Impact of Zakat on Economy: Structure and Implementation in Pakistan

Abstract

Zakat is one of the five pillars of Islam; this act required a Muslim to demonstrate submission to Allah. Its primary traditional function is an act of piety. It also reinforces the responsibility of Muslims for each other’s physical and social well beings. Zakat as a traditional religious institution involve both the payments and distribution. Muslim Jurists have defined it as a complete unilateral and unconditional transfer by a Muslim of ownership, as an act of holiness of a prescribed portion of property to a poor. Zakat is to be paid once a year during the holy month of Ramadan on wealth held more than a year. The Zakat rate is fixed 2.5% on the money, gold, silver and other precious items. While it is 20% 0n the produce of mines, there is an elaborate schedule of rates for animals, depending on the species, age, and sex of animals. In this study we have defined the structure of Zakat in Pakistan and also find the nature of Zakat tax which is flat and its burden in the connotation of marginal utility of money is declining so Muslims should willingly pay the Zakat for the sake of Pleasing Allah.

Keywords: Zakat, Nature of Zakat, Structure of Zakat, Benefits of Zakat.