Question

What is legal tender money?

Answer 1

1. Legal tender money can be classified as either limited or unlimited legal tender. Limited legal tender refers to the type of money that is accepted for transactions only up to a specific maximum amount.

2. Beyond this specified limit, people are not obligated to accept such money. The government determines this limit through legislation. For instance, in India, small denomination coins such as 5, 10, 20, and 25 paise are recognised as legal tender only up to ₹1000.

3. Beyond that threshold, individuals have the right to refuse accepting such coins. On the other hand, unlimited legal tender refers to money that must be accepted for any amount, without restrictions. In India, currency notes of all denominations fall under this category and are accepted without any upper limit.