how zakat works
there are five pillars of islam the declaration of faith prayer fasting during ramadan the hajj pilgrimage and zakat zakat is a compulsory procedure for muslims who earn above a certain threshold it should not be confused with sadaqah the act of voluntarily giving charitable gifts out of kindness or generosity religious texts offer comprehensive descriptions of the minimum amount of zakat that should be distributed to those less fortunate it generally varies depending on whether wealth came from farm produce cattle business activities paper currency or precious metals like gold and silver zakat is based on income and the value of possessions the common minimum amount for those who qualify is 2 5 or 1 40 of a muslim s total savings and wealth the recipients of zakat are the collectors of zakat are also compensated for the work they do each year between 200 billion and 1 trillion is spent on mandatory alms and voluntary charity across the muslim world according to islamic financial analysts 1special considerationsas one of the five pillars of islam zakat is a religious obligation for all muslims who meet the necessary criteria of wealth this rule plays a major role in the history of islam and has led to disputes notably during the ridda wars zakat is considered to be a mandatory type of tax although not all muslims abide in many countries with large muslim populations individuals can choose whether or not to pay zakat that is not the case for countries such as libya malaysia pakistan saudi arabia sudan and yemen 2 those who fail to pay zakat in places where it is compulsory are treated like tax evaders and warned that they will face god s punishment on judgment day there has been considerable controversy and criticism surrounding zakat though islamic scholars and development workers argue that it has failed to lift people out of poverty prompting them to suggest that the funds are being wasted and mismanaged a personal residence doesn t count toward wealth and thus doesn t count when calculating zakat property used to generate income such as a rental or vacation home does 3zakat vs nisabnisab is a term that often appears alongside zakat it is a threshold referring to the minimum amount of wealth and possessions that a muslim must own before being obligated to pay zakat in other words if personal wealth is below this minimum during one lunar year no zakat is owed for that period the nisab is set at the value of 87 48 grams of gold or 612 36 grams of silver not everyone pays zakat at the same time that s where nisab comes into play individuals become eligible to pay zakat once they reach the threshold during the full lunar year so one individual may owe it earlier than someone else there is no set payment date for zakat but it is often paid out at the end of the year once calculations on any leftover wealth are made some muslims believe that paying zakat during ramadan brings good fortune this requires that individuals take regular inventory of their possessions and wealth this can be done either weekly or monthly 