Islam, being a practical Religion has evolved a complete code of life which has  successfully fulfilled the requirements of the changing times, Not only in the social but also in the economic field it has given an ideal lead to the people, Of all the beneficial principles propounded by Islam, none are more useful for  humanity at large than those governing income and expenditure. The main sources of income to the Islamic Exchequer are Zakat, Ghanimhh, Jizyah (Tithe) and Kharaj. Zakat which literally means growth and purity is a tax on Muslim Capital  owned beyond a certain minimum. Zakat occupies an important place amongst the (Fard) Fundamentals of Islam, the observance of which is binding on Muslims. It is  an ordinance (Fard). According to the Holy Prophet of Islam (upon whom be peace), it was to be taken from the rich among them in order to be given to the poor. "This beneficial tax is called Zakat", writes Aghnides, in Muliammadan theories of Finance "because of its giving lead to an increase of prosperity in this world and growth of religious merit in the Next" The Zakat is a tax levied on capital goods" and is due when one is in "possession of full ownership of a productive Nisab(minimum) of property; and its raye is 2 1/2% of the value of possessions other than land". Tithe is a tax levied on the agricultural produce of the land. The Holy Quran enjoins upon the faithful to pay this tax in these words: "And on the day of its harvest give its Right" (VI:142). The Prophet of Islam determines its rate  as, "In what has been irrigated with rainwater, one tenth and in what has been  watered with buckets or water wheels, one half of the one tenth" (Mishkat). Both these taxes were charged from Muslims only. The Zakat (Growth Tax) is distinguished from the other taxes because it is spent exclusively on poor and needy persons. The Holy Quran states, "The charities are (exclusively) for the poor  and needy, and those who collect it and those whose hearts are to be reconciled  and to free the captives and debtors and for the cause of God--a duty imposed by God" (IX:16). This tax has throughout the centuries contributed immensely to  ameliorating the condition of the poor and has raised their standard of living by  bringing them nearer to rich--economically and socially. This ideal tax which is  levied on idle as well as productive wealth, discourages the accumulation of wealth  and ensures its investment for productive and beneficial purposes. The Prophet   once remarked, "Are there those among you who are the guardians of orphans   who possess property? Then let them trade with it and not leave it uninvested. So    that the Zakat Taxes due on it do not swallow it up" (AI-Tirmizi). The other   sources of wealth obtained in abnormal times are Ghanimah, Jizyah and Kharaj.   Ghanimah is the wealth obtained during the wars, one-fifth of which was deposited   in the Baitul Mal (Public Exchequer). The Jizyah is a tax levied on non-Muslims in   lieu of military service which is compulsory for Muslims but not for non-Muslims.  The amount of Jizyah is much less than theZakat which is levied on Muslims only.   The non-muslims paying Jizyah were exempt from compulsory military service in a   Muslim State but were entitled to full protection. The Kharaj is the annual levy paid  by the conquered countries to the Muslims. The public coffers in which the wealth    obtained through all these four sources was deposited was known as Baitul Mal. In  the days of the Khulafa-i-Raashidin (Pious Caliphs) when the principles of Islam  were strictly followed, the Baitul Mal played a vital role in building up the sound  economy of the Muslims. Out of this Public Treaslury were financed the needy,  destitutes; orphans and other charitable institutions. It was due to this Baitul Mal  that there could hardly be found any needy person among the Arabs, who before   constituted one of the poorest nations in the world. The faithful adherence to   payment of Zakat Tax and the strict maintenance of Baitul Mal during the time of   the Holy Prophet of Islam and his four companions led to the prosperity and the  raising of the standard of living in Muslim countries. Thus the saying of 'the Prophet  of Islam came to be true, "Give Sadaqat freely, as a time is to come when people will offer Sadaqat and there would be none (needy person) to receive them"  (Mishkat). In the short period of 30 years, the Arab economy was established on a sound footing. But during the Omayyad regime, the Baitul Mal was misused and  instead of utilizing this fund for purely charitable and public purposes, the Caliphs  hence-forward used it for furthering their personal interests. Since that time the  Baitul Mal, ceased to possess any importance and degenerated into an ordinary   Imperial Treasury. Undoubtedly there were a few exceptions and Muslim rulers like  Hazrat Omar Bin Abdul Aziz, Sultan Nasiruddin of Delhi and Aurangzeb Alamgir   refrained from spending money out of the public treasury. The Waqf (Endowment)  has been instrumental in financing and thus ensuring the smooth running of a large   number of public and charitable institutions all over the Muslim world, Such institutions include mosques, madrassas (educational institutions) orphanages and hospitals. Large endowments are attached to some of the big public institutions in Muslim countries.