Knowledge on the Calculation of Payable Income ZakahAmong Civil Servants
in Malaysia
Fidlizan Muhammad1*, SalwaAmirah Awang2,Mohd Yahya Mohd Hussin3, Azila Abdul Razak4, Alias Azhar5
1,3,4JabatanEkonomi, FakultiPengurusan dan Ekonomi, Universiti Pendidikan Sultan Idris,
35900 Tanjong Malim, Perak
2Jabatan Pengajian Am, Politeknik Sultan Azlan Shah, 35950 BehrangStesen, Perak 5Pusat PengajianUndang-undang, Universiti Utara Malaysia, 06010 Sintok, Kedah
fidlizan@fpe.upsi.edu.my1*
Article History: Received: 10 November 2020; Revised: 12 January 2021; Accepted: 27January 2021; Published online: 05April 2021
Abstract: Zakah of income is a form of zakah which is legislated as mandatory for working individuals.The money received from the employers and fulfilled the conditions of zakahwhich are the rate (nisab) and period (haul) qualify individuals to perform zakah of income. Employees who work for the government receive several forms of income which make up the monthly gross salary. Among them are the monthly basic salary, monthly fixed allowances, overdue salary and bonuses. Therefore this study aims to identify the level of knowledge among government servants in calculating the payable zakah of income based on the sources of income that formulate the monthly salary. This study applies the quantitative study with descriptive analysis on the dataobtained using the instrument of questionnaire. As many as 772 respondents involved in this study by focusing on two sections namely the knowledge pertaining to the concept of income zakahand items of income sources. There are four items of sources studied which are the salary, monthly fixed allowances, overdue salary and bonus. Finding of analysis indicates that the level of knowledge among respondents related to the concept of zakah is significantly high. Itemized analysis reveals that respondents’ knowledge in the calculation of payable income zakah for the item of overdue salary is moderate, while for the bonus is low. Implication of the analysis shows that the calculation of payable income zakah needs a continous effort from the authority. This is to ensure indviduals to carry out their responsiblity of the Islamic pillar more obediently in the future.
Keywords:Knowledge, Zakah of Income, Calculation, Descriptive
1. Introduction
Workers or employees are the essential production factor in the economy. In Islam, workers are not only functioning for physical purpose which is preparing goods and services for consumers, but they are also responsible spiritually to other indivuals. Islam regulates two methods in implementing the spiritual deed in helping each other by using the monetary channel and the non monetary channel. The monetary channel is prescribed into two ways namely the mandatory giving which is zakah, and secondly the voluntary giving such as sadaqah, hibah, will and others. While the non monetary form comes in the form of volunteering the ideas, labour and time.
Generally, an employee receives an income or salary from the employer monthly. For employees who serve the government or the public sectors known as the civil servants, this group receive a few other items in the monthly salary. Among them are the basic salary and the fixed monthly allowances. There are several forms of fixed allowances received which are the civil service allowance, housing allowance and Cost of Living Assistance (COLA). All these items are summed up to obtain the total of monthly gross salary. Apart from that, civil servants also obtain income which are not regularly counted in the income slip which are overtime payments, overdue payments and bonus. For the bonus item, there are several forms of bonus received by the civil servant. The special payment of civil servant is a bonus given by the government to each civil servant under the grade of 56, while the performance award is received by selected competent staffs in the service.
As there are various items in the monthly gross salary of a civil servant, the need to calculate the payable zakah of income amount is crucial. This is to ensure individuals whofulfil the conditions as zakah payers will pay the zakah in the accurate amount. There are two main conditions for a worker to know whether he/she is eligible or not to be categorised as a zakahpayerthatare the income received must be over the rate of 85 gram of gold and the period must be in one year.In this matter, the authority which is theState Islamic religious Council or (MAIN) has provided online calculators in assisting individuals to self calculate the amount of zakat to be paid by lump sum or monthly salary deduction. Individuals can also ask zakah officers to calculate the total amount of payable income zakah to be paid through the counters at zakah offices by states.
Via the provided calculators, items to be included in the calculation of payable zakah income should be helping individuals to count the exact amount of zakah to be paid. However, this matter is very much relies on the information prepared by the MAIN in regards to each related item. Observation on a few online calculators pertaining the items is shown in Table 1.
Table 1.Information on the Income Item in the Income ZakahCalculators according to states Item
State
Basic Salary Allowance Bonus Other
Income Information on Income Item in the Calculator
Pahang - Salary and wage
Income Freelance and Professional Income - al-Mustghallat Income - - -
Terengganu - Salary Allowance Bonus -
Kedah - Monthly Basic
Salary Total of fixed allowance Total of annual bonus Other income
Melaka Basic salary Allowance Others
Negeri Sembilan
- Basic salary Allowance (monthly) Bonus (annually) Other side income (monthly)
Johor - Salary x 12 Allowance x
12
Bonus Other
income Kuala Lumpur - Gross Income
(Annually) - - -
Kelantan - Monthly salary Annual
Bonus
-
Perlis salary +Allowance Bonus Other
income Pulau Pinang - Income from all
sources - - -
Perak - - Income
from all sources - - -
Sarawak Monthly income (salary + Allowance + Bonus) -
Source: Online zakah Calculator by States
Based on Table 1, there are various terminologies displayed in the calculators by each state. Calculation on zakah income in the state of Terengganu, Kedah, Malacca, Negeri Sembilan and Johor requires individuals to key in information according to items such as basic salary, allowance and bonus. For the state of Perlis and Kelantan, items of salary and allowance are combined as one, whereas in Sarawak, all items such as salary, allowance and bonus are all combined as monthly salary. For the state of Penang, Kuala Lumpur and Perak, the terminologies used are gross income and income from all sources. For other income, a few states have provided a space for payers to key in the related amount such as Perlis, Johor, Negeri Sembilan, Malaccaand Kedah.Since there are multiple terminologies used in the calculator according to states, this creates a gap which may cause an individual to not counting in a few items in the income. This can happen if the information displayed as an additional note or marked with the symbol of “*” is not read thoroughly by payers. For instance, the terminology of bonus displayed in the calculator may be understood as not covering the Special Payment of Civil Servants and the Excellent Performance Award and the likes.Similar situation is expectable to happen among civil
servants who receive income item of different kinds such as administrative allowance, transportation allowance and others.
As a consequence from the issue of different information which is observed in these online calculators, it is reasonable to conduct a study to identify the level of knowledge among civil servants on the items related to the calculation of payable income zakah. This is deemed crucial because of two justifications. Firstly the zakah of income is the highest collected source of zakah by zakah institutions in Malaysia. This source contributes between 40 to 60 percent from the overall MAIN annual zakah collection. Secondly, the practice of tax and zakah is implemented simultaneously in which the tax is collected by the State Internal Revenue Board (LHDN) that represents the rensponsible agency on behalf of the government while the zakah is collected by the State Islamic Religious Council (MAIN).Muslims who pay income tax are entitled to receive rebates according to the paid amount of zakah. However, there are several individuals who fully transfer the tax payment as the payment of zakah. In this situation, these individuals have to pay the income zakah higher than the actual amount because the tax rate is higher than zakah. For further discussion in the previous literature, this study is divided into five sections. The second section discusses previous research pertaining to income zakah, methodology and analysis findings in the third section and fourth section respectively, while the conclusion andresearch implication in the fifth section.
2. Literature Review
The circulation of mandatory payment of income zakah at national and state level in Malaysia was a significant factor identified to create awareness among Muslim society to carry out this Islamic pillar obligation (Norlela&Hairunnizam 2014). Thus, many studies were carried to analyze the level of compliance of this obligation. This was done because the society had different views related to the obligation of conducting the income zakah. The income zakah was one of the zakah types which was not unanimously agreed upon its obligation (Mohd Ali, 1989; MahmoodZuhdi, 1993; Mujaini, 1995). However, the National Council of Fatwa Discussion Committee or MuzakarahJawatankuasa Fatwa Majlis Kebangsaan in Malaysia had stated that income zakah is mandatory to be carried out via the fatwa circulation in 1997. Aidit (1988) categorised the different views into seven groups, while Mujaini (1995) simplified these seven groups into three main categories which are; (i)income zakah not in the mandatory category for not having any basis, but is encouraged based on the views of the scholars, (ii) income zakah is a mandatory zakah on the factor of maslahah (need), and (iii) income zakah is a mandatory zakah based on the direct basis from al-Quran and al-Sunnah. Departing from these different views, the authority was responsible to conduct constant promotional and educational activities to the public. This effort was found to be significant to influence the society to be more compliant in conducting the income zakah from time to time (Hairunnizam, Sanep& Mohd Ali, 2007; Nur Barizah& Hafiz Majdi, 2010).
The compliance in the paying of incomezakahwhich was studied in the previous research was mainly focused on the empirical analysis which was purposely to determine the factors or influence of certain variables. A study by Hairunnizam, Sanepand Mohd Ali (2007) discovered that factors of age, marital status, income and zakah payment mechanisms influenced significantly the awareness of the people to pay zakah by using the logistic regression. The factor of knowledge and enforcement were found to be important in increasing the payment of zakah among professionals (Mohd Ali, Hairunnizam&Nor Ghani, 2004). Similar factor was also seen in the analysis by Nur Barizah and Hafiz Majdi (2010) involving propfessionals in the Malaysian International Islamic University (UIAM), and in the study by Nur Azura, NorAzlina and Nor Fadzlin (2005) in Universiti Utara Malaysia.
Accordingly, there was a room for extended research to improve the level of compliance among Muslims in to pay income zakah. This could be realized by the increase of society literacy on income zakah as seen in the effort to improve the compliance of the society on paying the tax (Fallan, 1999; Richardson, 2006; AnisBarieyah& Ling, 2009; Mohd Rizal, Mohd Rusyidi& Wan Fadillah, 2013). Primary research on the level of knowledge of the calculated income zakah was carried out by a few researchers. Research by Fidlizan et al. (2016a)which involved the knowledge of the income item in the calculation of income zakah among 112 respondents in Perak found that the item of salary and allowance were at high level, while other items were found to be low.Fidlizan et al. (2016b) conducted a simulation analysis on the forecast of income zakah collection by the authority which was expected to increase between 20 to 40 percent. This number could be achieved if the payers paid the zakah based on a more accurate and comprehensive income zakah amount.
Besides education factor, there was a difference in had kifayahwhich was the deductable expenses incalculating the amount of payable income zakah according to the states. The difference in the related information could influence an individual to transfer his or her income zakah to other states (Fidlizan et al.,
2017). Some other research also adopted itemized descriptive analysis in Zakah al Fitr such as byMohd Yahya et al. (2013) dan Fidlizan et al. (2019) inPerak, Siti Saufirah, HairunnizamandSanep (2016) in Terengganu, Mohamad ShairaziandHairunnizam (2019) as well as bySayidah Nafisah andHairunnizam (2019) in Selangor. In brief, these studies suggested for a more aggressive exposure among the Muslim society on the basic concept of income zakah calculation as well as zakah al-Fitr.
3. Methodology
To achieve the objective, a survey research through the use of questionnaire has beencarried out. This form is divided into three parts. The details on the questionnaire is in the following Table 2.
Table2.Summary of Questionnnaire Form
Part Details Number of
Item
Explanation Scale
A Respondents’ Basic
Information
5 Gender, age, marital status, number of dependencies, status of tax and zakah payment
B Knowledge of
Zakah Concept
10 Zakah law, concept of period (haul) and rate (nisab), zakah rate, concept of distribution and asnaf, zakah management, zakah calculation, income tax, tax rebate.
Know, Do not know
C The calculation of
income zakah
amount.
10 Basic salary, allowance, overdue
payment, bonus
Know, Do not know
The questionnnaire form that includes statements, scales and type of suitable analysis with the research objective has been referred to three experts consist of an academian who work in Universiti Utara Malaysia, and two industrial representatives from the Kuala Lumpur Zakah
Collection Centre or PusatPungutan Zakat Kuala Lumpur and Perak Islamic Religious Council (Majlis Agama Islam Negeri Perak). Thus, to obtain the research data, the questionnnaire forms have been distributed to 1000 civil servants who are working in the Peninsular of Malaysia excluding Sabah of Sarawak.
These forms have been distributed with the help of enumerators who are research assistants to facilitate the matters with the respondents. The duration of data collection starts from April 2019 until December 2019. During the period, as many as 850 questionnaire forms have been returned with 772 have been completely filled up. The method of descriptive analysis using frequencies and percentages are used to analyze the obtained data.
This type of analysis is suitable to capture the level of knowledge on the concept of income zakah which should be made known to civil servants in the matters of income zakah amount.
4. Findings of Analysis
The respondents’ information in this research is shown in Table 3. The research respondentsconsisted of 227 males and 548 females. From the aspect of age, 76 percent of the respondents were from the young group which was between 22 until 43 years old., while 24 percent aged around 44 years old and above. The research finding that has involved majorly the highly significant group could be an indicator for the authority to improve the gaps in the current zakah information. This is justifiable to the current retirement age in the government sector which is between 58 until 60 years old. Based on the majority respondents’ age group which is between 22 until 43 years old, hence the duration of service of these civil servants are between 17 to 28 years. The expectation to receive salary increament, allowance and promotions in the service by being elected to certain positions in the future require this group to possess a good level of knowledge in the current calculation of income zakah.
From the aspect of marital status, 80 percent of respondents were married with 74 percent were having dependencies between 1 to 6 people. From the aspect of taxandzakah payment, almost 90 percent of the respondents carried out this obligation with 47 percent paid both, 37 percent only paid zakah, six percent paid tax and another 11 percent were not qualified to pay zakah or tax based on their income. This could be influenced by monthly income and number of dependencies. For an example, each child age under 18 years old, is entitled to
get tax rebate of RM1000 for one child. The examption is also enjoyed by the payers in the calculation of income zakah(Fidlizan et al. 2017)
Table3.Respondents’ Information
Respondents Criteria Details Frequency Percentage (%)
Gender Male Female 227 548 29.0 71.0
Age (year) 22 until32
33 until43 44 until 54 55 and above 201 388 157 26 26.0 50.3 20.3 3.4
Marital Status Single
Married Widower/Widow/S ingle Parent 134 621 17 17.4 80.4 2.2 Dependencies none 1 until 3 4 until 6 7 and more 190 427 145 10 24.6 55.3 18.8 1.3 Execution of current tax and
zakah
Paid tax only Paid Zakah only Paid tax and zakah Not qualified to pay zakah and tax
45 282 359 86 5.8 36.5 46.5 11.1
The following Table4 shows the level of respondents knowledge related to zakah concept. Table 4.Knowledge of Zakah Concept
No Statement Details
Know(%) Do not know (%)
1. Zakah is mandatory for Muslims who are eligible. 768 (99.5) 4 (0.5) 2. Zakah is mandatory to be paid if the period(haul) and rate(nisab)
are met.
756 (97.9) 16 (2.1) 3. The period (Haul)in zakah calculation is one year. 710 (92.0) 62 (8.0) 4. The rate (Nisab) in zakah calculation is based on 85 gram of gold. 547 (70.9) 225 (29.1)
5. The mandatory value of zakah is 2.5%. 650 (84.2) 122 (15.8)
6. Zakah is distributed to eight (8) recipients (asnaf). 638 (82.6) 134 (17.4) 7. The state Islamic Religious Council (MAIN) and The Zakah
Collection Centre are the authorities in zakah collection in Malaysia.
738 (95.6) 34 (4.4)
8. The calculation of income zakah can be made using the zakah online calculator.
697 (90.3) 75 (9.7) 9. Zakah payment can be deducted from the income tax payment. 693 (89.8) 79 (10.2) 10. The payment of zakaf is lower compared to tax payment 605 (78.4) 167 (21.6) (%) percentage
Based on Table 4,in general, it is found that respondents’ knowledge on the concept of zakah is high by 80 percent and above except for two items which is number 4 and 10. For item 4 that is related to the determination of rate (nisab) almost 30 percent of the respondents are not in the know that the rate is based on 85 grams of gold. This can be justified to a more popular trend of the current rate (nisab) displayed on the zakah web page by MAIN which is standardized to the value of Ringgit Malaysia compared to the original rate that is based on gold. This scenario is also seen to happen in the study by Fidlizan et al. (2019) pertaining to the original rate of zakah al fitr among muslim community in Perak. For item 10, this situation is influenced by the payment management of zakah and tax through the salary deduction by the employers. Generally, the calculation of employees’ income tax is executed through a taxation table known as the Scheduled Tax Deduction (PCB). Meanwhile for zakah, the amount is self calculated by the employee who later informs the employer tofix the amount as the monthly salary deduction for zakah. Therefore, information regarding the payment of zakah or tax whether it is low or high is
less given attention by the society.Table 5 displays the knowledge of respondents pertaining to items of income that should be included to obtain the amount of individual payable income zakah.
Table 5.Knowledge on income zakah items
No Items of income Know(%) Do not know (%)
1. Basic salary 763 (98.8) 9 (1.2) 2. Mothly allowance 593 (76.8) 179 (23.2) 5. Overdue salary 185 (24.0) 587 (76.0) 6. Bonus/award 350 (45.3) 422 (54.7) (%) percentage
Based on Table 5, it was found that majority by 99 percent of the respondents are in the know that the basic salary is the main item in the calculation of income zakah. For the other three items,they are categorised into three levels which are good (75% and above) for monthly allowance, moderate (40 – 75 %) for overdue salary and low (under 40 %) for bonus or award. Although most of the respondents have conducted the obligation to pay income zakah by basing on the high level of knowledge on the item of basic salary by 99 percent, there is a possibility for leakage to happen in calculating the accurate amount of payable income zakah. Continous explanation from the authority in regards to income zakah is paramount to be improved in ensuring that every eligible individual is able to carry out this zakah more accurately. Among them is to upgrade the online zakah calculator so that the income items can be prepared specifically such as the items of salary, allowance and bonus. Based on the discussion, it is found that most of the civil servants have carried out the obligation of income zakah. However, the outcome of analysis proves that there are a few items of income zakah which are not completely calculated. Accordingly, exposure on the obligation of individuals to clearly understand the concept of zakah income must be done aggresively.
5. Conclusion and Recommendations
Income zakah is the highest collected zakat source for MAIN to be distributed to the zakah recipients (asnaf). The accuracy in calculating the total amount of income zakah is vital to be given emphasis by the authority to ensure that the zakat obligation can be carried out completely. The increase in the total of zakah collection that is based on the awareness of this calculation will give opportunity for the MAIN to assist the asnaf group and achieve the zakah aimespecially in eradicating proverty and other general social aims such as education, social and others. Therefore, the MAIN is recommended to disseminate informative explanation regarding the income zakah from time to time. As the calculation of income zakah can be done by payers via online zakah calculator, hence informative information is essential to be prepeared. Items of income displayed in the calculator is suggested to be currently updated based on the current items of income. From this measure, the calculation of income zakah can be done easily and accurately by the Muslim society.
6. Acknowledgement
This research is funded by the Research Management and Innovation Centre of UPSI (RMIC-UPSI) under research grant, GPUF (code: 2019-0217-106-01).
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