms), he

said, O God! Bestow your blessings upon the family ofAbi Aufa.31 It is He who produces gardens with trellises and without and datesandtilth with produce of all kinds and olives and pomegranates similar

(in kind) and different(in variety): eat of their fruit in their season butrender the dues that are proper on the day that the harvest is gathered.

But waste not by excess: for Allah loves not the wasters (6:141).24


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these are actually considerate of the input cost. Where theland is watered by the heavens or springs or its own roots, a

tithe (ushur or tenth) has been prescribed as tax on its

produce. Where the land is watered by a well or a stream,

only half a tithe has been prescribed. In case the land is

watered equally by artificial and natural means, then three-

fourths of a tithe. The difference between the Charity and

the tax on produce is clear. The former becomes due only

when a Muslim has a specified minimum amount of surpluswealth at the end of an accounting year. The latter is due at

the time of harvest. The former has period and status factors

and is a wealth tax; the latter has time factor only and is

income tax. The maximum tax prescribed by Allahs Last

Messenger(saw) is only a tithe or 10%. The lesser rates of

7.5% or 5% were prescribed where there was an additional

cost of input for want of natural irrigation. (Our exorbitant

rates of excise duty go a long way to convince ourmanufacturers for tax evasion.) Thus the statutory limits of

Sadaqat (all good spending) are 10% of any produce, annual

2.5% of the surplus wealth, and a maximum optional

charitable spending of 33% of the total wealth.

This general rule of limited rates has its own

exception in which no rate is fixed by Allah or His Last

Prophet(saw). They have only authorised the imposition of

this (amount-wise) exceptional tax and the rate has been left

open to be determined by the government of the time. Thisexceptional tax is the tax that should be levied for defence

purposes. While determination of the rate of defence tax has

been delegated to the government, the subject Believers

have been simultaneously advised to pay this with an open

heart. They are advised not to tighten their fists, apparently

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for the sake of their dependants32. They are told that suchconduct will be indeed destructive33. This is quite

understandable: if the country is over-run by an enemy for

want of defence, the very dependants for whom the tax is

evaded shall be enslaved by the occupier; and slaves are

never wealthy. Moreover, paying this tax is declared as a

spending in the way of Allah. And there is no way in which

to spend ones wealth better than in the way of Allah. Nor is

there anything more inappropriate than removing thingsfrom the Allahs way. It is only Allah the Inheritor to Whom

belongs and returns all inheritance of the heavens and the

earth.

Two of the attributes of Allah are that He is the

Provider (Al-Razaak) and the Donor (Al-Wahaab). The

former is a necessary corollary of His act of creation34. He

has created, so He must provide. An owner of a car must

fuel his car if he wants to use it for self or others; it cannotfuel itself. The second mentioned attribute of gifting dispels

the misgivings of the former. A car does not have a right to

be fuelled because it cannot run for itself. The former

attribute alludes to an obligation cast as it were on Allah;

but the latter asserts a power/ choice/ discretion vesting in

Allah. At the same time the attribute of Gifting proves love

that God Who gifts away this beautiful life to every human

being. Whatever the Provider provides for someone is at the

32 And what cause do you have against spending in the way of Allah?and to Allah belongs the heritage of the heavens and the

earth(57:10).33 And spend in the Allahs way and let not your own hands contribute

to your destruction, and do excel (in good deeds): for Allah loves theexcellent (2:195).34 I have created jinns and men only for My worship; no sustenance do

I require of them, nor do I ask them to feed Me; verily it is Allah Who is

the Provider, the All-Powerful (51:56-58).26


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same time gifted to him by the Donor. A donor has the rightto gift away something, or to refuse it altogether. As far as

we are concerned, when we die we leave our inheritance not

because we want to leave it but because we are unable to

take it along. So we are not gifting it to our children because

we do not have the power to retain it and refuse to gift it to

them. The law of inheritance is in fact a divine arrangement

providing for takeover, on behalf of the real Owner-

Inheritor, of the possession of the properties when anerstwhile possessor ceases to exist. Our ownerships are

ownerships inter-se ourselves and not vis--vis the Maker.

Our succession is essentially a trust and our inheritance laws

are a means to carry out this entrustment smoothly.

The Believers are better advised to spend everything

in the way of Allah if the defence requirements so demand.

Political freedom is not an abstract idea to be cherished in

notion. It can be relished only in a defined territory whichmust be guarded to guard the freedom. Like every esteemed

possession freedom can be desired only if deserved. Those

who loose sovereignty loose freedom. Therefore, nothing is

more important than defending ones country for ones free

existence. When ones very existence is under attack, what

for should one spare ones wealth?

The two verses cited about the imposition of the

defence tax (57:10; & 2:195) are remarkably distinguishable

from the other verses relating to other types of spending.Both these verses have used the expression spend in the

way of Allah which is clearly distinguishable from the

expression used elsewhere in the Quran: spendOF what We

have given you. The latter phrase indicates that only a

portion is intended to be spent. The wording of these two

verses fairly connotes that even the last penny may have to

be spent for defence requirements at any point in time. In

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other words, the government can lawfully impose a defencetax at so high a rate that almost everything might have to be

paid towards this tax only. Interestingly, the Prophet(saw)

raised the wherewithal for wars by asking the Believers to

donate whatever they could. On one occasion Abu Bakr(ra)

donated for war all that he had. Better to put it in other

words: the Prophet(saw) did take from Abu Bakr(ra) all his

wealth for war. The Prophet(saw) could have fixed a high rate

also to do just the same thing. But in that case such ratewould become an inviolable precedent and consequently the

future governments would have to impose that high tax even

when a lower rate would also suffice or a higher rate would

be needed. This would not only disable the future

governments, but would also burden the subjects with a

burden not always unavoidable.

The power to determine the rate of the defence tax is

not a power exercisable during wartime only. In fact itswartime rigours are diluted by Islam by directing that it

should be appropriately utilized during peacetimes only35. A

sustained peacetime defence preparedness can safely and

easily keep away the panicky hike of wartime revenue. The

military prowess is, however, advised for deterrence ofenemies and not for any aggressive purposes. This military

tax is virtually a tax for peace because while peace is

destroyed by aggression, it is ensured by deterrence.

The reward for this spending is equally reassuring.

Allah promises the repayment of anything and everything

thus spent, as it were, for peace. The repayment promised

includes the repayment in this world also, without any

35 Muster against them all the military strength and cavalry that you

can afford, to deter the enemies of Allah and your enemies as alsoothers besides them whom you may not know but whom Allah does

know; ...... (8:60).28


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injustice. Normally there is always a little room for injusticealso during economic correction. But in the matter of

defence spending God promises a repayment which shall not

be unjust in any case. In fact the receipt of every Sadaqah is

acknowledged, and its repayment promised, in Quran36. The

repetition of the same promise for the defence spending

signifies its special importance and significance. Its

repayment, it is added, shall not be unjust 37. Nonetheless,

this repayment shall not be a mere repayment; there will bealways something more to it. A just repayment is not up to

the beneficence of the Beneficent Allah. He is just in

punishment only: the minimum reward for any good is

always ten-fold38.

The generosity of Allah knows no bounds when it

comes to rewarding the defence spending of the Believers.

The Beneficent Allah deems this spending as a loan unto

Himself

39

, and uses for it the epithet of better. Loans are

36 And whatever you spend in charity or devotion be sure Allah knowsit all (2:270);Say: Verily my Lord enlarges and restricts the sustenance to such of

His servants as He pleases; and nothing do you spendbut He replaces

it: and He is the Best to Provide (34:39);

Do they not know that it is Allah Who accepts repentance from Hisvotaries and takes (their) charity, and that it is Allah Who is verily the

Relenting, the Merciful? (9:104).37 ...... and anything that you spend in the way of Allah shall be but

repaid to you and you shall not be treated unjustly (8:60).38 Whoever comes with a good deed shall have ten times the like

thereof, but whoever comes with an evil deed shall be requited with nomore than the like thereof and no injustice shall be done to them

(6:160).39 Who will loan to Allah a beautiful loan which Allah willincrease manifold? It is Allah Who decreases and increases (your

wealth) and unto Him shall you return.(2:245);29


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graded according to their chances of repayment andrecovery which vary with various borrowers and different

times. A bad loan is the one which is lost. A good loan is

the one which is not bad but has some chances of turning

bad in future. A better loan has an assured recovery and no

chance of going bad. Certainly that is a beautiful loan also.

And indeed a loan to the Lord of the Worlds can only be a

beautiful loan. Now, along with this beauty of assured

repayment the multiplication of the loan is also promised40

.Again this multiplication of the loan is exceptional.

According to the general rule a good deed shall fetch ten

times the like thereof. On the contrary, the Sadaqah itself

shall be multiplied first, and the payer will come with the

multiplied Sadaqah which too shall then fetch a minimum

ten fold reward. In other words, the Sadaqah will be

Who will loan to Allah a beautiful loan? And (Allah) will increase it

manifold; and he will have (besides) a noble reward.(57:11);

Verily for those, men and women, who give in charity and loan to

Allah a beautiful loan, it shall be increased and they shall have(besides) a noble reward(57:18);

If you loan to Allah a beautiful loan, He will multiply it for youand will grant you forgiveness; and Allah is the Appreciative, the

Forbearing; Knower of the unseen and the visible, the Mighty, the

Wise(64:17-18). (See also Quran: 5:12 & 73:20.)40The parable of those who spend their substance in the way of

Allah is that of a grain of corn: it grows seven ears and each earhath a hundred grains. Allah gives manifold increase to whom He

pleases; and Allah cares for all and He knows all things (2:261); And the likeness of those who spend their substance seeking to

please Allah and to strengthen their souls is as a garden high and fertile: heavy rain falls on it but makes it yield a double increase

of harvest and if it receives not heavy rain light moisture suffices it.

Allah sees well whatever you do (2:265).30


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rewarded twice. Or we may say, its reward shall becompounded.

This is fair enough. Sadaqah, unlike other things,

has time value. An example can illustrate the point. Suppose

the Day of Judgement is only a month away. Today a

Believer gives a Sadaqah of a thousand rupees. This amount

goes to some recipient who does with it whatever maximum

he could. This maximum utility will be determined, or rather

limited, by the current market prices. There was anotherBeliever who had given a Sadaqah of one thousand rupees,

say, ninety years back. Obviously that same amount of

thousand rupees those days had a lot more value. Therefore,

one month from now the two cannot be similarly rewarded

for this act of charity. One thousand rupees of the older

Believer may be today, say, one hundred thousand rupees:

so he will have that much to his credit and will be rewarded

for the same. Of course, there are other factors also thathave a role to play. For instance, a Believer gives Zakah of

two thousand five hundred rupees on his annual surplus of a

hundred thousand rupees, and another believer gives five

thousand rupees on his surplus of two hundred thousand

rupees; the two are equal because both give only the

fourtieth part of their respective surpluses.

Thus the Islamic financial management envisages

three distinct heads of revenue. Or, in other words, Islam

taxes the Believers thrice for three different purposes. Oneis the tax on produce whose upper limit is 10%. This is

essentially a tax on income to be levied the moment income

is generated. The modern diversification should warrant this

tax on every economic activity including both production

and the service sectors. Second is the 2.5% Zakah on annual

surplus wealth, after defraying all expenses. Third is the

defence tax on wealth which should be levied specifically

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for defence purposes and its collections should beexclusively used for defence purposes. Defence purposes

would include both defence establishment as well as defence

research.Earlier the defence preparedness was in the hands

of individuals7. This is impossible today: individuals cannot

afford to maintain fighter planes, armoured vehicles and

other weaponry on personal levels. Even though some

affluent people can well afford it, but their own

governments will not permit it for security reasons. We areanyway living in an age of highly organised, complex

defence establishments. The civilians can relate themselves

to it only by bearing the cost of this establishment.

A Believer will be indeed taking part in Jihadwhen

he pays the defence tax; and the more he pays, the more will

7Abu Huraira(ra) related that Allah's Apostle(saw) said, Horses are

kept for one of three purposes: for some people they are a source ofreward, for some others they are a means of shelter and for some

others they are a source of sins. The one for whom they are a

source of reward is he who keeps a horse for Allah's cause ( i.e.,

Jihad), tying it with a long tether on a meadow or in a garden with

the result that whatever it eats from the area of the meadow or the

garden where it is tied will be counted as good deeds for his

benefit; and if it breaks its rope and jumps over one or two

hillocks, all its dung and its foot marks will be written as good

deeds for him; and if it passes by a river and drinks water from it,even though he had no intention of watering it, he will get the

reward for its drinking. As for the man for whom horses are a

source of sins, he is the one who keeps a horse for the sake of pride

and pretence and showing enmity for Muslims: such a horse will be

a source of sins for him. When Allah's Apostle was asked about

donkeys, he replied, Nothing has been revealed to me about them

except this unique, comprehensive verse: So anyone who does aparticle's weight of good shall see it; and anyone who does a particles

weight of evil, shall see it (101:7,8) (Al-Bukhari 4:112).32


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be his participation41. Jihad literally means struggle.Struggle for defence is the Jihad actually envisaged by

Islam. It is remarkable that the Quran places wealth on the

first rung ofJihad, and the personal participation only

next42. When Believers bear the defence expenditure, they

are indeed involved in the Jihadof defending their country

in which they practise Islam. (Islam does not deify the

artifice of the political State; it establishes and protects

the State for the sake of its citizens.) This Jihad is anindependent proactive engagement in which Believers can

take part throughout their lives to affirm and maintain

their identity. This is the Jihad for peace, unlike the war-

time Jihad which is reactive and depends upon the

aggressors conduct. Once the aggressor gives in, the Jihad

is over. Here lies the difference. Islam does not desire aMujahid/ Believer for whose Jihad somebody should be an

aggressor. It wants the Believers who would persist in Jihadto keep any aggression at bay.

This is about the civilian Believers whose

participation in Jihad will be financial. With the

establishment of a regular army the personal participation in

Jihadwill be of the military personnel only. These will be,

therefore, the professional Mujahidin officially struggling

for defending the faith of their country-men. (In our modern

history here is where we have failed actually and our faith

appears defenceless!) These Mujahidin are not at par withthe civil servants of the State just because both are paid

from the exchequer. Army duty is different by all means.

41Only those are Believers who believe in Allah and His Apostle,and then never doubt but strive with their wealth and their persons

in the way of Allah: they are the sincere ones (49:15).

42 See 4:95; 8:72; 9:20, 41, 44, 81, 88; 49:15; 61:11.33


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This special status is recognised by the Quran which accordsa share to the army from the spoils of any war43.

The rate of the defence tax may change every year,

and even within a year if an eventuality arises. Although the

Believers may choose to pay more for defence purposes, yet

it will not be competent for the government to divert this

collection for non-defence purposes. Briefly put, in modern

parlance, there should be a separa te defence budget

w i t h a s e pa ra t e de f e nc e t a x l e v i a b l e r a t he r on t heweal th than income of the Be l ievers .

The benefits of this system of separate defence tax

will be immense. This will save the hard-up people from the

every day price hike and inflation which owe their origin

mainly to defence expenditure. The prices of the consumer

goods will remain unaffected by hike in the defence tax due

to defence needs. The defence tax will be income related

only in the sense that only the wealth generated fromincome will become liable for tax. In other words, only the

persons having sufficient income will be bearing the cost of

defence. Modern defence tax being messed with other

general taxes has become related to the spending of the

people. As a result even if a person is spending the

borrowed money, he has to pay from it also. To tax a debt as

an income is indeed cruel. We are extracting this tax even

from beggars who are only spending on essentials what they

receive as alms! The rich are subsidised and the beggars aretaxed , this is hardly anything short of crime.

Separation of defence budgets would also have

another important benefit of very far reaching consequences.

As the defence expenditure would be exclusively borne only

by the rich and the affluent who do wield an effective

influence on the government policies and decisions, the

43 See Quran: 8:1, 41.34


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governments would be actually dissuaded from embarkingon egoistic military adventures and expeditions in which

only human and material resources are squandered. These

influential tax payers will certainly refuse to pay for

satisfying false egos. This in turn would eliminate many

causes of disruption of peace in the world.

Between Zakah and the defence tax the priority for

collection is to be given to the latter8. If a Muslim has a

surplus wealth of two hundred thousand rupees, and thedefence tax is levied at the rate of 20%, the respective

amounts ofZakah and the defence tax payable by him will

not be five thousand and forty thousand rupees. The reason

is that when one tax is taken out, the wealth will get reduced

by that much amount. The amount of defence tax

recoverable first will be forty thousand rupees and its

recovery will bring down the remaining wealth to one

hundred sixty thousand rupees. Then the amount ofZakahrecoverable on this reduced wealth will be four thousand

rupees only.

This makes out a very significant point of the

economic philosophy of Islam. Zakah is payable only after

the other two taxes are paid. At a particular point of time in

a given Muslim country if the rate of defence tax is 100%,

the wealthy will end up paying the defence tax only. Then

8Abu Huraira(ra) related that Allah's Apostle(saw) ordered (a person)to collect Zakah, and that person returned and told him that Ibn

Jamil(ra), Khalid bin Walid(ra), and Abbas bin Abdul Muttalib(ra) hadrefused to give Zakah. The Prophet(saw) said, What made Ibn

Jamil(ra) refuse to give Zakah though he was a poor man and wasmade wealthy by Allah and His Apostle? But you are unfair in

asking Zakah from Khalid(ra) as he is keeping his armour forAllah's cause (forJihad). As for Abbas bin Abdul Muttalib (ra), he

is the uncle of Allah's Apostle and Zakah is compulsory on him and

he should pay it double (Al-Bukhari 2:547).35


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they will have practically no Zakah to pay, and would beonly theoretically liable. Yet liability to payZakah, and not

the defence tax, is one of five fundamentals of Islam!

However, practically the amount ofZakah will be only

reduced on account of the defence tax. By raising the status

of the last recoverable tax (Zakah) to the level of a

fundamental Islam has only clarified to its followers that

even the last of the taxes must be paid if one wants to stay

a Believer. Impliedly there is absolutely no room for taxevasion in Islam.

The expenses of the defence and the social security

will come respectively from the defence tax, and the Zakah

and other charities. The two will be used and utilized for

their respective purposes only. The only tax that remains for

the civil expenses of the State must, therefore, come from

the duties to be levied on commerce and trade. On seeing

the miseries around us the only thing that we rush to do veryconveniently is to blame Providence. If a person is robbed

of his wages by a pick-pocket, the resultant starvation of his

family is the subject matter of criminal justice system. If the

thief is not brought to justice, the failure cannot be

attributed to Providence. According to one estimate, each

year photosynthesizing organisms produce about 170 billion

metric tons of extra carbohydrates, about 30 metric tons for

every person on earth. Such a huge provision is available to

mankind despite immense deforestation and the hugepopulation explosion! Even then if millions of us starve or

are deprived, it is only because of our own misdeeds and

mismanagement.

Quran does not accept a trustee as revenue in-charge

because a trust is only an obligation. A trustee can keep

trust of what is entrusted to him. If nothing is entrusted to

him, he has hardly anything to do. As per Quran the in-

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charge revenue should be a GUARDING and KNOWING person,the two qualifications put forth by the prophet Joseph(as)

before the Egyptian king while seeking this post44. The

guarding will guard and the knowing will know what to

guard. Resultantly, nothing recoverable will escape recovery

and nothing payable will be withheld. The performance of

Joseph(as) on the post was exemplary. After seven years of

normal agricultural production he had seven consecutive

droughts45

, but no one starved. Even the other peoplepurchased food from this State. On the other hand, we have

the millions of people starving before our eyes in spite of

bumper crops because we have food for stores and not for

the starving. However, with these traits of Joseph (as) Quran

records only one austerity measure that was taken by the

king: he had imposed a complete ban on immigration46. Was

it, or was it not, a population control measure is anybodys

guess! In an Islamic State the defence tax and Zakah are not

collected from the Non-Muslim citizens. As we shall see

later, since Zakah cannot be given to Non-Muslims, it

cannot be collected from them either. In lieu of the defence

tax a separate tax is levied on the Non-Muslim subjects of

an Islamic State which is called Jizyah and is authorized by

Quran47. It may be reminded that taxes are not a punishment

in Islam. Jizyah is an annual head tax levied on free, adult

male citizen. Jizyah is not levied on children and women;and the poor persons who cannot afford to pay are exempt.

44 See Quran: 12:55.45 See Quran: 12:43, 47, 48.46 See Quran: 12:76.47 ..... until they pay the Jizyah by hand in a state of submission

(9:29).37


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Different rates ofJizyah can be fixed for the Non-Muslimsof lower, middle and the upper classes. Non-Muslims who

pay, and those exempt from paying, Jizyah are all full

citizens of an Islamic country having equal rights of

education, employment and commerce. Their lives,

property, honour and all other rights are inviolable similarly

as those of the Muslims. They can hold high posts in

government, barring such of them as pertain to the religious

affairs of the Muslims. They will be governed by their own personal laws in such matters as marriage, divorce,

inheritance, and disputes among themselves. They are free

to consume pork and alcohol, provided they do not make

these accessible/ available to the Muslim population.

The words used in the Quran are eloquent: until

they pay Jizyah by hand in a state of submission. Contrary

to forcible collection, paying by hand implies a certain level

of volition on the part of the payer. Nevertheless, thisvolition wont be the same as free consent in a civil

transaction; it will be a political compromise to surrender

and live as peaceful citizen of an Islamic State. So the

Jizyah will be paid only by those Non-Muslims who accept

the sovereignty of the Islamic State and agree to live there.

And that is the beauty of this Quranic injunction which has

all along prevented the Muslims from becoming colonial

aggressors. According to this verse no Jizyah will be

collected from those Non-Muslims who refuse to live in theIslamic State, and fight back instead. On its part the Islamic

State will either let them go, or it will fight to subdue them.

If the Islamic State chooses to fight them, it will fight at its

own cost unlike imperial aggressors who tax the oppressed

to fight them only.

The Muslims have to fight in the way of Allah with

their wealth and lives. Normally they pay the defence tax

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for the purpose, but in case of need they may be asked togive lives. But as the defence tax is not levied on the Non-

Muslims wealth and instead Jizyah is levied as the cost of

security, the Non-Muslims lives are also exempt from

military services. This is the regard extended by Islam to the

un-Islamic beliefs of the Non-Muslims. They do not believe

in Allah and His last Prophet(saw), so they are not asked to

fight in His way. Secondly, by this exemption from military

service, Islam prevents the Non-Muslims from fighting theirfellow Non-Muslims. It does not want a Christian to fight

another Christian just because he is living in an Islamic

State. Others may take pride in giving a Muslim to fight

another Muslim, Islam spurns this dirty game.*****

INVESTMENT

For Charity Quran has used the words give (or pay)

Zakah. For other charitable spending, payment of taxes,

and use of the remaining wealth it has used a common word

spend. However, this common word carries three different

connotations with three appellations which occur with it in

different verses. It alludes to the routine household and

charitable spending with the appellations prosperity and

adversity or openly and secretly. It refers to the defence

related spending with the appellation in the way of Allah.

The third phrase used is spend of what We/ God have/ hasgiven you which refers to the use of the wealth that

remains after defraying all the taxes, Charity and charitable

spending. Or we may say that this last mentioned Quranic

phrase refers to the investment of the capital, in modern

parlance. Investment, which signifies productive

commercial spending, is desirable because it results in

production of goods and services, besides generating wealth

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for the investor, revenue for the State and employment forthe people.

In fact the Quranic verses relating to the commercial

spending are not restricted to investment of wealth only.

Quran calls upon a Believer to spend (invest) of what(ever)

Allah has given to him. Therefore, he must always keep on

investing all that he has his wealth, knowledge, expertise,

skill or mere time. The investment of all these possessions is

effective and useful. Mere capital of an investor does notfructify unless and until it is espoused with the human

resources. There is strong Quranic emphasis on investing

ones resources. One, Quran describes investment as an

important corollary of faith, second only to the daily Prayer

(Salaah), and asserts that only those Believers are true

Believers who do not fail or neglect to invest what Allah has

given them48. Two, it declares investment a condition

precedent for piety whose attainment is the cherished goalof every Believer49. Three, the double reward of the Judo-

Christian Believers is stated to be due to their investing,

besides being patient and repelling evil with good50. Four,

the great reward from Allah is promised only to those

Believers who do invest also51. Five, failure to invest is

48 (Believers are those) Who establish regular prayers and spend

of what We have given them; such in truth are the believers: for

them are the grades (of dignity) with their Lord and forgivenessand an honourable sustenance (in the Paradise) (8:3, 4).49 (the pious will be those) Who believe in the unseen, and

establish regular prayer and spend of what We have given them(2:3).50

(The Jews/Christians who followed Islam) their reward is twofold:

for they have been patient, and repel evil with good, and spend of what

We have given them (28:54).51

(O men!) Believe in Allah and His Apostle, and spend of what He

has made you heirs; for those of you who believe and spend, for them is40


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described as nothing short of disbelief or rejection of faith52.Six, failure to invest during life is declared to be an

incurable omission53.

Earlier economies were mainly agricultural, and

agriculture too was primitive. Manufacturing activities were

quite limited. But amazingly the timeless Book of Allah has

all along been advising its followers to make big

investments, collectively! It called upon the Believers to

make what we call institutional investments, in modernlanguage. There is a general commandment unto the

Believers that in all matters they should take decisions by

consultation. An absolute injunction to this effect is

contained in the third chapter named Al-iImran54 (or The

Family of Imran, the grand-father of Jesus Christ(as)). The

merits of consultation are obvious. Consultations create pool

of intellects and dispel the futility of arrogance, to name

only two. Significantly, however, the best part of thisQuranic commandment is that it orders consultation with the

not so good people. The Believers referred to in this verse

a great reward (57:7).52 O you who believe! Spend of what We have given you before the

day comes when no bargaining or friendship or intercession will

avail; and the rejecters of faith, they are the wrong-doers (2:254);53 And (O Believers!) Spend of what we have given you before

death comes to any of you and he shall say, O my Lord! If onlyyou would have reprieved me for a little while, I would have given

charity and been among the righteous; But never does Allahreprieve any soul when its term ends (63:10, 11).54

It is but with the Allahs Mercy that you (O Prophet) are gentle with

them (thy followers); and if you would be severe or harsh-hearted, theywould have broken away from about you; so pardon them and seek

(Allah's) forgiveness for them; and consult them in (various) affairs:and when you have resolved(a course of action)put thy trust in Allah

verily, Allah loves those who put their trust(in Him) (3:159).41


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are those who deserted the Prophet(saw) in the harmful battleof Uhud. And the Prophet is advised to overlook their

omissions, pray for them and take their counsel in different

matters. This is the best form of recognition imaginable that

Islam accords to the human intellect. Obviously, while the

Believers are instructed to take counsel of even the poor

performers, the performers have to be consulted any way.

{Can it be more than funny to say that Islam does not

approve of consulting the women?}The forty second chapter of Quran goes by the very

name of Consultation, or Shura. This chapter contains

only one verse on consultation and interestingly in that

verse the Believers are characterized as the people who

consult one another before going for commercial

spending, or investment55. In this way this verse actually

recognizes collective big investment only as true investment

and alludes to the institutionalization of investment sincefinancial institutions only can do justice to the

consultation for investment. Institutionalization would

also mean big investments which are not individually

desirable or advisable. It can be also taken as encouraging

cooperation between investors.

When Believers invest in an enterprise or an

investment institution both would be manned and managed

by others. These managers may not necessarily have a stake

in the enterprise or the institution; yet they will be stillinvestors of their time, labour, skill and expertise. Against

these personal investments they shall take what they

reasonably deserve and the institution can afford. Their

professional skills will not mutate into arrogance for

55And (the Believers are ) those who hearken to their Lord, andestablish regular prayer, and conduct their affairs by mutual

consultation, and spend of what We have given them (42:38).42


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extraction of undue perquisites from the institution, norshall they be unduly generous with the others money. Their

humility will not be quotes and paintings on their office

walls, or an inscription on their products. To them life

would not be a competition to cut others throats for self-

aggrandisement; it would be a time-bound opportunity to

cooperate with fellow being for better service of humanity.

They will not come to believe in destiny after they have

failed in their sprees. They remember the Scribe of destinyon the rungs of success56.

Some Muslims maintain that they can throw away

their immeasurable wealth, as it were, here and there.

They seek this license ignorantly from the Quranic phrase

that Allah gives to whom He pleases without measure57.

They believe that by giving them without measure God has

actually honoured them with the freedom to do with their

wealth whatever they like. And they like to believe that asGod is not keeping a measure for their wealth, they should

not measure it either. This is grossly erroneous. The

expression without measure is used in relation to us and

not to God. We lose account of our wealth and riches as

soon as we start getting rich. We have a record of every

penny as long as we have no pound. But as for Allah the

All-Knowing, He has the record of every penny of even the

richest persons on earth; and every single penny has to be

accounted for58.

56Only they believe in Our verses who, when those are recited to

them, fall down in prostration and extol the praise of their Lord,and they are not arrogant; who forsake their beds to invoke their

Lord with fear and hope, and spend of what We have given them(32:15,16).57

See Quran: 2:212; 3:26, 37 & 24:38.43


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The Believers and the non-Believers alike have beenalready spending their wealth, or investing their capital:

what is new then? Islam censures the spending of the

Unbelievers as akin to a nipping frost59. As a nipping frost

retards the growth of vegetation, so does the Unbelievers

spending inhibit the growth of economy. Although the

nipping effect would depend upon the cold of the frost and

the time at which it strikes a crop, yet in any case the effect

is always substantially damaging and the resultant loss isnever negligible. Interestingly, while a frost is nipping for

the others crops, it is no good to itself either. Since we are

not making investments the Islamic way, these are bound to

produce a frost. And we do witness the nipping effect of this

economic frost as it lands us into the (economic) depression/

recession caused by our own investment. The incidence of

economic recession demonstrates that something is wrong

with our investment for which it leads to the recession instead of development.

Since this verse highlights rather the fallacy of the

Unbelievers spending than the Unbelievers themselves, it

equally applies to the Believers spending if the latters is

also on the lines of the Unbelievers. As the modern

economic policies of the Non-Muslim world are what the

Muslims are also following willingly, their spending is

pretty like that of the Unbelievers. And if there are any

exceptions here and there, those are accidental rather than

58So anyone who does a particle's weight of good shall see it; andanyone who does a particles weight of evil, shall see it (99:7-8).59What they (the Unbelievers) spend in the life of this world maybe likened to a wind which brings a nipping frost: it reaches and

smites the harvest of a people who had wronged themselves; it is

not Allah Who hath wronged them but they wrong

themselves(3:117).44


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conscious ones. However, this verse does not simply containa comment on the Unbelievers spending; it carries a bold

mention of the other aspects of the problem as well. While it

indicts improper spending as nipping frost, it deprecates the

affected people also for their contributory wrong.

Remarkably, they are not portrayed as victims. In all

fairness Almighty Allah not only blames these sufferers as

wrongdoers, but also raises His hands to declare that He has

not wronged them60

. And this carries the true message ofIslam: economic iniquities need to be remedied, and not to

be acquiesced.

The frosting effect of the un-Islamic spending

explains why the gap between the rich and the poor

continues to widen in the face of all those so-called

economic reforms put in place day in and day out. Even the

U-turns that were taken by some countries from capitalistic

to communistic economies and later again from socialism/communism back to capitalism failed to change the lot.

Every time the rhetoric ended with the change of hands. The

simple reason is the un-Islamic spending whose harmful

effect is ignored by the spenders (investors) under a peculiar

perception. They believe they are not born to change the

destiny which has denied prosperity to the poor. This

thinking is dismissed in Quran as a manifest error61. The

error of this thinking is obvious. Instead of doing his duty, a

servant is questioning the right of his master. If a masterspills a cup of milk on the floor and then asks his servant to

cleanse the floor, the servant cannot refuse and say that if

60Ibid.61 And when they are told spend you of what Allah has given

you, the Unbelievers say to those who believe: Shall we feed

those whom if Allah had so willed He would have fed (Himself)?

Verily, you are in nothing but manifest error (36:47).45


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the master had not so willed the milk would not have beenspilt at all. We are neither to take Gods account, nor to

account for the acts of God. We need to do our stuff. {The

fund raising charity shows are no exception. Actually such

events are also a result of this erroneous thinking only.

Those who participate in these events pay for no other

reason than the entertainment provided in the events. That is

literally sadistic: giving not for the suffering but for the

pleasure!}The philosophy of Islamic spending/ investment has

been arranged in the form of a small story of the prophet

David(as) in just four verses of the Quran62. With reference to

their peculiar context, these verses are correctly understood

to restore the image of the prophet David(as) which is

tarnished in the Bible by accusing him of grave offences of

rape and murder. Briefly, according to the Quran David had

just thought of marrying the wife of a general in his army,most probably for her intelligence. But he soon turned in

repentance to Allah as this mere thought implied that Allah

62 Has the story of the disputants reached you? Behold they

climbed over the wall of the chamber. When they (so ) entered the

presence of David he was frightened of them, (but) they said: Fear

not, we are two disputants one of whom has wronged the other; sodecide between us with truth and treat us not with injustice, and

guide us to the path of rectitude. Verily, this is my brother, he hasnine and ninety ewes and I have (only) one; so he said: Commit

her to my care, and subjugated me in speech. (David ) said:Surely he has wronged you in asking for thy (single ) ewe to be

added to his (flock of) ewes, and indeed most of the fellow beingswrong one another except those who believe and do righteous

deeds, but only few are they. And (meanwhile) David realised thatWe have tried him; so he asked forgiveness of his Lord, bowed and

fell down prostate and turned to Him (in repentance) (38:21-24).

See Bible: II Samuel chapter 12.46


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booklet by farooq rather

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