Zakat vs Tax: Difference and Comparison

There are several types of taxes, which have various impositions and features depending upon their nature. Zakat is also considered one of them. But that is incorrect, as Zakat is a tax imposed on one religion; there are many differences between a regular tax and Zakat.

Key Takeaways

  1. Zakat is an obligatory donation that Muslims make every year as a form of worship and to help the poor and needy.
  2. Tax is a mandatory payment made to the government to support public services and infrastructure.
  3. Zakat is based on the principles of purity, intention, and proportionality, while tax is based on the principles of legality, equality, and fairness.

Zakat vs Tax

The Islamic finance term “zakat” refers to a person’s duty to donate a set percentage of their annual wealth to charity. It is based on both income and asset worth. While taxes are compulsory contributions that government collects from people or businesses. Tax earnings support government operations.

Zakat vs

Zakat is a religious tax or duty fixed in the holy Quran, according to which Muslims should pay Zakat to help other Muslims, although it is not compulsory in most of the country. The main motive is the help of poor and needy Muslims.

Tax is the amount of money charged by the government, which has to be paid by every citizen of the country, irrespective of their religion. The main motive for tax collection is the country’s development and providing facilities to its citizens, and geographical boundaries do not bind it.

Comparison Table

Parameter of ComparisonZakatTax
MeaningA religious tax, most important after prayers.The Compulsory fee charged by the government for the country’s development.
Related toReligious TaxRelated to government
Imposed onOnly Muslims in the Country.All citizens of the country
SourcesHas Fixed SourcesSeveral Sources
CompulsionIs not CompulsoryIt is Compulsory

What is Zakat?

All wealthy Muslims have to pay a certain amount as Zakat for charitable causes. It is considered to be an important way of salvation. Although spending is not compulsory, most Muslims pay Zakat as it is essential, which is fixed by the Holy Quran.

Also Read:  Jews vs Gentiles: Difference and Comparison

There are five pillars of Islam:

  1. Declaration of Faith
  2. Ramadan Fasting
  3. Prayer
  4. Hajj pilgrimage
  5. Zakat

Zakat is calculated on the income; the most common amount paid is 2.5% or ¼ of the total savings.

Importance of Zakat:

  1. Balanced Society: it helps make a balanced society by uplifting the below-poverty line section.
  2. Circulation of Money: it circulates the money among the people.
  3. Means of salvation: it is considered a means of saving for Muslims.
  4. Value of Sacrifice: it promotes the importance of sacrifice in society.

Misconception related to Zakat:

  1. It is a misconception about Zakat that it is only given during Ramadan.
  2. Only gold is paid as Zakat.
  3. Relatives cannot be given the Zakat.

Zakat has several criticisms, such as it has failed to achieve its primary goal, which is to help the poor and needy Muslims.

zakat

What is Tax?

Tax is a compulsory fee the government charges to the country’s citizens. And if any person is failed to pay the tax, he is punishable by law.

Benefits of Tax:

  1. Development in the public health sector
  2. Public Insurance
  3. Benefits for Unemployment
  4. Development is public transportation
  5. Development in the educational sector
  6. Providing facilities to the public
  7. Overall development of the country

Types of Taxes

Direct Tax is the type of tax paid directly to the government. Direct Tax includes the following:

  1. Income tax: this tax is charged on the income or the profit of citizens.
  2. Capital Gains: it is set on the capital sale or the investments.
  3. Securities Transaction Tax: imposed on securities trade and the stock market.
  4. Corporate Tax: it includes Dividend Distribution Tax, Fringe Benefits Tax, and MAT.
  5. Prerequisite Tax: charged on the benefits received by the employees of a company.

Indirect Tax: Taxes that are not collected directly but indirectly by the Government.

  • GST: Goods and Service Tax.

Other Taxes: this type includes the miscellaneous revenues, which include:

  1. Property Tax
  2. Professional Tax
  3. Entertainment Tax
  4. Registration Fees
  5. Toll tax.

Main Differences Between Zakat and Tax

  1. Zakat, in simple words, is a religious duty of Muslims, whereas Tax is a compulsory duty of every citizen of the country.
  2. In Zakat, only the Muslim section of society are the payers, and the Tax has to be paid by everyone irrespective of their religion.
  3. The amount paid as Zakat is 2.5% of the wealth, whereas the tax percentage varies with its type.
  4. Changes in the rate of the Zakat are not possible as it is fixed in the Holy Quran, whereas the government decides the speed, and therefore they can change it at their convenience.
  5. The Zakat payers expect no return as it is paid for the betterment of other Muslims. In contrast, the taxpayers expect a recovery in the form of facilities of certain developments from the government.
  6. Zakat doesn’t have any geographical limits. If there is an excess amount of tax received, it can be shared with some other countries among the poor or needy Muslims, whereas so much sharing or dispatching takes place with the tax it is utilized within the county in which it is collected.
  7. The tax has various types, but no such types are in Zakat.
Difference Between Zakat and
References
  1. https://www.jstor.org/stable/2729788
  2. https://www.emerald.com/insight/content/doi/10.1108/JIABR-07-2017-0097/full/html
Also Read:  English vs Western Riding: Difference and Comparison

Last Updated : 11 June, 2023

dot 1
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️

22 thoughts on “Zakat vs Tax: Difference and Comparison”

  1. The comprehensive comparison between Zakat and Tax is both analytical and educational, enriching the understanding of readers on these financial concepts.

    Reply
    • The articulation of the differences between Zakat and Tax provides a well-rounded perspective, ensuring clarity and eliminating misconceptions.

      Reply
  2. The depth of explanation is commendable, and it reflects the importance of understanding the differences between Zakat and Tax.

    Reply
    • Absolutely, the clarity in the description of these two concepts serves as a valuable resource for anyone seeking to understand their nuances.

      Reply
  3. The post offers an intellectual exploration of the contrasting principles and implications of Zakat and Tax, enhancing the reader’s comprehensive understanding of these subjects.

    Reply
    • The detailed comparison of Zakat and Tax serves as a testament to the thoroughness and scholarly approach taken in addressing these financial matters, ensuring an enriched understanding for the readers.

      Reply
    • The in-depth analysis of Zakat and Tax is compelling and informative, reflecting the dedication to providing a well-elucidated comparison of these concepts.

      Reply
  4. The informative nature of this article offers a detailed examination of Zakat and Tax, illustrating the stark differences between the two.

    Reply
  5. This thorough comparison between the mandatory Islamic donation of Zakat and the compulsory taxes provides an insightful read to anyone interested in learning about these subjects.

    Reply
    • Indeed, the article has succeeded in delivering an in-depth analysis of Zakat and Tax, serving as an educational tool for many.

      Reply
    • The detailed explanation of the differences between Zakat and Tax is both enlightening and a testament to the commitment to providing accurate information.

      Reply
  6. The post presents a well-researched argument identifying and explaining the differences in the principles and purposes of Zakat and Tax, shedding light on their unique features.

    Reply
    • The article is instrumental in exposing the disparities between Zakat and Tax, making it an essential read for those interested in Islamic finance and taxation.

      Reply
  7. The article offers valuable information about Zakat and Tax, shedding light on the misconceptions and criticisms surrounding Zakat while emphasizing the benefits of taxation.

    Reply
    • I agree; the piece successfully debunks misconceptions and presents a comprehensive outline of the advantages of tax, contributing to a better understanding of these concepts.

      Reply
  8. The comparative analysis of Zakat and Tax is thorough, offering a detailed exploration of the variances and similarities between these financial obligations.

    Reply
    • The delineation of the differences and similarities between Zakat and Tax is both enlightening and thoroughly researched, providing a comprehensive understanding of these financial aspects.

      Reply
    • The article presents a well-structured comparison between Zakat and Tax, emphasizing the crucial disparities and aligning with factual representations.

      Reply
  9. This article serves as a valuable, educational piece, providing critical insights into the distinguishing characteristics of Zakat and Tax.

    Reply

Leave a Comment

Want to save this article for later? Click the heart in the bottom right corner to save to your own articles box!