There are two types of Zakat:

1. Zakat al-Fitr: This is done during the Islamic celebration called ‘Eid-al-Fitr that happens after the fasting month of Ramadhan. The amount paid is similar to 3kg of rice or wheat that is found locally.
2. Zakat al-Mal is compulsory for those who have attained a certain amount of wealth (nisab) and ownership of some types of assets for one lunar year (haul). There are several kinds of wealth that must be paid as zakat such as revenue, agricultural, livestock, treasure, investment, gold and silver, mining products and income. Some scholars have different opinions about zakat on income. The scholars who believe there is zakat on income compare it to zakat on agricultural harvest.

Allah says:

وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ وَارْكَعُوا مَعَ الرَّاكِعِينَ

“And establish prayer and give zakah and bow with those who bow [in worship and obedience].” (Surah Al Baqarah 2:43)
 
People that are entitled to receive Zakat:

إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِّنَ اللَّهِ وَاللَّهُ عَلِيمٌ حَكِيمٌ

“Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler – an obligation [imposed] by Allah. And Allah is Knowing and Wise.” (QS At Taubah 9:60)