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Zakat & Taxes Planning (Type of zakat (Zakat on Income
2.5% of…
Zakat & Taxes Planning
Tax Planning
- To minimize an individual's income taxes as the higher the tax lower is the disposable income.
- The individual has to set a strategy to minimize tax payment.
- In Malaysia the tax system is administered by Inland Revenue Board (Lembaga Hasil Dalam Negeri) which responsible for assessing and collecting taxes from individuals and corporations once a year.
- The latest is self assessment system which an individual will fill in the figures in the tax form, calculate& determine the amount to be taxed.
Tax avoidance - One can apply strategies (legally) by getting the advice from the expert in tax ( tax consultant) to reduce tax liability.
Tax evasion - The illegal ways of reporting tax with the purpose of paying less tax example underreporting of income by not declaring other income such as investment and overstating the deductions/reliefs
Zakat
- The obligatory alms for Muslims which is not an option but compulsory to all believers in fulfilling their duties as the servant of Allah.
- Zakat means purification & growth
- Zakat is tool to purify an individual's wealth which muslim should understand that the wealth are accumulated, a small portion or a certain percentage of the wealth must be distributed in the right manner.
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Income exempted from tax
- Pensions received
- Gratuity
- Compensation for loss of employment
- Interest Income: from financial institutions, such as giving of up to RM100,000, from Fixed deposits (for conventional) of up to 12months, gain from deposit in Islamic Banks, Lembaga Tabung Haji/Bank Negara Malaysia.
- Dividends (from ASB, unit trust)
Made of Payment
- Selected banks using bank payment slips, internet banking, phone banking, ATM
- at the Lembaga Hasil Dalam Negeri (LHDNM) offices using cheque, money orders, bank drafts; or through FPX (Financial Process Exchange)
- Any non- payment after the due date will be an increase of 10% in the tax amount.
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Type of zakat
Zakat on Income
- 2.5% of gross income per year
- After basic deducting basic expenditure
- After considering actual expenses to bear.
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Zakat on Gold
- Condition of calculation for zakat on gold
1) Determine the Urf (Nisab- minimum amount that is subject to zakat)
2) Find the current price of gold per gram
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Methods to pay zakat
1) Salary deductions - Can be made by giving instruction to employer to deduct a percentage of your salary monthly & send contribution to the selected collection centre
2) At specified collection counters.
3) Electronic Banking
4) Other - Through the mosque system - Kiosk Maju Masjid