CHAPTER 6: DISTRIBUTION OF WEALTH IN ISLAM

 Objectives and principles of Distribution of Wealth in Islam

o The establishment of a practical system of economy
o Enabling everyone to get what is rightfully due to him
o Eradicating the concentration of wealth

 Distribution of Wealth
o Zakat
o Kaffarat
o Nafaqat
o Wirasat
o Money
o Riba
o Time value of money
o Trade
o Rent

 Characteristics of the
o A long list of inheritance has been prescribed in accordance with the degrees
of relationship because of which the inherited
o As against all the other systems of inheritances in the world, Islam has given
to a woman also the right to inherit property

 Islamic Banking anfd Finance

o 3 way distribution of wealth in Islamic banking
- Profit/loss sharing
a. Mudharabah
b. Musharakah
- Shareholders
- Customers

 Takaful (Islamic Insurance)

o Takaful is a contract involving a takaful company as a representative to
manage the Tabarru’ fund.

 Distribution of Surplus from Takaful

o Under a Takaful scheme, if the fund generates net surplus at the end of the
year then Takaful operator distributes it to the participants and the company
based on the pre-agreed profit sharing ratio.

 Zakat
o Zakat and Duties
o Zakat Requirement
o Zakat Distribution
o Zakat Calculation:
- Zakat on KWSP
- Zakat on Investment
- Zakat on Agricultural
- Zakat on Gold
 - Zakat on Livestock
- Zakat on Income

 Waqf
 Arabic term is known as Waqofa, Yaqifu, Waqfan.
 Literally: Confinement or prohibition
 : Causing a thing to stop or to standstill.

 Technically: The confinement of a private property, movable or immovable

property from the ownership and the dedication of its usufruct in perpetuity to
the welfare of society.

 Pillars of waqf
o Founder ( waqif )
o Waqf Property ( Mauquf )
o Beneficiaries (Mauquf’alaih)
o Declaration

 Types Of Waqf
o Waqf Khayri (Public Waqf)
o Waqf Al-Dhurri
o Waq Al-Mushtarak.

 Conditions For The Validity Of Waqf

o The conditions of be a founders.
o The condition for validity is the property.
o The validity condition is the founder must be
o appointed a muttawali or trustee.

 Faraid and The Law of Inheritances

o Islamic Inheritance jurisprudence is a field of Islamic Jurisprudence that
deals with inheritance, a topic that is prominently dealt in the Quran.
o The role of Faraid is to provide a system or method of distribution of one’s
assets after death in accordance with Islamic principles.
o Faraid, First: are to whom he or she can bequeath his or her wealth.
o Faraid, Second: is the amount that he or she can bequeath (which must not
exceed one third of the overall wealth).
o Lawful Heirs (Waris): The lawful heirs, who are specified in the Quran, are
entitled to share in the net estate of the deceased in accordance with the
Faraid method of distribution which is set out in the Quran.
o These heirs are classified as:
o Ashabul-Furud • those whose shares are specifically stated in the Quran
o ‘Asabah’• those who are entitled to the balanced of the deceased estate but
whose shares are not specifically state
o ‘Dhawil-Arham’• the residual third group who are blood-relations but who do
not belong to either of the below mentions group