Question: I own gold worth about 1,000 dinars and I trade with it—buying and selling. Is zakat due on it, how much, and must I pay the zakat in gold of the same type or may I pay it in cash?

Answer: When a Muslim possesses the niṣāb of gold or more—the niṣāb for gold is twenty mithqāls, equivalent to eleven and a half Saudi gold pounds—zakat becomes obligatory. He must take out one quarter of one tenth (2.5 percent), whether he pays it from the gold itself or pays its equivalent in another currency. And Allah knows best.
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Zakat on debts

Question: I have a friend who owes me money, and I am in urgent need of that sum, yet my friend is insolvent. Is zakat due on this amount even if the debt drags on for years? Should I pay its zakat every year or postpone payment until I receive the money from him?

Answer: The soundest opinion among the scholars is that when a debt is owed by someone who is bankrupt, the creditor pays zakat on it only once, for a single year, when he actually recovers the money. For the past years during which the amount remained in the debtor’s liability, no zakat is required, because the creditor had no assurance of obtaining it. Once he receives the debt, he must pay zakat for one year.
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Question: I have been engaged in trade for seven years. At the end of every year I used to take inventory of the shop’s contents and then pay the zakat, and now I have resolved to