Zakat is one of the five pillars of Islam, and is expected to be paid by all practicing Muslims who have the financial means. It is considered to be a personal responsibility for Muslims to ease economic hardship for others and eliminate inequality.
In the Qur’anic view, zakat is a way to redistribute the wealth, thus increasing the flow of cash in the economy with a particular interest in the poor and the dispossessed Muslims.
When is Zakat Due?
1. Passage of One Year: Zakat is obligatory after a time span of one year passes with the money in the control of it’s owner. Then the owner needs to pay 2.5% of the money as Zakat.
2. Deduction of Debts: The owner should deduct any amount of money he or she borrowed from others; then check if the rest reaches the necessary nisab, then pays Zakat for it.
Each Muslim calculates his or her own Zakat individually. For most purposes this involves the payment each year of two and a half percent of one’s capital.