Quora Answer: How Will My Family Give Zakat, if We Have No Income except Fixed Deposits?

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ

The following is my answer to a Quora question: “How will my family give zakat if we have no income, and we live by the money in fixed deposits in the bank?”

Zakat is paid out of excess, earnings above the nisab, for that period, the hawl.  If there is no excess, and that money is spoken for, even if it is above the nisab, you do not need to pay the zakat.  Another of the conditions of zakat is the fund be fully in your control.  Money, in a fixed deposit, is not liquid for the duration of that fixed deposit.

For example, if the nisab is $5,000 for the year, and you have $6,000 which you have in savings, untouched, you would normally have to pay zakat on that.  However, if you are saving the funds for a specific purpose, such as for education, or a wedding, it would not make sense to pay zakat on that since it would continuously diminish the amount set aside, particularly if the 2.5% zakat is more than you save per annum.  That money is not excess, in the sense it is not funds saved, taken out of circulation in the economy and hoarded.  That money has a purpose.