The institution of Zakat and Prohibition of Interest in Islam
Definition of Zakat:
The Arabic word "Zakat" assumes vast meaning. It means "purification: growth: giving better part of a thing."
Zakat creates Islamic brotherhood of the whole of the world.
By establishing the system of Zakat, Allah desires to prepare a society among the Muslims themselves which surpasses in fellow- feeling and Islamic brotherhood. The giving and taking of the Zakat develops the society on a sound footing of love.
Allah enumerates countless blessings for the Muslims both in this world and the hereafter who pay Zakat, but for these people who do not pay Zakat, there are horrible torments of Fire for them, as described in the Qur'an.
Zakat is the pivot and hub of the Islamic finance. It covers moral, social and economic spheres. In the moral sphere Zakat washes away greed and selfishness of rich. In social sphere Zakat acts as unique measure vouchsafed by Islam to abolish poverty from the society by making the rich alive to the social responsibilities they have. In economic sphere, Zakat prevents the accumulation of wealth in a few hands and diffuses before it assumes threatening proportions in the hands of its possessors.
At numerous places in the Qur'an, Zakat has been associated with Salat.
The Qur'an categorically states that whoever wants to enter the brotherhood of Islam, shall have to establish regular Salat and pay Zakat regularly. Both are equally fundamental in importance.
The heads of expenditure of Zakat which have been clearly mentioned in the Qur'an are :
(1) disbursement in the aid of poor, and destitute and the disabled;
(2) to help winning the hearts;
(3) to help the needy;
(4) to help the debtor;
(5) to free slaves;
(6) to travellers, especially those who travel in the cause of Allah, who have run short of money.
Nisab of Zakat:
There is a Nisab of Zakat. Zakat is an annual charge on property which remains in the possessions of a person for a whole year, when its value reaches a certain limit called "Nisab".
Nisab differs with different kinds of property. But generally it is one-fortieth of a thing, animal or money.
Prohibition of Interest:
Allah in the Qur'an 2:275-277 says: "Those who take interest on their money do not rise except as rises one whom Satan has smitten with insanity. This is because they say: Trade is also like interest; whereas Allah has made trade lawful and made interest unlawful. So he to whom an admonition comes from his Rabb and he desists, then will that which he received in the past be his, and his affairs is with Allah. And those who revert to it, they are the inmates of the Fire; therein they shall abide. And Allah abolishes interest and causes Zakat to increase. And Allah does not like anyone who is a confirmed disbeliever and an arch-sinner. Surely those who believe and do good deeds, and establish Salat and pay Zakat, shall have their reward from their Rabb, and they shall have no fear, nor they shall have any grief."
The Qur'an cites examples of nations and individuals, which were destroyed and erased from the globe of the world, on account of their indulging in interest.
The Hadith also lays equal stress on the prohibition of interest.
The prophet Muhammad (Allah's blessings and peace be upon him) with inspired insight diagnosed the harm and misery caused by the wretched group of money-leaders and enjoined the Muslims not to lend money on interest. This is certainly one of the wisest of economic laws. A Hadith says that four persons, viz.
the money lender the person who takes money on interest, the writer of money-lending bargain and the witness, all shall be thrown into the Fire (Hell).
