In Islamic understanding all things belong to God and thus wealth is something entrusted to human beings for a time, and they will be held responsible for how they used it during their life. As such it is an obligation upon the rich to care for the poor. It is God's mercy that has made them wealthy and part of gratefulness for this blessing is to distribute some of that wealth to those who have less.
God says in The Qur'an:
...spend of your substance out of love for Him (God), for your family, for the orphans, for the needy, for the wayfarer, for those who ask, .... Such are the people of truth those mindful of God.
(Chapter 2: Verse 177)
The word "Zakat" means both "purification" and "growth" . Since it is the obligation of the rich to care for the poor, any wealth a Muslim receives has this obligation attached to it and the wealth is not permissible for the Muslim to use until this obligation has been fulfilled. When the Zakat is paid the wealth is now "pure" in the sense that he/she can now use it without fear of having wronged anyone.
In the Islamic world view, charity is like the pruning of plants, removing excess encourages new growth. Likewise giving to those in need circulates wealth and encourages growth in society that benefits everyone. Not just financially but spiritually as well, by fostering mercy and kindness among the people.
Zakat is a proportion of ones wealth determined by when the wealth was received and the means by which it was earned. For example farmers pay Zakat at the time of harvest, merchants at the end of the fiscal year and salaried workers when they receive their paychecks. In other words when one receives ones wealth the first obligation is to pay the Zakat and the remaining wealth is theirs to keep. The percentage is generally 2.5 % but in some cases, like agriculture, it may be more. The Zakat can be in the form of currency, other goods, and or food equivalent, given to those who qualify to receive it.
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