Question

Distinguish between limited legal tender and unlimited legal tender.

Answer 1

Limited legal tender and unlimited legal tender:

1) The rupee notes of higher denominations are considered unlimited legal tender because they can be used for settling claims relating to high-value transactions. For example, 100/500/1000 rupee notes.

2) Coins of smaller denominations are considered limited legal tender because they are acceptable only for meeting financial transactions of lower value. For example, 1/2/5 rupee coins for satisfying the smaller requirement.