Surah At-Tawba (9) — Ayah 60

60. Charities [65] are only for the poor [66], the needy, those employed [67] to collect them, those whose hearts are to be reconciled [68], for freeing slaves [69], for those in debt [70], for the cause of Allah [71], and for the stranded traveler [72]. This is an obligation from Allah [73]. And Allah is All-Knowing, All-Wise.

[65] Here, "charity" refers only to the obligatory charity or zakat, as is made clear by the later words "as an obligation from Allah." The hypocrites also objected to the distribution of charity, so Allah Himself specified the categories for its distribution, so that there would be no room—or at least very little room—for objection to its allocation. And these are a total of eight categories, which are as follows.
[66]
The Difference Between the Deserving Poor (Miskin) and the Destitute (Faqir) for Zakat:

There are several scholarly opinions regarding the definition and distinction between faqir and miskin. In this regard, the following hadith is decisive. Sayyiduna Abu Hurairah ؓ reports that the Prophet ﷺ said: "A miskin is not the one who goes around to people for a bite or two, who is sent away with a date or two; rather, a miskin is the one who does not possess enough wealth to make him independent, whose condition is not known so that charity may be given to him, nor does he stand up to ask people." [بخاري۔ كتاب الزكوٰة۔ لَا يَسَْٔلُوْنَ النَّاسَ اِلْحَافًا، مسلم۔ كتاب الزكوٰة۔ باب المسكين الذى لايجد غني]

Thus, in terms of need, there is no difference between faqir and miskin. The real difference is that a faqir is one who goes around asking people, while a miskin is one who, despite being in need, remains content and refrains from asking—what we call "white-collar poor" in our society.
[67]
The Worker Should Take Compensation:

That is, all those who collect, distribute, and keep accounts of zakat funds are entitled to compensation or salary from the zakat wealth. Even if someone among this staff is wealthy, he is still entitled to compensation or salary, and he should take it, even if he later gives it in charity, as is clear from the following hadith. Sayyiduna Abdullah bin al-Sa'di says that during the era of Umar ؓ, he came to Umar ؓ. Umar ؓ said to him: "I have heard that you work for the people, and when you are given wages, you dislike it?" I said, "Yes." He asked, "Then what do you mean by that?" I replied, "I have horses, slaves, and wealth, and I wish to give my wages in charity to the Muslims." Umar ؓ said, "Do not do that, for I also intended what you intended. The Messenger of Allah ﷺ would give me something, and I would say, 'Give it to someone who is more in need than me.' The Prophet ﷺ said, 'Take it, become wealthy from it, then give charity. If wealth comes to you without you being greedy for it or asking for it, then take it, and if not, do not worry about it.'" [بخاري۔ كتاب الاحكام۔ باب رزق الحاكم والعاملين عليها مسلم۔ كتاب الزكوٰة۔ باب اباحة الاخذ لمن اعطي من غير مسئلة]

The Provision and Distribution of Zakat is the Responsibility of the Government:

Incidentally, from this sentence, it is also understood that the provision and distribution of zakat is the duty of the Islamic government, and zakat should only be given individually when such a system is not established. If a family, community, or nation collectively arranges for the provision and distribution of zakat, this is better than individual payment.
[68]
Those Whose Hearts Are to Be Reconciled:

With this help, even those disbelievers who are at the forefront of enmity against Islam can be given wealth if it is hoped that, out of greed for wealth, they will abandon their actions and incline towards Islam. Likewise, new Muslims who are not yet able to stand on their own feet in the Muslim society can be given a regular stipend until their economic situation stabilizes. Thus, when Sayyiduna Ali ؓ sent gold from Yemen to the Prophet ﷺ, he ﷺ distributed it among such disbelievers. Sayyiduna Umar ؓ, during his caliphate, abolished this category, saying that Islam had now become dominant and there was no longer any need for this category. However, circumstances do not always remain the same, so when necessary, this category can also be utilized.
[69]
The State of Collective Slavery:

There are two forms of this: one is to buy a slave and set him free; the other is to pay the remaining amount for a slave who has a contract for his freedom (mukatab) and set him free. Nowadays, the era of individual slavery has passed, and instead, collective slavery has become prevalent. Some wealthy countries have made impoverished countries their economic slaves. Therefore, today scholars should consider what possible means there are for the liberation of such enslaved countries. For example, nowadays Pakistan is shackled by usurious loans from foreign countries, especially America, and Muslim traders are wealthy enough that if they cooperate with the government, they could pay off this debt, provided they are assured that this is a valid use of their zakat and that the government is sincere in implementing the Islamic system.
[70]
Payment of the Debts of the Indebted:

Here, debt refers to loans taken for household necessities, not for trade or business, and the debtor is one who, if all his wealth were used to pay off his debt, would be left with less than the cash nisab (minimum amount for zakat). Such a debtor may be employed or unemployed, and whether he is poor or wealthy. His debt can be paid from this category.
[71] That is, every work in which the pleasure of Allah is sought. And this is a very broad field. According to the majority of the early imams, its best use is spending in jihad fi sabilillah, and fighting in the way of Allah is an important branch of this. In other words, from this category, religious schools can be established and their expenses met. In addition, every institution that verbally or in writing serves the religion or defends Islam is included in this category. According to some scholars, the construction and repair of mosques can also be funded from this category.
[72] A traveler, whether poor or wealthy, if he faces such a need during travel, can also be helped—for example, if his pocket is actually picked or his wealth is stolen, etc.
[73]
The Needy Are More Deserving of Zakat:

It should be clear that, in terms of the provision and distribution of zakat, society is divided into three classes. One is the class of the wealthy, from whom zakat is collected; the second is the class of the poor, needy, or indebted, to whom zakat is given; and the third is the middle class, upon whom zakat is not obligatory, nor can they be considered deserving of zakat, as their sources of income are sufficient to meet their expenses. The general definition of a wealthy person is that whoever possesses any item among the zakatable assets in the amount of nisab or more is wealthy, and whoever does not possess any such item in the amount of nisab is poor or needy.

Another noteworthy point is that the poor of the locality from which zakat is collected are the most deserving of it. If any amount remains, it will be deposited in the central treasury (Bayt al-Mal). In this regard, consider the following hadiths:

Sayyiduna Ibrahim bin Ata narrates from his father that Imran ibn Husayn was sent for the collection of zakat. He returned empty-handed, so he was asked, "Where is the zakat wealth?" He replied, "I was sent for the collection and distribution of zakat. I took it from those from whom it should be taken, and gave it to those to whom it should be given." [ابن ماجه۔ ابواب الصدقه]

The Prophet ﷺ was asked, "What is the limit of wealth (ghina)?" He replied, "Fifty dirhams or gold (or cash) of equivalent value." [نسائي۔ كتاب الزكوٰة۔ باب حد الغنيٰ]

And a dirham was a coin of four and a half mashas of silver, and the equivalent of fifty dirhams is two and a half dinars, while a dinar was a coin of three and a half mashas of gold. That is, whoever possesses about nine mashas of gold is wealthy, and such a person will be counted among the middle class. In addition, the following types of people are not entitled to zakat:

a. The person of the Messenger of Allah ﷺ and his relatives, as is clear from the following hadith:

1. Sayyiduna Abu Hurairah ؓ reports that Hasan bin Ali ؓ picked up a date from the zakat dates and put it in his mouth. The Prophet ﷺ said, "No, no," so that Hasan would spit out the date. Then he said, "Do you not know that we do not eat charity?" [بخاري۔ كتاب الزكوٰة۔ باب الصدقة للنبي]

However, if something from charity reaches the family of the Prophet through a deserving person as a gift, it is permissible.

2. Umm Atiyyah says that the Prophet ﷺ came to the house of Sayyidah Aisha ؓ and asked, "Is there anything to eat?" She said, "Nothing except the meat of the goat that you gave as charity to «نسيبه» and «نسيبه» sent to us as a gift." The Prophet ﷺ said, "Bring it. Charity has reached its place." [بخاري۔ كتاب الزكوٰة۔ باب اذا تحولت الصدقة]

3. Sayyiduna Anas ؓ reports that meat was brought to the Prophet ﷺ which had been given to Barirah as charity. The Prophet ﷺ said, "For Barirah it was charity, and for us it is a gift." [بخاري۔ حواله ايضاً]

b. A person who is healthy, strong, and able to earn is not entitled to zakat:

1. Once, the Prophet ﷺ was distributing charity. A man came and asked for charity. The Prophet ﷺ said, "In the distribution of charity, Allah was not pleased with the division of any prophet or anyone else. He Himself decided and divided it into eight categories. If you fall under any of these, I will give it to you." [ابو داؤد۔ نسائي۔ كتاب الزكوٰة باب مسئلة القوي المكتسب]

2. On the occasion of the Farewell Pilgrimage, the Prophet ﷺ was distributing charity. Two strong men came and asked for charity. The Prophet ﷺ looked up at them, then lowered his gaze and said, "If you wish, I will give it to you, but there is no share in charity for the wealthy and the able-bodied who can earn." [ ابو داؤد۔ نسائي۔ كتاب الزكوٰة۔ باب مسئلة القوي المكتسب]

c. Those who are under someone's care cannot be given zakat by that person. For example, a wife and children. Similarly, if a father has become old and his care is the responsibility of his son, the son cannot give zakat to his father.

As is clear from the following hadith: A man came to the Prophet ﷺ and said, "I am a man of means, and my father is in need." The Prophet ﷺ said, "You and your wealth belong to your father. Your children are your pure earnings, and you may eat from your children's earnings." [ابو داؤد۔ ابن ماجه بحواله مشكوة۔ كتاب الزكوٰة۔ باب النفقات وحق المملوك]

In this respect, a woman can give zakat to her husband, because the husband is not under the wife's care.

As is clear from the following hadith: Sayyidah Zainab (wife of Abdullah bin Mas'ud ؓ) came to the Prophet ﷺ. There she found another Ansari woman at the door of the Prophet ﷺ, who had come to ask the same question that I wanted to ask. Meanwhile, Bilal ؓ came out. We said to him, "Ask the Messenger of Allah ﷺ if I give charity to my husband and some orphans under my care, will it be valid?" We also told Bilal ؓ not to mention our names. Bilal ؓ asked the Prophet ﷺ, "Two women are asking this question." The Prophet ﷺ asked, "Which women?" Bilal ؓ said, "They are named Zainab." The Prophet ﷺ asked, "Which Zainab?" Bilal ؓ said, "The wife of Abdullah bin Mas'ud ؓ." The Prophet ﷺ said, "Yes, this charity is valid, and for her there is a double reward: one for kinship and one for charity." [بخاري۔ كتاب الزكوٰة۔ باب الزكوٰة على الزوج والا يتام فى الحجر]