Zakat

Definition
• Importance Of Zakat In The Light Of Quran And Hadith
• Kinds Of Property On Which Zakat Is Obligatory
• Recipient Of Zakat
• Persons Who Cannot Be Given Zakat
• Virtue Of Zakat
• Punishment For Not Giving Zakat
• Benefits Of Zakat
i)         Purification of Soul
ii)        Purification of Wealth
iii)       Creates Love in Human beings 
iv)       Solution for Unemployment 
v)        Solution for Unequal Distribution of Wealth 
vi)       Wide Circulation of Wealth 
vii)      Elimination of Poverty 
viii)     Treasury of Islam 
ix)       Insurance Company of Muslims 
x)        Reduction in Crimes 
xi)       Solution for Depression 
xii)      Wide Circulation of Wealth

• Social Impact Of Zakat
• Economic Impact Of Zakat
• Islam Concerns for The Poor-Zakat And Poverty Alleviation
• Restabilising The Institute Of Zakat OR Steps To Achieve The Purpose Of Zakat
• Conclusion

Definition Of Zakat:

“And observe prayer, and pay the poor-rate and bow with those who bow.”
(Al-Baqara: 43)

The Arabic word Zakat means purity and cleanliness. The word Zakat is derived from word “Tazkia”. In religious terminology, Zakat means that a Muslim who is in possession of certain amount of wealth or more, is required by his religion to spend 1/40 of it at the end of year on the poor, the needy and the wayfarer, an on such other items of charity and good doing, as are prescribed for it by God and the Prophet.

Zakat In The Light Of Quran And Hadith:

Metioned 82 times in quran in close association with prayers
“And establish prayers and pay zakat and bow with those who bow”
Surah Al-Baqarah

“And zakat expenditure are for poor and needy and for those employed to collect zakat, and for bringing hearts together, and for freeing slaves and captives, and those in debt, and for the cause of Allah and wandering traveller- an obligation imposed by Allah. And Allah all Knowing and Wise.”
(Surah Tubah Ayat no. 60)

Prayers carries us half the way to Allah (swt), fasting brings us to the door of his palace and alms procure us admission (Hazrat Umar bin Abdul Aziz)

Among the fundamental tenets of Islam Zakat occupies a great importance and it is the third pillar of Islam. At several places in the Quran Zakat has been enjoined on Muslims side by side with Namaz.

“Be steadfast in prayer and practice regular charity.”

The Holy Quran says:

“….those who spend their wealth By night and by day, Secretly and openly, Therefore for them is their reward with their Lord. And there is no fear on them, Nor shall they grieve.
(Al-Baqara: 274)

And Again:

“The attribute of those who spend their wealth in God’s way, Is like the attribute of a grain, Which grows into seven spikes, In each spike a hundred grains; And God multiplies it for whom He pleases; For God is Vast, Knowing.”
(Al-Baqara: 261)

The Holy Quran says that those who give charity should not make show of it.As

“O’ ye who believe! Render not void your charity, By (show of) obligation and injury, Like him who spends his wealth For the sake of show of mankind, And he does not believe in God , And the Future day, His attribute is, As the attribute of a smooth rock, With some soil thereon, Then it catches a heavy rain Which then leaves it as bare stone; Nothing which they earned is of any avail.”
(Al-Baqara: 264)

The Holy prophet said about the Zakat that:

“I have been commanded to fight against people till they testify that there is no god but Allah, and they establish prayer and pay Zakat and if they do it, then blood and property are guaranteed protection on my behalf and their affairs rest with Allah.” (Muslim)

If any Muslim refused to pay Zakat, an Islamic government was duty bound to punish him. In the times of Caliph Abu Bakr some of the tribes refused to pay the poor-due. He declared war against them:

“By Allah I would fight definitely against him who makes a distinction between the prayer and Zakat.” (Muslim).

The above mentioned quotations from the Quran and the Hadith are sufficient to signify the position of the poor-due in Islam. They make it abundantly clear that the edifice of Islam cannot be raised without full regard to the poor-due. It was actually for this, that the poor-due was included among the pillars of the Faith.

I have done my own research and conclude this, that the word "ZAKAT" is mentioned 32 times in Qur'an. I have given All the Ayats with references. The Word Zakat is mentioned in Qur'an 32 times and Zakat with Salaat 23 times

Following are the verses

01. Surah Al-Buqrah (2:43)                     17. Surah Mariyum (19:31)
02. Surah Al-Buqrah (2:83)                     18. Surah Mariyum (19:55)
03. Surah Al-Buqrah (2:110)          19. Surah Al-Anbiya (21:73)
04. Surah Al-Buqrah (2:177)          20. Surah Al-Hajj (22:41)   
05. Surah Al-Buqrah (2:277)          21. Surah Al-Hajj (22:78)
06. Surah Al-Nisa (4:77)                         22. Surah Al-Mumenoon (23: 04)
07. Surah Al-Nisa (4:162)                       23. Surah An nur (24:37)
08. Surah Al-Maidah (5:12)                     24. Surah An nur (24:56)
09. Surah Al-Maidah (5:55)                     25. Surah An naml (27: 03)
10. Surah Al-Araf (7:156)                       26. Surah Ar rum (30:39)
11. Surah Taubah (9: 05)                        27. Surah Luqman (31: 04)
12. Surah Taubah (9:11)                         28. Surah Al-Ahzab (33:33)
13. Surah Taubah (9:18)                         29. Surah Fusilat (41: 07)
14. Surah Taubah (9:71)                         30. Surah Al- Mujidilah (58:13)
15. Surah Al- Kahf (18:81)                      31. Surah Al-Muzammil (73:20)
16. Surah Mariyum (19:13)                     32. Surah Al- Bayinah (98: 05)

Objectives Of Zakat:

i) Purification Of The Soul:

Zakat relates to a person’s individual capacity. The alms giver cleanses his heart from greed and acquires fear of Allah. Allah has said:

“He shall be saved from Hell fire who is God fearing and who gives riches to others for the purification of the soul.”
(Al-Lail: 17-18)

In this verse Zakat has been described as a means of purifying the soul. Holy Prophet has proclaimed the Love of the world is the root of all the evils. Love for the world may have many aspects but in essence it is one. Emancipation of the heart from temporal love is nothing but its purification. If the poor due yields the freedom of the soul it proves that it has quality of purifying the soul. Free from the love of worldly things, one strives to seek the pleasure of God and the welfare of the After Life. He inclines more towards the pious deeds.

ii) Help Of The Poor:

The secondary objective of the poor-due is the help of the poor. it provides necessities to the poor Muslims. The Holy Prophet (PBUH) said:

“Verily, Allah has ordained the payment of Zakat on them (Muslim). It will be taken from the rich and returned to the poor.” (Muslim)

It is true that the primary objective of the poor-due is the purification of the soul but it is equally true that unless it serves the needs of the poor, its real purpose will remain unattained. This duty can be done when the poor-due reach their hands. That is the reason why the Quran has regarded the poor-due as a right of the poor on the affluent class of the society.

iii) Support Of Islam:

Muslims have been repeatedly exhorted in the Quran to this effect:

“And strive with your wealth and your live in the way of Allah.”

It is admitted on all the hands that the protection and support of religion is not an ordinary matter. As such expending of personal wealth for this purpose has great importance. While enjoining Holy War the Quran says:

“Spend your wealth in the cause of Allah and be not cast by your own hands to ruin.”

(Al-Baqara: 195)

It signifies that non-supply of funds for the protection and support of religion is tantamount to inviting destruction both in this world and in the Hereafter. Something that offers protection from destruction, both in this world and the After Life, can never be regarded as a matter of little importance.

Importance Of Zakat:

Zakat is the backbone of economic system of Islam. The Holy Quran speaks Charity as next too prayer in the series of worships and says that prayers without charity are useless.

“Woe to the prayer ones, who are unmindful of their prayers, who make a show of prayers and withhold the acts of Charity.”

Zakat helps in amelioration of condition of the poor and to put in other words more clearly Zakat gives economic security to the Muslim community and prevents the accumulation of wealth in a few hands.

It is the duty of the rich to pay Zakat and right of the poor to receive Zakat. The rich shall maintain the poor and the needy so that they may not beg, steal or sleep hungry. The institution of Zakat aims at solution of the problem of destruction of wealth.

Hazrat Umar bin Abdul Aziz used to say “prayer carries up half way to God, fasting brings us to the door of His palace and alms procure us admission.” This is the importance of Zakat.

ROLE IN SOCIETY
ECONOMIC IMPACT OF ZAKAT
Distribution of wealth and economic growth
Money supplied to poor and needy----------->increase in demands of goods and services------->increase in production-------->new jobs and employment opportunities-------->more demands of goods and services------->more room for investment------->economic growth

Freeing the poor from economic slavery and making them self-sufficient (fir-riqaab)
Muslims living in poor countries facing abject poverty and being exploited and rendered slaves by landlords, loan sharks, rich industrialists and multinational cooperations can be freed . Zakat can be given to them for training, equipment and material to start their own small businesses and enterprises. This would make them self sufficient and economy can grow
Zakat prevents bankruptcy (al-gharimun)
Social welfare (fe-sabelillah)
Education, medical care, social programs, refugees, political exiles, war, propagation and spread of islam
Zakat is universal in scope
Example
1% muslims in middle east has $800 billion in western banks deposited and earns $80 billion in profit every year (10%). A zakat by 2.5% on this money is about $20 billion dollars annually. This is the wealth of only 1% of muslim population of middle east. What would be impact of 1.25 billion muslims spread over the globe if they py their zakat. 
Necessary contingency fund during depressed economic conditions- a saftey net to society
A way to end extreme poverty in muslim world
A recent study undertaken by the Islamic Development Bank, Jeddah, has some shocking revelations. Just five of its 56 member countries - Indonesia, Bangladesh, Pakistan, Nigeria and Egypt account for over half a billion (528 million) of the world’s poor with incomes below $2 a day or below their national poverty lines. All these countries except Nigeria have Muslims constituting over 95 per cent of their respective population. With another five countries - Afghanistan, Sudan, Mozambique, Turkey and Niger, they account for over 600 million of the world’s poor. Among IDB non-member countries with significant Muslim population are India at around 150 million and Russia at 28 million. A large percentage of Muslim population in these two countries is poor. The poverty in most Muslim countries is accompanied by growing tensions and conflicts and therefore, deserves immediate attention of the international community.
We can get rid of western aid with strings attached
HURDLES 
1. Merely reduced to a ritual practiced individually
2. Practiced on ad hoc basis
3. Failure to have understanding of Hukms realted to zakat
4. No established system of implementing, collecting and distributing zakat
5. already paying so many taxes why zakat
RECOMMENDATIONS
1. Awareness and education
2. Establishment of an institution under the guidance of State Bank of Pakistan (ministry of zakat and usher already in place working on zakat and usher ordinance 1980) with same structure and effectiveness as FBR, IRS, EXCISE & TAXATION and CUSTOMS.
3. Evaluating new categories of wealth such as intellectual assests and other intangible assessts and including them in zakat network 
4. The practice of zakat exemption on various financial instrumrnts which are zakatable under shariah should be stopped
5. Credible, cost-effective, loophole free, and accountable collection and disbursement of zakat
6. Subsistence allowance should be given only to those that are minors, disabled and most poor while others who are entitled to zakat should be given such an amount that is sufficient to start a project.

Re-establishing The Institution of Zakat.

Due to a variety of eroding factors, the institution of zakat, which once provided an c economic safety net to society, has lost its meaning. Today, it has an ad hoc and irregular function reduced to almost a ritual practiced individually by a small minority of Muslims. Many who pay zakat, unfortunately, do not even know how to accurately calculate it, let alone its potential economic impact on society. 

To re-establish the institution of zakat, it is essential that we first understand the importance of zakat in terms of its economic impact upon society. Also, in order to properly apply its rules and regulations to many forms of wealth, we must recognise that there are new categories of wealth (such as intellectual property and other intangible assets) which did not exist in early Muslim society, and for which we need to use appropriate evaluation methods (book value, replacement values, market value, present value of future earnings, etc.) in computing zakat. 

Can the institution of zakat achieve its objectives of establishing economic justice and general well being of all members of society through equitable distribution of wealth in today’s economic environment? Since there is no contemporary empirical data, this question can be answered only through simulation or extrapolation of the cumulative economic impact of a redistribution of wealth. To test if it is as valid as it was fourteen centuries ago, let’s go through a simple accounting exercise. It is a known fact that the collective wealth of 1% population of the Middle East lying in the Western Banks is conservatively estimated to be in the region of over 800 Billion dollars, and earns $80 Billion annually in net profits (10% rate of return of equity) a 2.5% Zakat on this wealth would produce an annual Zakat of approximately 20 Billion dollars. Mind well this is only 1% population of the Middle East. If some one estimates the total wealth of the 1.25 Billion Muslims and measures the Zakat we can well imagine what an economic impact it can have on the lives of the Muslims alone. 

If we were to distribute this money among various categories of recipients of zakat as prescribed in the Quran over, say, every year for the next ten years, the cumulative result of this annual redistribution of wealth will substantially reduce unemployment, expand investment base, eliminate poverty and extreme disparity of wealth between rich and poor by the end of the tenth year. This projection is however based on the premise that this goal is achievable in a reasonable length of time provided the system of collection and distribution of zakat is credible, cost-effective, loophole-free and supported by strong accountability mechanisms to assure its integrity