Zakat is a religiously obligatory charity in Islam. Its purpose is to purify wealth, promote social justice, and support those in need. It is one of the five pillars of Islam, making it a core act of worship. There is another form of charity in Islam called sadaqah.  While, zakat is mandatory for Muslims who meet the minimum financial threshold,  sadaqah, on the other hand, is a voluntary charity of any amount that can be given at any time. Zakat is given by adult Muslims whose total wealth exceeds the nisab, which represents the minimum threshold for zakat eligibility.

Nisab is traditionally measured in terms of either gold or silver. The gold-based nisab equals 87.48 grams, or about three troy ounces. Alternatively, the silver-based nisab is set at 612.36 grams, or 19.68 troy ounces. These dual standards help address varying economic circumstances and make zakat more inclusive. When a Muslim’s wealth stays above the applicable nisab level for one complete lunar year, they are required to give zakat accordingly.

There are two types of zakat: Zakat al-mal and Zakat al-fitr. Zakat al-mal, or charity on wealth, is the most familiar form of zakat. Muslims whose assets exceed the nisab must give 2.5 per cent, or 1/40th annually. Zakat al-fitr, by contrast, is a compulsory food donation given before the Eid prayer at Ramadan’s end, ensuring that disadvantaged people can share in the joy of Eid. It usually equals the cost of one meal for families and individuals in need during the celebration period annually.

The Qur’an outlines eight eligible recipient categories:

• the poor with little or no income;
• the needy with limited resources;
• zakat administrators;
• new Muslims requiring support;
• individuals overwhelmed by debt;
• stranded travellers without funds, including refugees;
• those engaged in welfare, religious, or humanitarian work; and
• captives or their modern equivalents, such as bonded labourers.

Zakat must not be given to immediate family members whom one is financially responsible for, including parents, children, or spouses. It is also prohibited to give zakat to individuals whose wealth exceeds the nisab threshold.