What is Zakat?
The term zakat means alms; it is an obligation upon all Muslims and it forms one of the central Five Pillars of Islam. The actual meaning of zakat is purification and growth, thus encouraging growth amongst the population and community whilst sharing one's wealth with his fellow beings.
Giving zakat is seen as a duty in Islam. It becomes obligatory upon an individual when a certain amount of maintained money or wealth is reached and exceeded. If the amount of profitable wealth falls below the nisab values at the time of zakat, then that individual is not liable to pay zakat in that given lunar year*. If the amount of profitable wealth exceeds the nisab value, then 2.5% of the amount above the nisab value becomes liable for zakat.