What is Source of revenue of an Islamic State? Fundamentals of Islamic Economic System

Fundamentals of Islamic Economic System By Dr. Muhammad Sharif Chaudhry CHAPTER 13 PUBLIC REVENUE Az-Zakat Al-Ushr Al-Khums Al-Jizyah Al-Fai Al-Kharaj Miscellaneous Sources Can an Islamic State Levy Modern Taxes? Public finance deals with the income and expenditure of a state. It consists of the efficient management of taxes and other sources of revenue, proper budgeting and effective control over state expenditures. In this chapter, we would study in detail the sources of revenue, while in the next chapter we would discuss budget and expenditure of the Islamic state. Sources of revenue of the public treasury (Bait-ul-Mal) in the Islamic state in the time of Prophet Muhammad (PBUH) and early caliphs included Zakat, Ushr, Khums, Fai, Jizyah and Kharaj. The first five sources have been mentioned in the revealed book of Islam, while the sixth arose out of the extended application of the Fai properties of the Islamic State. These sources were tapped and utilized by the state to defray its essential expenses incurred on discharging various functions, and also with a motive to distribute wealth among the poor and destitute classes of the society. Let us discuss these sources briefly as under. [Back to the start of this chapter] 1- Az-Zakat ‘Zakat’ or ‘Zakah’ literally means ‘growth’ or ‘increase’ or ‘nourishment’ Another derivative of this word carries the sense of purification. Thus, Zakat means ‘to grow’, ‘to increase’ or ‘to purify’. It is because of the fact that Zakat helps the purification of human soul from miserliness, selfishness, lust and greed of wealth and, thus, it paves the way for its growth and development. Technically, Zakat is a compulsory contribution, a sort of tax which is collected from the rich and distributed among poor or spent by the state for the welfare of the needy and helpless. Zakat is levied on the authority of the Qur’an and Sunnah. The Qur’an says ! “establish worship, pay the poor-due (Zakat) and bow your heads with those who bow (in worship)”. (2:43). At another place, the Qur’an enjoins upon the prophet of Islam to collect Zakat in these words: “take alms of their wealth, wherewith thou mayst purify them and mayst make them grow and pray for them. Lo! Thy prayer is an assuagement for them. Allah is Hearer, Knower” (9:103). The Prophet of Islam has been quoted by Mishkat-ul-Masabih on the authority of Ibn Umar as follows: “Islam is built on five things; to bear witness that there is no God but Allah and that Muhammad (PBUH) is His Messenger; to establish prayer; to pay Zakat; to make pilgrimage; and to keep fast in Ramadan”. Zakat is not only a tax but also an act of worship. It is one of the five fundamental articles of faith for a Muslim. It is the corner-stone of the financial structure of the Islamic State. Next to Salat (prayer), Zakat is the most important of the religious obligations enjoined on the followers of Islam. The importance of Zakat in Islam can be judged from this very fact that the Qur’an mentions Zakat for more than eighty times, while for twenty seven times commandments regarding Zakat are found in close connection with obligatory prayers. Hadrat Muhammad (PBUH), the Prophet of Islam, not only established a model system of collection and disbursement of Zakat but also made rules and regulations of this levy. Zakat is not a private charge but it is a State institution as referred to in the verses 60 and 103 of chapter 9 and verse no 41 of chapter 22 of the Holy Qur’an. Practice of the Prophet also establishes that system of Zakat was set up in the Islamic State as governmental institution. After the demise of the Prophet of Islam, when some people declined to pay Zakat, Hadrat Abu Bakar, the successor of the Prophet, declared war on them to enforce Zakat as a state levy. Briefly speaking, following rules and regulations govern the system of Zakat: 1. According to jurists and scholars, Zakat is imposed on the wealth of a person who is (a) Muslim (b) adult (c) sane (d) free and (e) solvent. However, Zakat is payable on the wealth of a minor as well as on the wealth of an insane person and that is paid by the guardian. As it is a religious duty, it is obligatory on a Muslims only and no non-Muslim is obliged to pay it. A slave and insolvent debtor is also not liable to its payment. 2. Nisab of Zakat or the minimum limit of wealth which attracts liability of Zakat has also been fixed at various levels in case of different categories of wealth. Nisab in case of gold is 20 Misqal or 7.5 tolas or 3 ounces. In case of silver, it is 200 Dirhams or 52.5 tolas or 21 ounces. In case of camels, it is 5 in numbers. In case of cows, it is 30 and in case of goats and sheep, it is 40 in numbers. Articles of trade and general merchandise qualify for Zakat when their value is equal to Nisab of silver. 3. Rate of Zakat in case of gold and silver is 2.5%, in case of cattle wealth it varies between 1% to 2.5%, while in case of articles of trade it has been fixed at 2.5%. Assets of modern times like shares and stocks, cash and coins, investments and debentures, etc. are also charged to Zakat at the rate of 2.5%. 4. No Zakat is due on property before a year elapses. Ibn Umar reported that the Messenger of Allah said; ‘Whoever acquires wealth, there is no Zakat therein till a year passed over it” (Tirmizi). For the purpose of Zakat, the Muslim financial year begins with the month of Ramadan. Advance payment of Zakat is also permitted like the advance payment of Income Tax these days. 5. Deduction of Zakat at source is also reported to have been initiated by the early Muslims as Muawiyah introduced the system of deduction of Zakat from pensions. 6. For the purpose of levy of Zakat, properties or goods are divided into two categories; goods of increase and goods of no increase. Goods of increase are real and capable of measurement such as animals, gold and silver, articles of trade, etc. Goods of no increase are buildings and personal effects. On the principle of productivity, Zakat is levied on the former but not on the latter. Another classification for the purpose of charging Zakat is that of Amwal-e-Zahirah (visible or apparent wealth) and Amwal-e-Batinah (invisible or non-apparent wealth). Example of the former is farm produce, sheep, cattle, etc., while example of the latter is gold, silver, cash, etc. 7. Properties which were subjected to Zakat in the early Islamic State included gold and silver, animal wealth, articles of trade, etc. During the reign of Hadrat Umar, horses were also subjected to Zakat where they were bred and traded on a larger scale. Industrial revolution and technological development have brought in their wake certain properties and assets which were not known in the early days of Islam such as; industrial machinery, bank or currency notes, bank deposits, bonds, securities, shares, stocks, debentures, certificates of credit, bills of exchange, insurance policies, provident funds, certificates of investment etc. Modern jurists and scholars of Islam are almost unanimously agreed that these assets are chargeable to Zakat in an Islamic State. 8. The following properties and assets have been exempted from the levy of Zakat:- a) Personal effects like clothes, articles of furniture, household goods except ornaments and utensils of gold and silver. b) Horses and asses for conveyance or Jihad. c) Arms or weapons for personal use. d) Cattle employed in farming or transportation of goods. e) Tools of a professional for his personal use. f) Residential house. g) Slaves and servants. h) Books. i) Food for the owner and his family. j) Agricultural land and factory building and machinery etc. 9. Zakat cannot be lawfully paid to members of the tribe of Hashim who was the great grand-father of the prophet of Islam. It cannot be paid to Non-Muslims. Servants and slaves are also not eligible for Zakat when it is paid to them in consideration of their services. A person possessing Nisab property is also not eligible for it. One’s ascendants and descendants are also not eligible for Zakat. Wife and husband cannot pay Zakat to each other. Similarly, according to some jurists Zakat cannot be spent on the construction of a Mosque. 10. Zakat is levied only on what remains after satisfaction of one’s basic necessities. Wealth for Zakat is computed after deducting the amount of debt which the assessee owes to the others. All the wealth and assets owned by an assessee are not clubbed together for the purpose of Zakat because every category of wealth has its own Nisab and its own rate. In case of joint ownership of wealth, the share of each partner is considered separately. Zakat can be collected or paid in kind or cash, whichever method is convenient. Zakat on visible or apparent wealth is assessed and collected by the Islamic State but in case of invisible or non-apparent wealth Zakat can be assessed and determined by the Zakat payer himself. However, in this case also Zakat should be paid to the State. [Back to the start of this chapter] 2- Al-Ushr Ushr means one-tenth. It is a tax on agricultural produce. It is frequently used in the sense of Sadaka and Zakat, because no strict line is drawn between Zakat and Ushr in Fiqh books. The term Ushr is not found in the Qur’an, but two verses (2:267 and 6:141) are taken to refer to it and it is on the authority of these verses that ushr is levied. The Qur’an says: 1. O Ye! Who believe! Spend of the good things which ye have earned and of that which We bring forth from the earth for you….. -(Al-Baqarah 2:267) 2. ……..Eat ye of the fruit thereof when it fruiteth, and pay the due thereof upon the harvest day, and be not prodigal. -(Al-An’am 6:141) Keeping in view the above - mentioned Qur’anic mandate, the prophet of Islam Hadrat Muhammad (peace be upon him) levied Ushr on agricultural produce. The following rules and regulations framed in the light of the Qur’an and Sunnah of the prophet of Islam govern the levy of Ushr:- 1. Ushr is collected on the agricultural produce of Ushr lands. Concept of Ushr lands was developed by the Muslim Jurists and scholars in Fiqh books. Briefly speaking the lands of those who accepted Islam, and which remained in their possession, as Makkah, Madina, Taif, Hijaz, Yemen and other Arabian Territories are included in Ushr lands. Lands granted by the Imam to Muslims as fiefs, lands obtained by Muslims from the state lands of Al-Swad etc., are also included in Ushr lands. 2. Jurists have classified the agricultural produce in two categories for the purpose of determination of Ushr dues: Firstly, farm produce like corn and vegetable and secondly, garden produce like fruits, honey, etc. In the view of Imam Abu Hanifa, Ushr is chargeable on all farm produce such as corn, vegetables and fodder. On the other hand, Imam Shafii, Imam Malik and Imam Abu Yusuf have opined that no Ushr is chargeable on the produce which cannot be stored or measured. Thus, according to them, Ushr is not chargeable on vegetables and fodder. So far as garden produce is concerned, Imam Abu Hanifa subjects all kinds of fruit to Ushr, while Imam Shafii is of the opinion that Ushr can be imposed on dates and grapes only. 3. According to Ahadith and Sunnah of the Prophet of Islam, Ushr is levied at the rate of one-tenth or 10% of the produce in case of land irrigated by natural sources like rain, springs or streams. However, the rate of Ushr is one-half i.e. 1/20 or 5% of the entire produce in case of land watered by artificial means of irrigation such as wells, buckets etc. The tax is charged before deduction of any expenses on account of cultivation or production. 4. Nisab or minimum amount of agricultural produce which is liable to Ushr is 5 Vasqs or 948 Kg. in weight. If the produce is less than that, no Ushr is chargeable. 5. Ushr on agricultural produce is paid at the time of harvest when the crops are reaped or fruits are taken away. The Qur’an says; “…. And pay the due thereof upon the harvest day…..” (6:141). Thus, period of one year is not essential for levy of Ushr like Zakat on gold and silver. 6. Ushr is payable only when there is actual produce, the land is Ushr land and the producer or the owner of the produce is a Muslim. Owner may be an adult or a minor, a man or a woman, a slave or a makatab, Ushr will have to be paid. Even a Waqf is subjected to Ushr. In case the owner of the land has himself cultivated it, he will be charged to Ushr. If the land has been given on lease or rent by the owner and has been cultivated by the tenant or leaseholder, then the tenant or the leaseholder would by paying the Ushr because he is the owner of the produce (Abu Yusuf). In Mazaraat, i.e. when the land is given to the tenant on the basis of produce sharing, Ushr would be paid by the landlord if the seed has been supplied by him. If the seed is supplied by the tenant, then the land-owner and the tenant, both of them, would be paying Ushr according to their shares in the produce. If the land is leased or rented to a Zimmi, the Ushr would be paid by its Muslim owner, because by renting the land to a non-Muslim, he has deprived the state of its right to Ushr. 7. If the crops are destroyed on account of natural calamities or theft, there would be no Ushr. If the owner gets compensation for destruction of the crop, then he would be paying Ushr out of such compensation. [Back to the start of this chapter] 3- Al-Khums Al-Khums means one-fifth. It is the share of the Islamic state which was collected from the following:- 1. Spoils of war or war booty is subjected to Al-Khums at the rate of one-fifth on the authority of Al-Qur’an. The Qur’an says; “and know that whatever ye take as spoils of war, Lo! A fifth thereof is for Allah, and for the messenger and for the Kinsman (who hath need) and orphans and the needy and the wayfarer, if ye believe in Allah and that which We revealed unto Our slave on the Day of Discrimination, the day when the two armies met. And Allah is able to do all things” (Al-Anfal 8:41) Khums on spoils of war used to be the major source of revenue of the Islamic State during its expansionist period, particularly during the period of the Prophet and the right-guided caliphs. 2. Khums on the produce of the mines or mineral wealth was charged by the Islamic State at the rate of 20%. However, Imam Shafii and Imam Hanbal are of the view that mines should be charged to Zakat at the rate of 2.5%. 3. Khums on Treasure-Trove or Rikaz is also charged by the Islamic State. The finder or discoverer of such treasures, be he a Muslim or Zimmi, gets four-fifth, while one-fifth goes to the State. 4. Khums is also levied on what is extracted from the sea like pearls, ambergris, etc. It is reported that Hadrat Umar levied Khums on the pearls and appointed Yaali-b-Ummayah as tax collector. [Back to the start of this chapter] 4- Al-Jizyah Jizyah is derived from ‘Jaza’ which means ‘recompense’ or ‘compensation’. It is a tax imposed by an Islamic State on its non-Muslim subjects in lieu of protection given to their lives and properties. The non-Muslims are called Zimmis or protected or covenanted people. The tax is also called ‘tribute’ or ‘poll-tax’. Jizyah is levied on the authority of Al-Qur’an (Chapter 9, verse 29) which commands the believers : “Fight against such of those who have been given the scripture as believe not in Allah nor the Last Day, and forbid not that which Allah hath forbidden by His messenger, and follow not the religion of truth, until they pay the tribute (Jizyah) readily, being brought low”. Rules framed in respect of Jizyah in the light of the Qur’an, Sunnah of the Prophet and practice of the right-guided caliphs are as follows:- 1. Though Jizyah was initially imposed on people of scripture (Ahl-e-Kitab), later on when the non-Arab countries were conquered by the Muslims it was imposed on all non-Muslim communities of every faith. However, it is levied on able-bodied adult male non-Muslims who are capable to participate in war but who do not join the defence forces of the Islamic State. 2. The following classes of Zimmis (protected people) are exempt from the payment of Jizyah tax:- a) All females. b) Males below age of puberty. c) Old men. d) All sick, blind or crippled. e) Priests and monks. f) The slaves. g) Persons who join military service. h) The destitute, poor and beggars. i) Insane and mentally retarded persons. 3. The Prophet of Islam imposed Jizyah at the rate of one Dinar or 12 Dirhams per person per annum. However, during the reign of Hadrat Umar, the rates of Jizyah were raised according to the income level of the tax-payers. For the rich, the rate was fixed at 4 Dinars; for the middle class, it was fixed at 2 Dinars, and for the lower class it was retained at one Dinar. Disabled and poor Zimmis who have been reduced to begging or who have been over-taken by a calamity are not only exempted from Jizyah but also are eligible for support from the public treasury of the Islamic State. 4. No harsh or oppressive measures to collect Jizyah were allowed under the instructions of the right-guided caliphs. Since Jizyah was imposed on non-Muslims for the protection of their lives and properties, it is not chargeable when the Islamic State is unable to provide such protection. There are many examples in the history of Islam when the amount of Jizyah collected from the non-Muslims was refunded to them in times of war because the Islamic State found itself unable to defend the non-Muslims. 5. No doubt, Jizyah has been subjected to bitter criticism by the non-Muslim scholars, yet there is ample justification for imposition of Jizyah on non-Muslims by the Islamic State. Muslim scholars and jurists have held the imposition of Jizah tax on zimmis as justified on the following grounds:- (a) In the Islamic State every adult Muslim citizen is obliged to take up arms for its defence when the State is attacked. In the case of non-Muslim citizens, there is no such compulsion. Therefore, non-Muslim citizens are required in all fairness to compensate the Muslim community in sharing of financial burdens. However, those non-Muslims who participate in war are exempted from the payment of Jizyah. (b) The Muslim citizens of an Islamic State pay Zakat to the state while the non-Muslims are exempted from it. In this situation, the non-Muslims are rightly expected to contribute to the State Treasury for sharing the civic burdens of the Islamic State. It is interesting to note that the rate of Zakat is much higher as compared with rates of Jizyah. In case of a wealthy Muslim the incidence of Zakat would be in thousands while in case of a wealthy non-Muslim the amount of Jizyah would be only 4 Dinars at the most. [Back to the start of this chapter] 5- Al-Fai Fai means ‘to return’, ‘to revert’, ‘to come back’. When the Muslims conquered enemy countries by armed force they gave name of Fai to perpetuated incomes obtained once and returned again each year. The term Fai is applied in the Qur’an and the Sunnah exclusively to war gains—whether consisting of lands or tribute or indemnities—which are obtained from an enemy who has laid down arms before actual fighting has taken place. Revenue from Fai is derived by the Islamic State under authority from the Qur’an. The Qur’an says: “And that which Allah gave as spoil unto His messenger from them, ye urged not any horse or riding-camel for the sake thereof, but Allah giveth His messenger lordship over whom He will. Allah is Able to do all things. That which Allah giveth as spoil unto His messenger from the people of the townships, it is for Allah and His messenger and for the near of kin and the orphans and the needy and the wayfarer, that it become not a commodity between the rich among you. And whatsoever the messenger giveth you, take it. And whatsoever he forbiddeth, abstain (from it). And keep your duty to Allah. Lo! Allah is stern in reprisal. -(59: 6-7) Thus according to the Qur’an, Fai means such of properties of the unbelievers as are returned to the Muslims without war. It is not to be distributed like booty among the soldiers, but the whole of it is for Allah and His apostle. From the Sunnah and Practice of the Prophet of Islam it is evident that the Prophet himself used to manage Fai as the head of the Islamic republic. After the death of the Prophet, when Iraq, Iran and Egypt were conquered by Muslim armies, there was a controversy among the Muslims concerning the lands of these countries. Companions of the Prophet at the request of caliph Hadrat Umar held meetings to discuss and deliberate upon the issue. Imam Abu Yusuf in his book Kitab-ul-Kharaj gives a lengthy and interesting account of these debates. Abdul Rahman, Zubair and Bilal backed by the army generals were of the view that the conquered lands sould be divided among the soldiers just like other categories of booty from which one-fifth is taken out for the Muslim community and four-fifth is distributed among the participating soldiers. On the other hand Hadrat Umar backed by Ali-b-Abi Talib and Muadh-b-Jabal was of the opinion that these lands should be retained in state control and should not be distributed among the soldiers. The reasons why Hadrat Umar wanted to retain lands in state control were that he wanted a regular source for the government for war expenses, for the pay of soldiers and other state officials and also for the purchase of arms. Moreover, he wanted to retain the land in the state control as Fai belonging for all time to the whole Muslim Ummah for the benefit of all future generations. At last Hadrat Umar succeeded in persuading the members of Shura with his convincing arguments to agree to his point of view. Thus, it was decided that the conquered lands of these countries would be considered Fai property and would be kept under state control for the benefit of all Muslim Ummah including future generations. Income from these lands would be considered Fai revenue and would be utilized for common benefits and for state expenses in the light of the Qur’an and the Sunnah. [Back to the start of this chapter] 6- Al- Kharaj Kharaj means revenue, tax, rent, rate, lease, produce, income, wages, etc. received from land which the Muslim jurists call Kharaj land. According to Imam Abu Obaid, Kharaj is rent or produce received from land. It is, in fact, an agricultural tax received from non-Muslim owners of the lands. Kharaj was levied by the early Muslims on the authority of the Qur’an, on the basis of the interpretation of the verses numbering from 7 to 10 of surah 59 called Al-Hashr. Sanction for the levy of Kharaj is also found from the practice of the Prophet of Islam who gave the conquered lands of Khaiber to the Jews (who were previous owners of these lands) on the agreement that they would pay half of the produce to the Islamic State. It has already been discussed in detail under the head Fai that Hadrat Umar, after consultation with his Shura, retained the conquered lands of Iraq, Iran, Egypt and other provinces under State control. The State in turn permitted the previous owners of these lands to cultivate the lands on behalf of the state and pay a definite part of the produce as a tribute to the public treasury. This tax which came to be called Al-Kharaj was fixed either per unit of land in the form of cash or share of the harvest in kind. Once the lands was declared as Kharaj land, Kharaj Tax continued to be paid by the tiller even if he embraced Islam. Soon after taking over the conquered lands in the State control, Hadrat Umar set to re-organise the system of revenue. Survey of these lands was carried out and Kharaj was imposed according to the rates fixed per unit of land on different categories of crops. The system was set up so efficiently that the revenue from Kharaj rose before the death of Hadrat Umar to an impressive level of 12.80 crore Dirham in Iraq, in Egypt it rose to 1.20 crore Dinar and in Syria it amounted to 1.40 crore Dinar. Some of the rules and by-laws of Kharaj are briefly stated as under:- 1. Kharaj has been historically charged on either of the two basis i.e. on fixed rate or on proportional basis. Hence the jurists have classified Kharaj into two types; fixed Kharaj levied at a fixed amount per unit of area; proportional Kharaj which is charged in the form of a definite portion of the produce, for example, one-half or one-third etc. During the times of Hadrat Umar fixed Kharaj was charged while in the Abbaside period proportional Kharaj was levied. 2. Kharaj is charged on the Kharaj land. Whether the owner is minor or adult, free or slave, Muslim or Zimmi, does not make any difference. 3. The land once declared as Kharaj land continues to remain as such even if the owner becomes Muslim or he sells the land to a Muslim. 4. In case of destruction of the entire crop by some natural calamity, no Kharaj is charged if the land is being subjected to proportional Kharaj. 5. No Ushr can be levied on land which is Kharaj land. 6. No Kharaj is payable on the habitations or houses of the land-owners. 7. In case of payment of Kharaj every facility is given to the tax-payer and very lenient treatment is accorded. Hadrat Ali issued special instructions to the Kharaj collectors not to attach household effects, clothes, cattle and implements of the farmer in the recovery of Kharaj. [Back to the start of this chapter] 7- Miscellaneous Sources Apart from the six major sources of revenue narrated above, the following miscellaneous revenues also contributed towards the public treasury of the early Islamic State:- 1. Hadrat Umar introduced import duties which were charged on the articles of trade and merchandise imported into Islamic State. Abu Musa Ashari, the Governor of Iraq apprised the caliph about the fact that the Roman and Persian Governments of the neighbouring countries were levying import tax on the Muslim traders who visited their countries to sell their articles of trade. So the Islamic State also levied a tax of 10% on the goods brought into Muslim territories by Harbi traders as a reciprocal measure. Later on, the tax was also extended to the Zimmi and Muslim traders at the rate of 5% and 2.5% respectively. These import duties on mercantile goods are called ‘ushur’ by the Muslim jurists. In the modern world these taxes are called import duties or custom duties or tolls. 2. Income from public domain or the lands owned by Bait-ul-Mal is another source of revenue in an Islamic State. 3. Income from Waqf properties (Properties or lands donated by generous persons to the Islamic State for charitable cause) is yet another source of substantial revenue for the Islamic State. 4. Other minor sources include the following:- a) Income from lease or license to exploit or use certain things belonging to Islamic State. b) The proceeds from things found on the highways when there is no claimant of such things. c) Property found in the hands of thieves and high-way robbers when there is no owner to claim it. d) Estates of persons leaving no heir and no will. e) Property of apostates confiscated by the State. f) Property of Zimmi-rebels guilty of treason. g) Income from forests, etc, etc. [Back to the start of this chapter] 8- Can an Islamic State Levy Modern Taxes? Can an Islamic state impose taxes such as Wealth tax, Income tax, Customs Excise, Sales tax, Gift tax, Capital Gains tax, Property tax, etc., on its Muslim citizens in addition to Zakat? This question is being hotly debated these days. The issue cannot be resolved easily since there are no clear instructions either in the Qur’an and the Sunnah in the favour of or against the proposition under debate. Some people argue that an Islamic state cannot charge taxes besides Zakat from its Muslim subjects, while others are of the opinion that the State, in case of need, is well authorised to levy taxes in addition to Zakat. Interestingly, both the groups try to build up their arguments from the Qur’an and the Sunnah and also quote the early jurists in order to prove their contention. Since there is no direct injunction of the Holy Qur’an or of the Sunnah which would either authorise the Islamic state to impose taxes or would prohibit it to do so, there is no need of analyzing and discussing the arguments of both the groups of contenders. However the study of the Qur’an, the Ahadith and the practice of the Prophet of Islam, the conventions of right-guided caliphs, the opinions of the jurists of Islam and the experience of states through history reveals that some sort of justification can be found enabling the Islamic state to impose extra-Shariah or worldly taxes in addition to Zakat for funding emergency needs and for meeting the huge expenses of its welfare functions. Such justification has been found by the scholars on the following grounds: 1. The activities of a modern Islamic state have expanded, like any other modern state, due to socio-economic changes brought about by the industrial revolution and the progress made in science and technology. In addition to performing the traditional functions of a conventional state, a modern state is expected to provide socio-economic infrastructure for industrial development, education and medical relief, means of communication and transport, employment and civil amenities, etc. Thus, the need for finances has increased for meeting the huge expenses on newly assumed manifold responsibilities by the state. But on the other hand, the sources of finance like Khums on spoils of war, Fai, Kharaj and Jizyah etc. which were available to the early Islamic state are no longer available to a modern Islamic state. So a modern Islamic state has to impose taxes to supplement its Zakat revenues for meeting its ever-growing expenses. 2. The Qur’an prescribes the heads of expenditure of Zakat funds of an Islamic State when it says: “The alms are only for the poor and the needy and those who collect them and those whose hearts are to be reconciled, and to free the captives and the debtors, and for the cause of Allah, and (for) the wayfarers…..” (9:60). Thus, the Zakat revenues can be applied by the Islamic state only on the expenditures enumerated by the Qur’an. It has no discretion to utilize Zakat funds on the heads of expenditure other than listed by the Qur’an. Therefore, the government of an Islamic state has to impose taxes in order to meet its expenses other than those to which Zakat revenues can be applied. 3. In another verse, the Qur’an says: “It is not righteousness that ye turn your faces to the East and the West: but righteous is he who believes in Allah and the last day and the Angels, and the Scripture and the Prophets and giveth his wealth for love of Him, to kinsfolk and to orphans and the needy and wayfarer and to those who ask, and to set slaves free; and observeth proper worship and payeth the poor due (Zakat)……..” (2:177). This verse of the Qur’an is making the rich liable (in addition to the payment of Zakat) to spend their wealth for their kinsfolk, for orphans, for the poor and the needy and also for the emancipation of slaves and assistance to the wayfarer. Many jurists see in this verse a clear authority enabling the Islamic state to impose taxes in addition to Zakat for the purpose of meeting its expenses on such welfare activities. In yet another verse, the revealed book of Islam ordains: “And they ask thee what they ought to spend. Say: That which is superfluous” –(2:219). From the world “afw” (superfluous) used in this verse, many scholars like Maulana Maududi understand that it provides clear scope for taxation besides Zakat. 4. There is a well known Hadith which says: “There are other claims too on the wealth of a person besides Zakat.” This Hadith is interpreted by the scholars to authorise the Islamic state to impose taxes besides Zakat when the state needs funds for its expenditures. Moreover, the Nisab and rates of Zakat have been prescribed by the Prophet of Islam and the same cannot be changed, according to the opinion of many of the jurists. Thus, the Zakat revenues cannot be increased beyond a certain limit and, therefore, are unable to meet the ever-growing expenses of the state. Therefore, the state will have to explore additional sources. 5. The early jurists of Islam have unanimously held that the Islamic state can impose extra-Shariah taxes or compulsory contributions (whom they call Nawa’ib) in case of emergency needs like war, flood, earth-quake, cyclone, outbreak of epidemic, etc. The Holy Prophet himself asked for contributions for the Battle of Tabuk and his companions even contributed all of their belongings. 6. History bears witness to the fact that taxes in addition to Zakat were levied even in the early period of Islam. Hadrat Umar imposed duties on imports which were called Ushur in those days. He also included the horses (which had not been subjected to Zakat in the time of the Prophet) in the list of properties chargeable to Zakat. 7. It is a cardinal principle of Islamic Jurisprudence that anything which is for the welfare of the Muslim Ummah can be done provided it is not explicitly prohibited by any Injunction of the Qur’an and Sunnah and it also does not violate any tenet of Islam. Thus, the Islamic state can impose taxes to augment its Zakat revenues for the welfare of the Ummah provided in doing so no Injunction of Islam is violated. On the basis of the above-mentioned arguments, it has been held that the Islamic state is authorised to levy and collect taxes like Income tax, Wealth tax, Property tax, Customs, Excise, Sales Tax, etc. in addition to Zakat from its Muslim citizens provided the following conditions are fulfilled:- a) Taxes should be levied for emergencies, contingencies or genuine needs of the state and not for benefit of the ruling classes. b) Tax proceeds should be prudently applied and honestly spent for the welfare of all in the public interest without any discrimination. c) Principles of equity, justice and fairness should govern the charge, assessment and collection of taxes. d) When the objective or the purpose of imposing a certain tax is achieved, that tax should be withdrawn. e) And the last condition is that the rules and regulations and the tax laws and procedures should not be inconsistent with or repugnant to any injunction or provision of Islam. If the above-mentioned provisions are met the Islamic state can levy as many taxes as are required to meet its expenditure.