DefinePK

Abstract

Zakat, one of the five pillars of Islam, plays a vital role in achieving socio-economic justice and alleviating poverty. Traditionally, zakat served as a fundamental mechanism of wealth redistribution within early Muslim societies. However, in the context of today’s globalized and complex financial systems, the effective implementation of zakat presents significant legal, administrative, and ethical challenges. The contemporary financial world is characterized by interest-based banking, digital currencies, cross-border trade, and intangible assets—realities that were absent during the early formulation of Islamic jurisprudence. These developments demand a renewed interpretation (ijtihad) of zakat-related rulings while staying within the framework of Shariah principles.
This paper explores how modern Islamic scholars and financial institutions are navigating these complexities to uphold the zakat obligation. It analyzes the jurisprudential adaptations required to apply zakat on modern wealth forms, including stocks, pensions, cryptocurrencies, and business assets. Furthermore, it discusses institutional zakat collection and distribution in state and non-state models, the role of technology in zakat management, and the ethical implications of transparency and accountability in zakat governance. Special attention is given to the issue of zakat avoidance and evasion in modern economies, and the role of legal enforcement and public awareness in combating these problems.
Through a combination of classical fiqh analysis and contemporary financial case studies, this study aims to offer a comprehensive understanding of the dynamic interplay between Islamic law and modern economic realities. It concludes that although challenges are considerable, with thoughtful jurisprudential efforts and institutional reforms, zakat can retain its powerful potential for social justice in the modern world.