Is it permissible to pay Zakat using cash value instead of the specified asset?
Chapter on Zakat on Gold and Silver
Al-Mughni
Book of Zakat
Primary text
It is not permissible to pay Zakat by substituting cash value if the payment is less than the specified amount, such as paying one-third of a Dinar when half a Dinar is due, because the Prophet (peace be upon him) explicitly specified half a Dinar, and a deficit is not permitted. However, if one pays an amount from lower quality wealth whose value equals the obligation, this is permissible. Similarly, paying broken coins when sound coins are due, with an additional amount to cover the difference in value, is permissible, as the obligation is fulfilled in both value and quantity. This principle applies equally if lower quality wealth is given for higher quality wealth.
Supporting text
There is a difference of opinion regarding paying defective wealth for good wealth. Abu Al-Khattab permits it, provided sufficient excess is added to match the value of the good asset. Al-Qadi holds that paying good wealth is mandatory, and one cannot reclaim the defective wealth paid because paying defective wealth constitutes a defect in the right of Allah, similar to paying a sick animal for a healthy one. Al-Shafi'i agrees with Al-Qadi, although some of his school permit reclaiming the defective portion in one narration. Abu Hanifa permits paying inferior quality for superior quality, or broken for sound, without compensation, based on the principle that quality difference holds no weight when dealing with the same genus involving usury.