Zakat is the third pillar of Islam. It is a specified portion of a Muslim’s wealth that is given to those in need. It is the amount given once a year to support specific categories of people. The amount is about 2.5% of total wealth which includes the following asset classes:

  • Gold and silver
  • Precious metals
  • Stocks and shares
  • Real estate
  • Cash
  • Agricultural livestock

These are the most common asset classes for which Zakat is paid from.

The linguistic meaning of zakat is “that which purifies.” It is considered to be a way for Muslims to purify their wealth and income. Similar to how the prayer (salah) purifies a person’s soul, zakat purifies your assets and earns you the pleasure of Allah because your wealth is distributed to those in need.

Allah has enjoined upon the Muslims zakat which is taken from those who have wealth and given to those in need.

Zakat is only obligatory for Muslims who have reached puberty (i.e. they are adults), are mentally stable, and are financially capable. Furthermore, the amount of wealth a person has must reach a certain threshold known as the nisaab. The nisaab is a minimum amount of wealth a person must have before zakat becomes due upon them. The wealth should be in their possession for one year.

This pillar of Islam is not required for those who do not meet the criteria above. For example, if you are a university student with plenty of debt, a father who lives paycheck to paycheck, or a person whose wealth has not reached the nisaab (minimum amount) then zakat is not required for you to pay.

We hope to cover the pillar of Zakat in greater detail in a future guide. What we have covered in this chapter so far is only an introduction.