Shaykh Ibn Baz explains that Zakat is a foundational pillar of Islam, an obligation upon every Muslim whose wealth reaches a minimum threshold (nisab) and has been held for a lunar year (hawl). It is not merely a voluntary act of kindness but a right of the poor over the wealth of the rich, established by divine command.

The primary wisdom behind Zakat is to purify the soul of the giver from stinginess and to purify their wealth, causing it to grow in blessing. Allah says in the Qur'an, "Take, [O, Muhammad], from their wealth a charity by which you purify them and cause them increase..." (At-Tawbah 9:103). It also serves as a crucial mechanism for social welfare, ensuring the needs of the community's most vulnerable are met and fostering a sense of brotherhood.

The amount of Zakat varies by the type of asset:

1. Gold, Silver, and Cash: The rate is 2.5% of the total value if it meets the nisab (equivalent to 85 grams of gold) and has been held for a year.
2. Trade Goods: Zakat is 2.5% of the total value of the inventory at the end of the Zakat year.
3. Agricultural Produce: The rate is 10% for crops irrigated by rain and 5% for crops irrigated by artificial means.
4. Livestock (e.g., sheep, goats, camels, cattle): Zakat has specific rates, for example, one sheep for every 40-120 sheep owned.

This is distinct from Sadaqah, which is any voluntary, non-obligatory charity a Muslim gives out of a desire for reward from Allah. There is no set amount or time for Sadaqah; it is open-ended. While Zakat is restricted to eight categories of recipients mentioned in the Qur'an (Surah At-Tawbah, 60), Sadaqah can be given more broadly.

Fulfilling the obligation of Zakat is a sign of true faith, as the Prophet Muhammad (peace be upon him) instructed his companion Mu'adh ibn Jabal when sending him to Yemen: "...inform them that Allah has enjoined upon them a charity to be taken from their rich and given to their poor."