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Meaning:
The word Zakat is an Arabic word that shows two literary meanings i-e i. Purification ii. Growth
Purification:
It means the purification of soul, character, life and wealth. Zakat purifies the human soul by keeping a person away from illegal sources of earning, eliminating the love for materialism and by overcoming the sense of pride for being wealth. Wealth is dear to everyone but who spends wealth on others attains goodness and purity . As Quran says in Sura al Toubah: take alms out of their property , thou wouldst cleans them and purify them thereby
Growth:
It means that a person who pays Zakat regularly , his individual wealth as well as the community wealth keeps on growing by the blessing of the Almighty Allah . Moreover Allah protects the wealth on which Zakat has been paid and in this way the peace of mind of the person who pays Zakat grows.
Comprehensively,
In economics , Zakat can be technically defined as follows : Zakat is a transfer payment which Sahib e Nisab Muslims make at given rates by themselves or through the Islamic state to the poor and the needy in or after the month of Rajab.
ASSESMENT OF ZAKAT
For the assessment of Zakat, the following must be kept in view.
1. Sahib-e-nisab muslim:
A muslim who owns and keeps in his or her possession at least 7.5 tola gold or 52.5 tola silver or cash money to the equivalent value is considered a sahib e nisab muslim . it is his compulsion to pay Zakat at its prescribed rates by Quran and Hadith.
BENEFICIARIES OF ZAKAT
The following can be beneficiaries of Zakat.
1. The poor:
These are the people who cannot be treated as sahib-e-nisab.
2. The needy:
Theses are the people who are unable to earn their living e.g. handicapped, disable , orphans etc.
3. Collectors of Zakat:
These are the people who collect and distribute Zakat among the poor and the needy . their salaries are paid from the Zakat fund.
5. The Slaves:
Zakat can be used to make free the slaves and prisoners of wars from their masters and enemies.
6. The debtors:
People who are heavily indebted can get Zakat to repay their debts provided that the debt is not taken for sinful purpose.
7. The travelers:
The travelers can get Zakat to complete their journey in case they fall in need of money.
8. Mujahideen:
Zakat can also be given to Mujahideen to prepare them for jihad . Also the dependents of the martyrs and the religious educational institutions can seek assistance from the Zakat fund. Thus, Zakat is a source of financial assistance for the poor and needy persons.
1. Purification of soul:
Zakat purifies the soul of contributor from the evils of miser ness . It makes them humble and God-fearing . It also creates wealth discouraging love among people.
7. Minimizes unemployment:
Zakat is very vital instrument for removing unemployment .the money received by the people can be used and poor can start a business.
8. Economic stability:
the problem of instability does not take place in an Islamic economy due to the mechanism of Zakat. Zakat promotes the velocity of circulation of money due to which AD for goods and services rises. This determines the level of investment , income and unemployment on stable footing.
9. Self reliance
Zakat eliminates poverty and diversity from the society . It brings amout prosperity .people can take care of each other and in such a way Zakat enables an economy to be self-reliant.
IMPACTS OF ZAKAT
We observe two major impacts of Zakat: 1. Impact on production of wealth 2. Impact on distribution of wealth
4. Higher efficiency:
Since, Zakat increase the aggregate demand for consumer goods, consumption function of the community in a macro sense may shift upward. the economy would become more efficient.
Since 2.5% of the wealth of rich is transferred to the poor every year in the form of Zakat .It means, whole wealth of the rich is transferred to the poor section of the community in the forty years. This provides an automatic mechanism for the flow of wealth from the rich to the poor, due to which wealth is fairly distributed among different sections of the society.
3. Social welfare:
The construction of social welfare institutes with the Zakat fund ensures distributive justice in the economy.