There are very few punishments that followers of the Quran are specifically commanded to apply when a crime is committed. One of these is the punishment for stealing. Unfortunately, there are two major misunderstandings that many people have regarding this verse.
[5:38] The thief, male or female, you shall mark (fa-iq’ṭaʿū) their hands as a punishment for their crime, and to serve as an example from GOD. GOD is Almighty, Most Wise.
(٣٨) وَالسَّارِقُ وَالسَّارِقَةُ فَاقْطَعُوا أَيْدِيَهُمَا جَزَاءً بِمَا كَسَبَا نَكَالًا مِنَ اللَّهِ وَاللَّهُ عَزِيزٌ حَكِيمٌ

Cut vs. Severe
The more major of the two misunderstandings is in regards to the meaning of the word fa-iq’ṭaʿū (فَاقْطَعُوا), which you will typically see in most translations as sever. It is because of this misunderstanding of this verse that for many years in Muslim countries, people who are found guilty of theft have their hands cut off.
The issue is that while the word can mean sever, it can also mean to cut or mark. We see this in the example of Sura 12, Joseph, where the women were so mesmerized by Joseph that they cut their hands. Obviously, they did not sever their hands but merely cut their hands.
[12:31] When she heard of their gossip, she invited them, prepared for them a comfortable place, and gave each of them a knife. She then said to him, “Enter their room.” When they saw him, they so admired him, that they cut their hands. They said, “Glory be to GOD, this is not a human being; this is an honorable angel.”
فَلَمَّا سَمِعَتْ بِمَكْرِهِنَّ أَرْسَلَتْ إِلَيْهِنَّ وَأَعْتَدَتْ لَهُنَّ مُتَّكَأً وَآتَتْ كُلَّ وَاحِدَةٍ مِنْهُنَّ سِكِّينًا وَقَالَتِ اخْرُجْ عَلَيْهِنَّ فَلَمَّا رَأَيْنَهُ أَكْبَرْنَهُ وَقَطَّعْنَ أَيْدِيَهُنَّ وَقُلْنَ حَاشَ لِلَّهِ مَا هَٰذَا بَشَرًا إِنْ هَٰذَا إِلَّا مَلَكٌ كَرِيمٌ

[12:50] The king said, “Bring him to me.” When the messenger came to him, he said, “Go back to your lord and ask him to investigate the women who cut their hands. My Lord is fully aware of their schemes.”
وَقَالَ الْمَلِكُ ائْتُونِي بِهِ فَلَمَّا جَاءَهُ الرَّسُولُ قَالَ ارْجِعْ إِلَىٰ رَبِّكَ فَاسْأَلْهُ مَا بَالُ النِّسْوَةِ الّٰتِیۡۤ قَطَّعْنَ أَيْدِيَهُنَّ إِنَّ رَبِّي بِكَيْدِهِنَّ عَلِيمٌ

Interestingly, the same root as fa-iq’ṭaʿū ( فَاقْطَعُوا ) used 5:38 occurs only a few verses before in 5:33 in the word ( تُقَطَّعَ ) which has the meaning of severing, except in this occurrence it uses the form with a shaddah on top of the ta ( طَّ ), rather than the form without ( طَ ) like it is in 5:38. This is signifying that we are to interpret these two words differently as they are used in conjunction to one another being only a few verses apart.
[5:33] The just retribution for those who fight GOD and His messenger, and commit horrendous crimes, is to be killed, or crucified, or to cut off their hands and feet on alternate sides, or to be banished from the land. This is to humiliate them in this life, then they suffer a far worse retribution in the Hereafter.
إِنَّمَا جَزَاءُ الَّذِينَ يُحَارِبُونَ اللَّهَ وَرَسُولَهُ وَيَسْعَوْنَ فِي الْأَرْضِ فَسَادًا أَنْ يُقَتَّلُوا أَوْ يُصَلَّبُوا أَوْ تُقَطَّعَ أَيْدِيهِمْ وَأَرْجُلُهُمْ مِنْ خِلَافٍ أَوْ يُنْفَوْا مِنَ الْأَرْضِ ذَٰلِكَ لَهُمْ خِزْيٌ فِي الدُّنْيَا وَلَهُمْ فِي الْآخِرَةِ عَذَابٌ عَظِيمٌ

From this, it is clear that the punishment for stealing is not to sever a thief’s hand but to cut or mark. Additionally, we have mathematical signs to confirm this understanding:
- Number of verses between 12:31 and 12:50 is 19 verses
- If we add the sura and verses of 12:31 and 5:38 they both equal 43
- The verse mentioning the cutting off a thief’s hand occurs in verse 38 = 19 x 2
- 5:33 mentions the same root in the context of severing: 5 + 33 = 38 = 19 x 2
This shows that contrary to common belief, the thief’s hand shall not be cut off. Thank God for His mercy and His mathematical miracle in the Quran; we know now that the thief’s hand is to be marked.
Both Hands
The second misunderstanding from this verse stems from the dual use of the word hand “aydiyahumā” ( أَيْدِيَهُمَا ) used in this verse.
[5:38] The thief, male or female, you shall mark [both] their hands as a punishment for their crime, and to serve as an example from GOD. GOD is Almighty, Most Wise.
(٣٨) وَالسَّارِقُ وَالسَّارِقَةُ فَاقْطَعُوا أَيْدِيَهُمَا جَزَاءً بِمَا كَسَبَا نَكَالًا مِنَ اللَّهِ وَاللَّهُ عَزِيزٌ حَكِيمٌ

Some people understand this to mean that both hands must be marked, but upon careful analysis, we see that the use of the dual form is not in regards to both hands but in regards to both the male and the female thief. This is clear because the word kasabā ( كَسَبَا ) which is the dual form as well and is translated as “they both earned.” This shows that the dual form used for the word “hand” is not in reference to two hands of one individual but in regards to the two entities mentioned, e.g. the male thief and the female thief.