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Concept of Taxation in Islam?


Wiki User

The concept of taxation is quite different in Islam.

Islam doesn't tax Income, it tax saving. Hence what ever you left after your expenditure or what ever you left as saving after your expenses are taxable in Islam.

This would be significant impact on economy. Your expenditure is someone's income. So if your savings are taxed, you tried to expense out more. Hence more you expense ,more income is generated for other society members.

The process doesn't stop here. It would be an accelerator affect. As more expenditure occur, more income generated in society , hence more opportunities for new income generation would take place, more job opportunities would be generated, more businesses to established etc etc. In short a single step has a tremendous accelerator affect on economy.