Zakat is obligatory upon different forms of wealth, such as money, crops, fruits, livestock and treasures found in the earth. In today’s world, the most common form of wealth is that of money. Zakat is to be paid on one’s money if that amount of money reaches the minimum required for Zakat and if it has been in the person’s possession for a year’s time. The amount to be paid on such holding is 2.5%.
The minimum required holding of wealth before one is obligated to pay Zakat is known as the nisaab. There is actually a distinct nisaab for gold and for silver. Today, people hold cash and currency rather than gold or silver. This has led to some difference of opinion as to whether the nisaab for cash should be based on its gold equivalent or its silver equivalent. If gold is taken as the basis, Zakat is only obligatory if the amount of gold one possesses reaches twenty mithqaals228 or if a person holds its equivalent value in currency. If the Muslim possesses this amount of money for a year’s me, he pays 2.5% once in that year as Zakat.
Zakat is distributed to specific categories of people. Allah has mentioned those categories in the following verse: “The alms are only for the poor, the needy, those employed to collect (the funds), and to attract the hearts of those who have been inclined (towards Islam); and to free the captives; and for those in debt; and for Allah's Cause, and for the wayfarer (a traveler who is cut off from everything); a duty imposed by Allah. And Allah is All-Knower, All-Wise” (9:60).
In general, most mosques have committees and accounts for Zakat. If a Muslim gives them his Zakat payment, informing them that it is Zakat, it should then be distributed to the proper recipients and the Muslim would have fulfilled his responsibility to Allah.