Zakah plays a very important role in the development and welfare of the economy in the system of Islam. No one can deny the role of Zakah for the enhancement of the welfare of the economy. It has been empirically observed that Zakah has significantly impact on the variables like poverty, rehabilitation of the poors, provision of the basic needs and etc. during the period of Prophet (peace be upon him) and Khulfa-i-Rashdin System of Zakah is not only substitute for the social security system of the modern world but it is also has a positive and remarkable effect on the income distribution. In this present paper it has been concluded that the System of Zakah is a best example even for the welfare of the modern world.