What is the ruling on paying Zakat using defective currency for standard currency?
Chapter on Zakat on Gold and Silver
Al-Mughni
Book of Zakat
Primary text
If one pays lower quality (defective) currency for standard currency, and adds an excess amount equal to the value difference, it is permissible as the obligation is met in both value and quantity. The main opinion holds that this is valid. The supporting evidence relies on the fact that the required payment is specified in both amount and description; thus, a deficiency in description is not permitted just as a deficiency in amount is not permitted. Usury does not apply here because the payment is a right due to Allah, and there is no usury between a servant and his Master, nor is usury considered in Zakat, whose purpose is societal welfare, enriching the poor, and thanking Allah.
Supporting text
The counterargument states that paying two defective items for one good item (in livestock or grains) is not permissible. The response distinguishes this by stating that if the defect is only in value and the values match, it is permissible for currency, as the primary intent of currency is its value. For other assets, the intent is the use of the asset's essence, so matching value alone is insufficient as part of the intended purpose might be lost.