Withholding Zakat From Scholarships
Zakat is obligatory for Muslims who believe in Allah, Subhaanahu wa Ta’ala, and is the removal of a percentage of one’s assets when it has reached nisaab (the equivalent to 85 grams of gold) and has been owned for one year.
It is proven in the following Qur’anic verses and hadiths:
O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy. (Surah Al-Baqarah (2): 267)
The Prophet, Salallahu ‘Alaihi Wassalam, said: “When you have 20 dinars gold and it has reached one year then the zakat is half-dinar (2.5%)”. (Hadith narrated by Ahmad)
As the Messenger of Allah, Salallahu ‘Alaihi Wassalam, said: “There is no zakat obligation on property until it has passed one year” (Hadith narrated by Abu Daud).
When someone gets a scholarship for covering the cost of education and living during college, should he/she issue zakat from this ‘income’ (scholarships)?
It is uttered by Abu Ubaid ibn Kitab al-Amwal that zakat is obligatory and issued over the entire property, including gifts (scholarships), as was practiced by the companions of Ibn Mas’ood and Ibn Abbas. Abu Ubaid from Hubairah bin Yaryam stated that Abdullah ibn Mas’ud gave us small baskets and then took zakat. Likewise, Abu Ubaid, also Ibn ‘Abbas, narrated about a man who gets an earning, “He took his alms on the day he acquired it.”
According to Muhammad Zen, zakat shall be issued from scholarships once a year (or once a month if it cannot be issued once a year) if the property has already met the needs of life and reached nisaab. So if the money has been obtained from scholarships after it has been saved for a year and the rest of the money has reached nisaab, the person should emit zakat. However, if the scholarship covers only the monthly needs and there are no monies remaining in it, and after a year the rest of the money turns out not to reach nisaab, then that person is not obligated to pay zakat, but it is highly recommended to spend sadaqah (charity) that depends on ability and sincerity.
The same opinion has been stated from Sheikh Muhammed Salih Al-Munajjid, and relates that the grantee should wait until one year after Hijr has passed before checking how much money is left, and then he/she should remove the zakat of 2.5%. But when the money runs out as it is used for day-to-day life and the rest does not reach nisaab, although it has settled for a year, he/she is not obliged to issue zakat from the scholarship.
And Allaah knows best