Zakat means donating money to needy and poor people and promoting social justice within the Muslim community. It is the third core element of Islam, and everyone should know what is Zakat in Islam, so the eligible one can pay 2.5% of the total value of their wealth. It is a different concept than Charity.

What is the Importance of Zakat in Islam

Zakat is one of the five pillars of Islam and is so necessary in Islam that it has been mentioned in more than 30 placesin the Qur’an. It is important for Muslims in several ways:

• It is important to purify the wealth of a Muslim.
• For Muslims, Zakat is a way to support economic systems and eradicate inequality
• The Zakat is also believed to bring Allah’s blessings and rewards.

What is the Percentage of Zakat in Islam?

The amount of Zakat owed is 2.5% of the wealth above the Nisab, which is equivalent to 87.48 grams of Gold or 612.36 grams of silver. However, the amount must be consistent throughout a lunar year.

How to calculate Zakat

The formula to calculate Zakat applies on commonly three things

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Now, let’s understand it through an example

A person has 50 grams of Gold, $3,000 in Cash, and, lastly, a home that he has rented out for years. Now, first of all, we will sum up the above three values.

• 50 Gram Gold Cost: $3917.94 (you will calculate according to current rates).
• Currency in Cash or bank for one year: 3000$.
• The house is rented for $1500/month. Let’s suppose he/she has to pay bills or do some renovation, so he/she uses $500$ from it per Month. Zakat will be on the remaining cost, which will be $12000 annually.
• Total cost becomes: 18917$

Let’s assume that he got a loan of $3000, so we will exclude it from the total cost. The total price will be $16917, and finally, dividing it by 40, we get a total Zakat of $422.925. Through this example, you must have a clear idea about what is Zakat in Islam and how to calculate it.

Economic Impacts of Zakat

To understand the concept of what is Zakat in Islam first learn about its significant impacts on the economy. First, it provides income support to the poor and boosts the demand for goods and services. This leads to increased production and job creation. Furthermore, this donation cycle encourages balanced economic growth and helps people escape economic slavery. Additionally, Zakat also helps people who are under the burden of debt by maintaining price stability and reducing inflation.

Resources on Which Zakat is Obligatory

Those who have wealth over Nisab for a consistent one year will pay Zakat. Below are some sources on which Zakat is obligatory.1) Cash: Wealth in hand from above the Nisab threshold for a full lunar year.2) Gold: 87.48 grams of Gold.3) Silver: 612.36 grams of silver.4) Bank Accounts: Money saved in banks for an entire year.5) Business stock: This can be anything like raw materials and goods manufactured for sale.6) Pensions: Withdrawable pension funds.7) Shares: Money invested in the share market.8) Investments:Funding money in different businesses or places like the “stock market.”9) Property. Land and real estate that has been bought for resale or renting.The exemption: Buildings, machinery, vehicles, and other essential business equipment are exempt (not included) from Zakat.

What are the Criteria for Receiving Zakat?

According to Quran Ayat 9:60, a person must meet specific criteria to qualify for Zakat. If you want to know what is zakat in Islam for a deserving person, then read the below points

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1. Poors

Those who earn very little, even their expenditures can’t be fulfilled.

2. Needy

Individuals or families who are struggling with a bad time and in need of help.

3. Zakat distributor

Job holders who perform the duty of distributing Zakat (But not in today’s era).

4. Non- Muslim

Disbelievers who are attracted towards Islam or have an affection for our religion.

5. Fir-Riqab (those in Bondage)

Giving Zakat to people to help in freeing enslaved people.

6. Al-Gharimin (Those in Debt)

People who are in debt and unable to repay it.

7. Fi Sabilillah (Allah’s cause)

Scholars who spread Islam in the world or defend our religion and jihadis who are fighting for religion.

8. Needy Travelers

People who are traveling far away from their homes but do not have enough money.

Who can Zakat not be given to?

• People who are strong but not willing to work.
• Disbelievers who are against Islam.
• Rich people, except those who work for Zakat distribution.
• Children can’t donate Zakat to parents or grandparents.
• Parents are not eligible to donate Zakat to their Kids (However, poor siblings and other relatives are eligible).
• Sadat can’t take zakat “direct paternal descent of Muhammad (M) through the sons of his daughter Fatima (F), Hassan (Ha) and Hussein (Hu).”

Who is Exempt to give Zakat?

• The person in debt is not eligible to give Zakat.
• Little kids are not allowed to give Zakat even if they have a lot of money.
• Poor and needy people are not eligible to give Zakat.
• People who are under slavery (Not applied in the current era).

Those who don’t Pay Zakat even though they are Eligible?

Many Muslims know about what is the Zakat in Islam, but they didn’t pay for it. These people must understand that Allah has set a very strict punishment.Abu Huraira Narrated That:Allah’s Messenger (ﷺ) said, “Anyone whom Allah has given wealth but he does not pay its Zakat, then, on the Day of Resurrection, his wealth will be presented to him in the shape of a bald-headed poisonous male snake with two poisonous glands in its mouth, and it will encircle itself round his neck and bite him over his cheeks and say, “I am your wealth; I am your treasure.” (Sahih al-Bukhari 4565) After the demise of Prophet P.B.U.H the Khalifa Abu Bakr R.A did jihad against those who refused to pay zakat amount, and this set the standard so high for the whole Muslim Ummah.

Last Note

Overall, Zakat is an obligatory worship that has many economic and individual benefits. Every Muslim must know what is Zakat in Islam, who is eligible and who is not, and finally, how to pay for it.