Allah praises those who spend for His cause in order to help the poor and the needy in the Islamic society. This is based on the instructions of the verse in the Glorious Qur'an:
And in their wealth is a recognized right. For the (needy) who asks and the one who is deprived.
As a matter of fact Islam regards the charity given to the poor and the needy as one of the most virtuous deeds. Moreover, Islam warns those who conceal and save up their wealth and do not spend for the cause of Allah . Allah says in the Qur'an:
It is not righteousness that you turn your faces towards East or West. But the righteousness is to believe in Allah and the Last Day, and the Angels, and the Book, and the Prophets, and to give of your wealth out of love for Him, to your kin and orphans and the needy and the wayfarer and those who ask, and for the ransom of slaves...
The ones who accumulate the wealth without giving the due right of the poor and needy as commanded by Allah, are promised by Allah that they will receive a severe punishment on the Day of Requital. Allah says in the Quran:
And those who hoard up gold and silver and do not spend in the Path of Allah then warn them of the painful torment.
For this reason Zakah was prescribed as one of the basic tenets of Islam. Zakah is a set percentage (2.5%) of the accumulated wealth over a period of one year. Muslims willingly offer the due amount in obedience to Allah's Commands. They pay it to the poor and the needy. Zakah is obligatory upon those who possess the appropriate amount on which Zakah is due. Allah states in the Glorious Qur'an:
And they were commanded not except to worship Allah, offering Him alone sincere devotion, being true (in faith); to establish regular Prayer; and to give calculated Charity; and that is the right Religion.
Zakah is prescribed with the following principles and conditions:
1. The person to pay Zakah must possess "Nisab' (the appropriate amount as stipulated in the Islamic Shari'ah).
2. A period of one-year must pass while the owner maintains this amount in his possession. If less than a year passes, Zakah will not be required.
Islam defines the types of people who are entitled to receive Zakah. This is based on the verse in the Glorious Qur'an:
Verily alms are for the poor and the needy, and those employed to administer (the funds); for those whose hearts have been (recently) reconciled (to the truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is All- Knower and All-Wise.
Islam imposes Zakah in order to uproot poverty from the Islamic society, treat the resulting problems stemming from poverty such as: theft, murder, attacking people and taking their property unjustly. In addition, it revives the mutual social welfare and support among members of the Islamic society. Furthermore, Zakah is used to fulfill the needs of the needy, the destitute, and to pay the debts of those who have debts and are not able to pay their debts due to a sound and legitimate reason. Moreover, the payment of Zakah purifies one's heart, soul and wealth as well. An owner of a wealth will become less selfish and greedy when he/she pays this charity with a pure heart. The Almighty Allah states in the Glorious Qur'an:
And those saved from the covetousness of their own souls; they are the ones that achieve prosperity.
Zakah purifies the hearts of those who are less affluent since they will have less hatred, jealousy and bitterness against the rich and wealthy class of people of the society because they see that they are paying their just dues and the rights to their poorer brethren.
The Almighty Allah warns those who refuse to pay their due Zakah against a severe punishment. The Almighty Allah states in the Glorious Qur'an:
And let not those who covetously withhold of that which Allah has bestowed on them of His Bounty (wealth) think that it is good for them. Nay, it will be worse for them; soon shall the things which they covetously withheld be tied to their necks like a twisted collar on the Day of Resurrection. To Allah belongs the heritage of the heavens and the earth; and Allah is well-acquainted with all that you do.