Zakat is something in material sense (goods, animals, assets or money) a Muslim gives back to the Muslim community every year. It is determined based upon the wealth, assets or goods retained for the previous year, not the income during that time. Assets and goods for personal or family use are excluded for the calculation of Zakat. There is also a minimal level of wealth, the Nisab, after which the Zakat becomes applicable. For understanding, the typical value of Nisab, consider the value 87.43 g of gold. There is no Zakat on any wealth less than that.

Once the value of Nisab is excluded, Zakat of 2.5% is due on the rest of the amount. Zakat is considered a compulsory act of worship, not a tax or even a charity. God stated that Zakat cleanses and blesses our overall wealth. In Islam, there is no restriction for earning or accumulating wealth in any permissible way, as long as the yearly Zakat is paid. It is also understood that any wealth acquired by us is a special blessing from God. We are only the temporary custodian and should use it in manners He recommended.

Zakat is generally given to Muslims or for certain Muslim causes. More deserving are the needy in one’s own family and neighborhood. Preferably, it should be disposed without the indication of its nature. In Muslim societies, there are formal systems or institutions for its collection and delivery. If given appropriately and collected and used properly, it becomes a tremendous resource for the welfare of needy, sick and elderly.