Categories of People Eligible For Zakat

 There are 8 types of people who are eligible for zakat as Allah mentions in Quran: 

"Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom."

— Qur'an, Sura 9 (Al-Tawba), ayat 60[55]

List of People Eligible For Zakat

Traditionally, Islamic scholars have interpreted this verse to mean that zakat should be given to the following eight Muslim causes:

1-  Those without means (Al-Fuqar'),[56] the poor

2- Those in need (Al-Maskn)

3- Zakat Collectors

4- Encourage recent converts to convert to Islam (Al-Mu'allafatu Qulbuhum)

and potential allies of Islamic cause.

5- Slave of a Muslim who has or intends to free from their master.

6- Those who have incurred overwhelming debts trying to meet basic needs, debtors who have incurred debts pursuing a worthy goal.

7- Jihad in the way of Allah by pen, word, or sword or Islamic warriors who fight against unbelievers but are not salaried soldiers.

8- Stranded travellers who have a noble goal but cannot reach it without financial assistance

Zakat Cannot Be Given To These People

1- Own Parents 

2- Grandparents 

3- Children 

4- Grand Children 

5- Spouses 

6- Descendants of the Muhammad (Peace Be Upon Him)

Does Quran or Hadith Mention The Method For Distributing Zakat?

Neither the Quran nor the Hadiths specify how zakat is divided into the eight categories.

Different Islamic School of Thoughts on Zakat Distribution

The Shafi'i school requires zakat to be distributed equally among the eight categories of recipients, while the Hanafi school allows zakat to be distributed to all, some, or none of the categories. Classical Islamic schools of law, including Shafi'i, agree that zakat collectors should be paid first, with the remainder distributed equally among the remaining seven categories of recipients, even if one group has greater need.

Can Non-Muslims Receive Zakat? 

Scholars disagree on whether non-Muslims can receive zakat. According to Islamic tradition, only Muslims can receive zakat.  Some recently stated that zakat may be paid to non-Muslims after Muslim needs are met, citing no evidence in the Quran or sunna that it should be paid only to Muslims. 

Can Zakat Funds Be Used For Other Causes Than Mentioned Here? 

Some Salafi adherents argue that zakat funds should be used for social welfare, economic development, and science and technology education. Some argue that spending them to defend a Muslim country is permissible.

Can Zakat Funds Be Invested?

It is also forbidden to invest zakat funds instead of giving them to one of the eight categories listed above. 

References: 

Fiqh al Zakah (Vol. I), Dr. Yusuf al Qardawi

The Zakat Handbook: A Practical Guide for Muslims in the West

The Institution of Zakat: An Obligation and an Opportunity (2005) The Central Zakat Committee of The Council of Islamic Organizations of Greater Chicago