Zakat is one of the five pillars of Islam, which has been made obligatory by Allah to each and every Muslim to carry out. According to the basic principles of zakat, the zakat institution has to be established first within Muslim society in a well-organized way (Al-Habshi, 2005). Zakat is one of the five fundamental obligations of Islam. It is an obligatory form of worship (Ibadah) prescribed by Allah s.w.t. Allah commanded in the Qur'an:
"... so establish Salat and give Zakat, and hold fast to Allah ..."
Through this method, Muslims are obligated to pay a certain "tax", called Zakat, on their accumulated wealth. The money collected from this Zakat is to be distributed among eight categories of the zakat beneficiaries. The Qur'an specifies eight categories of the zakat recipients as follows:
"Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer; (Thus it is) ordained by Allah, and Allah is Full of Knowledge and Wisdom." (Al-Quran, 9:60)
Islam establishes the zakat as a compulsory charity tool that can be used on eight types of group of people (Al-Quran, 9:60). Among eight types of them, five are meant for poverty eradication such as the poor, the needy, the debtors, the slaves (release them from captivity), and the travellers in need. Others are the heads of zakat administrative, 'those whose hearts are made inclined' (to Islam), and in the way of Allah. Although these eight types of people have been mentioned in the Qur'an, but the first priority in the use of zakat funds has to be accorded to the alleviation of poverty through assistance to the poor and the needy (Wan Mohd and Mahadi Mohammad, 2013).
Often, there are various and interesting issues occurred from zakat management, collection, distribution and poverty field which may gain interest from researchers of Islamic scholar as well as economic researcher. These studies not only explore in depth for those issues, but may also allow researchers to suggest solutions and produce new knowledge to solve issues related to zakat. The articles related to those studies were archived in during 2003 until 2013 based on online Google Scholar search on paper and articles, published article from international journal and books from published journal.
Zakat is defined as "that portion of a man's wealth is designated for the poor" (Azeez, 2003). In addition, it is also defined as, "a compulsory levy imposed on Muslim so as to take surplus money or wealth from the comparatively well-to-do members of the Muslim Society and give it to the destitute and needy" (Zaim, 1989). Moreover, based on the study being done bay Ahmad (2008), zakat in theory will result in economic prosperity as Zakat is paid from those who have surplus, to the poor. So that, this will improve and enhance the poor's purchasing power which may lead to a higher demand on goods.
Zakat has several meanings according to literary term; it means blessing, growth, development, purity, and neatness. The scholars of Islam (ulama) define Zakat as the part of property with certain requirement that Allah SWT requires to the owner to give to the proper person to have it with certain requirement (Hassan, 2007). According to Qardhawi (1999), which refer to Lisan al Arab, the term Zakat is pure, grow, and laudable, this term is used in Al Qur'an and Hadist. On the other hand, according to Mahmud et.al (2008), Zakat has literary meaning as purification (thaharah), growth (mana'), blessing (barokah), and praise (madh), in fact Zakat is a Moslem's financial obligation to pay their some net property or agricultural produces, if those properties exceed the nishab limit to certain degree which, it is paid as the part of religion obligation.
The fact that the main objective of zakat is the achievement of socio economic justice is not disputed according to Yusoff (2011) stated that the zakat disbursement has the ability to increase consumption since the marginal propensity to consume of the zakat payer is lower than the zakat recipient, so that increasing the purchasing power parity of the poor. Consequently, in Islam transfer payment, from the wealthy to the poor for the purpose of redistribution of wealth and income in the society has been taking a central principle in building the Ummah (Semerdjian, E. 2010). Furthermore, redistribution concept is also established that the Quran and the Prophet act (Sunnah) do have overwhelming evidences which indicate that Islamic system do not recognize and like any form of concentration of wealth or income in a few hands (Nurlaelawati, E. 2010).
Zakat distribution in the form of income generation programs has been introduced alongside the other established distributions of living allowance, medical aid, shelter aid and the like (Patmawati, 2008). The introduction of the program which is considered as a gradual shift from consumptive to productive distribution of zakat is mainly due to Muslims' awareness of the need to transform zakat from merely personal piety to an Islamic socio economic system (Iqbal Munawar, 2003). As such, zakat is hoped to play a more significant role in improving the socio economic condition of Muslim communities.
The institutions of zakat are among several instruments instituted by Islam to combat and enhance welfare in the society. Zakat helps to generate a flow of funds and recruit the necessary manpower. The word zakat means growth, cleanness and purity in Arabic (Wan Mohd and Mahadi Mohammad, 2013). The Qur'an mentions the word zakat 30 times and at three places it appears as being commanded by God (Allah s.w.t). The importance of zakat as an obligation on Muslims is also emphasized in many sayings of the Prophet Muhammad (pbuh). The importance of the institution may be established from a saying of the Prophet (pbuh) in which he (pbuh) indicates that refusing to pay it represents a rebellion against the Islamic State (Yusuf Qaradhawi, 2006). Hence, zakat can be considered as an essential form of worship and spiritual purification.
Zakat also play its role as a fiscal mechanism, zakat performs some of the major functions of modern public finance, which deals with social security entitlements, social assistance grants for childcare, food subsidy, education, health care, housing, and public transportation in a welfare state (Yusoff et.al 2012). It separates public welfare expenditures from other budgetary items and puts the burden of meeting the economic welfare needs of the society where it belongs. Unlike tax levied by the government for the services provided to tax payers on a quid pro quo basis, the Qur'an and Sunnah, irrespective of the economic conditions of the society, determine zakat and its heads of expenditure (Nasim Shah Shirazi & Md. Fouad Bin Amin, 2009).
Besides that, zakat creates a balanced growth cycle. When a certain percentage of one's wealth is spent annually over the foregoing eight categories as prescribed in the Qur'an, zakat has a significant economic impact on society (Tarar et.al, 2012). Income support provided to the poor and needy would result in a measured increase of the money supply in the economy causing upward shift in demand for goods and services. To support this upward shift in the demand for basic necessities of life such as food, clothing and shelter, the production facilities would gradually expand and begin to absorb the idle capital. In order to support the increased production, the economy would generate more jobs and new employment opportunities. This added employment in turn would generate more demand for goods and services, more room for additional investments, and finally, the growth cycle based on balance consumption would contribute to a balance economic growth (Muhammad Ridhwan Ab. Aziz, 2012).
This article adopts descriptive analysis based on several literatures on zakat issues for ten years between 2003 and 2013. 108 articles had been gathered based on online Google Scholar search on seminar paper, journal and articles. The review focuses specifically on the articles written in the areas of Zakat. It follows that the articles would be classified into four categories namely zakat management, zakat collection, zakat distribution and poverty. The classifications are made based on either the content or the abstract of the articles. It is noted that some areas might overlap due to different nature and research interest of the...