Wa `alaykum as-Salamu wa Rahmatullahi wa Barakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:
Difference between Zakah and Charity
The matter is simple. Zakah is a financial pillar of Islam. It is the right of the poor in the wealth of the rich. Also, it is to be given to the poor and needy not to any religious hierarchy, meanwhile charity is not really obligatory.
The Prophet (peace be upon him) determined the rate of Zakah as Allah revealed it to him.
As for livestock and agricultural products, it is at 2.5% of the balance of wealth and savings at the end of every year. We use lunar year for it as done by the Prophet (PBUH).
Also, the Prophet determined items that are exempt from Zakah payment such as the residence, cloth, furniture and books used for studying/learning etc.
Every Muslim, male or female, major or minor (for the latter by guardian) should pay it if he is rich enough (this is defined by having an amount called nisab); and this amount stays with the owner for one year.
The Prophet determined this amount of nisab as 20 Dinar of gold or 200 Dirham of silver which were the currencies at his time. According to my estimate, this is now about $1500.
Finally, Zakah is a yearly duty that must be repeated at the end of every lunar year; the first such year begins on the day you acquire nisab for the first time.
📚 Read Also: Can the Once-Rich Receive Zakah?
For some more details on calculation please consult my website, www.kahf.net the publication called, Calculation of Zakah for Muslims in North America.
On the other hand, charity (sadaqah in Arabic) is optional and voluntary and for which a Muslim gets abundant reward.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.