Zakat Council

Zakat Councils are responsible for collecting and distributing the Islamic taxes known as Zakat and Ushr in Pakistan. The Councils are overseen by the Ministry of Religious Affairs. In Pakistan, the system of compulsory collection and distribution of Zakat and Ushr began in 1980 with an ordinance decreed by General Muhammad Zia-ul-Haq calling for a 2.5% annual deduction from personal bank accounts on the first day of Ramadan, with the revenue to be used for poverty relief.

Zakāt (Arabic: زكاة‎‎ "that which purifies"), is the giving of a fixed portion of one's wealth to needy people, and is one of the Five Pillars of Islam. (Zakat purifies the wealth of a Muslim, (according to Surah At-Tawba, Ayat 60 in the Quran), and several a hadith.)

In Pakistan Zakat is levied on sahib-e-nisab, i.e. a person who owns or possesses assets liable to Zakat under Shariah equal to or more than nisab, (about US $300, calculated according to the value of 612.32 grams of silver). There are eleven types of assets liable to Zakat "detailed in 1st schedule of Zakat & Ushr Ordinance 1980".

Ushr is collected on compulsory basis at a rate of 5 percent of the produce from every landowner, grantee, allottee, lessee, lease-holder or land-holder unless they fail to meet the definition of sahib-e-nisab, (producing more than 849 kilograms of wheat, or its equivalent in value. Farmers who produce less are called mustahiq).

Ushr was intended to replace the land tax (revenue) levied by provinces. The law was amended so that Shia Muslim and non-Muslim landowners would continue to pay the land revenue tax.

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