Zakat

Zakat (Arabic: زكاة, literally 'purification' or 'growth') is the obligatory annual almsgiving that constitutes the third pillar of Islam. Muslims possessing wealth above the Nisab threshold (minimum taxable amount, equivalent to 87.48g of gold or 612.36g of silver) for a full lunar year (Hawl) must pay 2.5% of their total qualifying wealth. Zakat applies to cash, gold, silver, trade goods, agricultural produce, livestock, and investments — each category having specific calculation rules. The eight eligible recipients (Asnaf) are specified in the Quran (9:60): the poor (Fuqara), the needy (Masakin), Zakat administrators, those whose hearts are to be reconciled, slaves, debtors, those in God's cause, and travellers. In Islamic finance, institutions manage Zakat funds for clients, and Zakat obligations factor into product structuring. The global Zakat potential is estimated at $200-600 billion annually, making it one of the largest redistribution mechanisms in the world.