Analysing the Present State and Future Agenda
Studies in Islamic Finance, Accounting and Governance series
Chapter 22: Contemporary application of the law of zakah
Muslims have an obligation to pay a certain percentage of their wealth as zakah every year. The Arabic root of the term ‘zakah’ refers to the dual meanings ‘to grow’ and ‘to purify’. The zakah thus means something that purifies (human soul) and something that leads to growth (in wealth). The zakah as a tax purifies the wealth of any social, moral and spiritual failings in earning it. Besides, after paying the zakah the wealth grows in the future through blessings (baraka) of God – a spiritual concept that still requires authentic interpretation in a cause–effect framework. It is generally agreed that an Islamic government has an obligation to collect and distribute the zakah according to the divine law (Q. 9:60). Primarily, proceeds of the zakah are meant for alleviating poverty and providing a social security net. However, the zakah can also be spent on the general and broad objective ‘in the way of God’ (fi sabil Allah), which according to some scholars covers a wide range of socio-economic objectives. The present chapter deals with the zakah law and its application in the present age. We shall show the problems created by the orthodox interpretation of the law and how it has led to non-achievement of its original objectives.
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