Khums Project Draft & Charts

There is insufficient clear english content for Khums ,an important obligation .Khums affects other acts of worship & in case we can help others to fulfill this obligation correctly ,It has great potential to provide the resources required for community change.

We need One good document explaining all aspects of Khums .This also needs to include common Income Tax concepts ie Income chargeable / exempt , C/f -Set off of loss , Accounting period , Expenses allowable / not allowable as deduction , Tax Payment in advance / delayed,  Capital/Revenue , borrowings personal / bzns ,Amt in hand/possession, Unused items, Investment valuation /cost  etc. It can have spreadsheet examples & download web address as wel
A spreadsheet has been developed to give examples of Khums calculations These are only sample cases & No answers are available as yet Objective of putting this is for knowledgeable persons to review & suggest solutions
 
 
INDEX OF CONTENTS  - Khums xl draft Document
     
       
1 Terms      
2 Chart1 - Unused Items  
3 Chart 2 Assets    
4 Chart 3 loan    
5 Foreign Exchange calculations example
6 Shares Example    
7 Trading Company Example  
8 Manufacturing company Example
9 Contracting Company Khums Example 
10 Investments treatment  
11 Salary Accrual vs cash  
12 Loans      
13 Questions open    

 

Khums – The Obligatory Islamic Act – Draft Index of Content

  1. Introduction

1.1  Definition

1.2  Things on which Khums is obligatory.

1.3  2 important things – On mixed money and On Surplus.

  1. Why Khums?

2.1  Quran

2.2  Hadith

2.3  Rationally needed - Islamic Economic system that benefits self & society.

2.4  Importance & effect on other acts of worship.

2.5  Fear of poverty / future –Satans tool

2.6  Fulfillment of the dues to Ahlulbayt

  1. Definitions

3.1  Mixed money

3.2  Surplus = Business net profit + job earnings + other gains – exempted gains – permissible personal expenditure – permissible personal savings in kind.

  1. Relevant Concepts

4.1  Taqleed –Marajae & Representatives. Some differences

4.2  Intention

4.3  Zakat & Khums common ground/distinction

4.4  Khums obligation & Charity distinction.

4.5  Year definition /concept  -lunar /solar, Date fixation

4.6  Khums not on entire assets

4.7  Usage of item, Unused /Seasonal use material

4.8  Access to own wealth (Ikhtiyar)

4.9  Sadat - Non Sadat  defn & responsibility/method to identify

4.10          Social Status/Needs

4.11          A brief overview - Investment v/s loan v/s reserves v/s expenditure v/s expense.

4.12          Mukhammas – Khums free

  1. Khums payment schedule

5.1  Payment prior to due date

5.2  Payment in advance- for same /more than 1year.Estimates & Adjustments.

5.3  Payment after due date & in installments.

5.4  Windfalls - Unexpected Incomes

5.5  In the event of Death

6.      The formula, Surplus = Business net profit + job earnings + other gains – exempted gains – permissible personal expenditure – permissible personal savings in kind.

6.1  Brief note on surplus. Surplus and not savings.

6.2  Brief note on Business - net profit genuine statement

6.3  Brief note on Job - earnings genuine statement

6.4  Brief note on Other gains

6.5  Brief note on Exempted gains

6.6  Brief note on Permissible personal expenditure – What is meant individually by permissible, personal and expenditure?

6.7  Brief note on Permissible personal savings.

6.8  Brief note on ‘In Kind’ – Not in cash.

6.9  Hajj / dowry – Not exemptions but examples of permissible savings in kind.

  1. Business - net profit genuine statement

7.1  What is meant by net profit?

7.2  What is meant by genuine?

7.3  Closing balance – Opening balances method.

7.4  Treatment for Investment payments , recpts , Profit /loss on sale

7.5  Business payments in terms of Haram/ Israf / Khums /Investment

7.6  Income Accrued vs recieved

7.7  Expenses - Accrued vs paid – consisitency

7.8  Deductible - expenditure / expenses?

7.9  Employee Provident fund – Employee/Employer contribution /Recpt

7.10          Use of capital for expenses / loss

7.11          Advances

7.12          Invt valuations on khums date & Networth changes considerations

7.13          Borrowings & Repayments made . Loans given & repayment recd

7.14          Inventory of balance material available & unused /once used.

7.15          Recpt in hand/ at bank & in last mth/day

7.16          Set off of losses

7.17          Increase in Networth/profit – Mixed vs separable

7.18          Business Income spreadsheet.

7.19          Examples

8.      Job - earnings genuine statement

8.1  Salary statement

8.2  Employee Provident fund – Employee/Employer contribution /Recpt

8.3  Salary Earner spreadsheet.

8.4  Investments made, P&L – additons/deductions

8.5  Use of capital for expenses / loss

8.6  Increase in Networth/profit – Mixed vs separable

8.7  Recpt in hand/ at bank & in last mth/day

8.8  Salary Income & Investments spreadsheet.

8.9  Examples.

9.      Permissible/Non-permissible personal expenditure and personal savings in kind – statement

9.1  Personal V/S Business.

9.2  Useful and not merely used expenditure.

9.3  Deductible - expenditure / expenses?

9.4  Accrued vs paid

9.5  Personal payments in terms of Haram/ Israf / Khums

9.6  Personal insurance premium payments –Refundable/Non refundable.

9.7  Set off of losses – Permissible/Non-permissible.

9.8  Increase in Networth/profit – Mixed vs separable

9.9  Borrowings & Repayments made . Loans given & repayment recd

9.10          Advance payments made against delivery of products or services in the next year.

9.11          Personal cash savings

9.12          Personal savings certificate/shares

9.13          Personal savings like books, house purchase, dowry, Hajj, etc.

9.14          Statement format in Spreadsheet

9.15          Examples

10.  Surplus – Final Statement

10.1          Closing balance – Opening balances method.

10.2          Applying the Formula.

10.3          Borrowings & Repayments made . Loans given & repayment recd

10.4          Increase in Networth of personal assets.

10.5          Multiple currencies to common consistent currency

10.6          Surplus spreadsheet.

10.7          Examples

  1. First Time Khums payment

11.1          Fixing date

11.2          Estimating Past years Khums

11.3          Seeking pardon from representative on legitimate grounds – Waive off or installment payment.

  1. To Whom is it to be paid

12.1          Payment to Representative /Organisations – Authorisation details

12.2          No responsibility beyond pyt to authority for misuse etc

12.3          Use of Sehme Imam/ Sadat based on own judgment

12.4          Obtaining permissions for payment to specific projects/relatives

  1. Frequently Asked Questions

13.1          Objections on Khums use by Ulema

13.2          Answer to khums only on war booty & only once in Quran

13.3          Answers to Charity vs khums

13.4          Answers to wastage / misuse

13.5          Answers to obligation on Sadat too

13.6          Answers to No eligible person to collect

  1. Complicated scenarios

14.1          Spreadsheet

14.2          Examples

15.  Lists

15.1          Spreadsheets

15.2          Quranic Verses

15.3          Traditions

15.4          Books