A. Khums is an annual tax that is levied on seven forms of wealth. It consists of 1/5 the value of the following wealth:
1. Surplus income from one’s business or from an employee’s salary.
2. Precious minerals.
4. Lawful property combined with unlawful property.
5. Gems taken from the seabed.
6. War booty.
7. Property bought by a non-Muslim (living in an Islamic country) from a Muslim.
B. When Khums Most be paid
1. Whenever one earns a monetary income from business, industry or any other means, he must set aside 20% of each year’s surplus after deducting all his own and his family’s lawful expenses.
(a) One who depends on another for his support must pay khums on any money that he earns except for that which he spends on pilgrimage or similar religious duties.
(b) A merchant, businessman, labour or employee whose incomes are lawful, must pay khums on the savings of their past one year’s earnings, beginning when they start work.
(c) Khums may be payed while income is earned, but payment may be deferred for one year.
(d) Khums is not levied on income earned during the year that is spent on provisions, clothing, household essentials, the purchase of a house, marriage expenses, wedding gifts for a daughter, or pilgrimage expenses, provided that the expenditure is not extravagant.
Also, what is spent for one’s vows, atonements, gifts or awards is considered to be part of one’s annual expenses, provided that the expenditure is not extravagant.
(e) If, at the end of the year, there is a surplus of provisions bought for consumption from the profit of the business, khums must be paid on that surplus. One may pay his khums from the same items subject to khums or on their current value.
(f) If one does not pay khums on his profits, they may not be used lawfully.
2. If extractions from a mine are equal to 75 grams (15 mithqal) or more of gold or 525 grams (105 mithqal) or more of silver in value after expenses, khums must be paid on it. The same applies to treasure.
3. Lawful property mixed with unlawful property.
(a) Khums must be paid on the entire mixed amount if both the owner and the value of the unlawful property are not known.
(b) When khums is paid on such mixed property, it becomes lawful for use.
(c) If one can identify the unlawful portion of the mixed properties, but not the owner, that portion should be given in charity with the intention of the owner. It is necessary caution that this be done with the approval of an agent of the leading mujtahid.
(d) If the unlawful portion of mixed property is not known, but its owner is, the two parties must reach a satisfactory agreement between themselves.
4. If gems from the sea are equal to or more in value after expenses to about three grams (18 nukhods) of gold, khums must be paid on them.