(Arabic: زكاة IPA: [zækæːh], zakaat or zakāh, has the implied
meaning of 'grow', 'purify', or 'foster').
It is often compared to the system of charity and alms but unlike these older systems, it serves principally as the welfare contribution to poor and deprived people in the Muslim lands, although others may have a rightful share. It is the duty of the state not just to collect it; but to distribute it fairly as well.
Zakat is one of the Five Pillars of Islam.
Amounts & Minimums
إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاء وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِّنَ اللّهِ وَاللّهُ عَلِيمٌ حَكِيم
"Alms are only for the poor and the needy, and the officials (appointed) over them, and those whose hearts are made to incline (to truth) and the (ransoming of) captives and those in debts and in the way of Allah and the wayfarer; an ordinance from Allah; and Allah is knowing, Wise." [Qur'an 9:60]
People whose hearts are to be reconciled include (normally new Muslims or those close to becoming Muslim. Even non-Muslims could be included):
Zakat doesn't become obligatory on a Muslim if he doesn't have a minimum amount in his possession that has remained unchanged for a whole lunar year; any increase in that money during the year waits for the following year and any decrease as long as the total amount is still above the minimum amount is exempted.
In all the four recognised Scholl of thoughts the fiqh of Zakat is very much the same with the key elements that make Zakat compulsory for an individual being: Islam, Freedom, the Nisab, Ownership and a Year's Possession.
Zakah is a form of payment, which has the spiritual development
of the believer.