Total abstinence from lying

Hazrat Imam Zainul Abedin (a.s.) says, 
"Avoid falsehood, whether it is small or big, in solemnity or jest." 
(Al Kafi)

Hazrat Amirul Momineen (a.s.) said, 
"No man can taste faith, till the time he completely forgoes lying, in solemnity and in jest." 
(Al Kafi)

It is also related from Amirul Momineen (a.s.) that he said:
"There is no merit in falsehood, whether in seriousness or in jest. Do not even promise your child something if you do not intend to fulfill it. Certainly, falsehood leads man to sin (fearlessly) and (this) leads to the Fire." 
(Wasaelush Shia)

The Holy Prophet (s.a.w.s.) in his advice to Abu Zar Ghaffari (r.a.) says:
"O Abu Zar one who protects his private parts and his tongue shall enter Paradise. One who utters a small falsehood in company of people to make them laugh, that same lie shall take him towards Hell."

"O Abu Zar, woe be upon the one who speaks falsehood to make people laugh. Woe be upon him woe be upon him O Abu Zar. One who remains silent will obtain salvation. Then silence is a must for you (in place of falsehood). Not even the smallest lie should be uttered by you."

Abu Zar (r.a.) says that he asked, 
"O Messenger of Allah, what is the repentance of the one who has intentionally spoken a lie?"

The Holy Prophet (s.a.w.s.) replied:
"The sin shall be erased by Isteghfar (seeking forgiveness) and by the five-times prayers." 
(Wasaelush Shia)

The Prophet of Allah (s.a.w.s.) is quoted to have also said:
"Curse be upon the liar if he has lied in jest."

It is also narrated from the Messenger of Allah (s.a.w.s.) that he remarked, 
"I guarantee a house in the best part of Paradise for one who refrains from a dispute even when he is on the right, and a house in the mediocre-grade area of Heaven for one who refrains from falsehood even in jest, and a house in the garden of Paradise for a person with the best morals." 
(Khisaal)

Lying in jest is a sin but it is not a greater sin. However if this joke hurts the feelings of a believer or causes him physical harm or is an insult to him, it will be a greater sin.

Exaggeration is not falsehood

Common hyperboles in a conversation are not falsehood. For example after relating a certain thing one says:
"I have told you a hundred times!" Obviously, he has not repeated his statement a hundred times and it is also clear that by "hundred" he does not imply the figure "100"; but rather it means that he has said it a number of times.

Similarly other figures of speech are also permitted, especially in poetry.

No falsehood should be regarded as insignificant

It is commonly seen that when the host asks his guests to stay on for dinner or lunch, the guests say, "we are not hungry;" although in reality it is not so. Consequently it is a lie. People tend to ignore such lies and consider them insignificant. The traditions denounce them in unequivocal words, and their prohibition is clearly established in the Islamic law.

Asma Binte Umais says:
"On the first night of Ayesha's wedding, the Holy Prophet (s.a.w.s.) gave me a bowl of milk and told me to give it to the ladies. The women said, "we are not hungry." When the Holy Prophet (s.a.w.s.) heard this, He said:
"Do not bring together hunger and falsehood."

Asma asked the Prophet (s.a.w.s.), 
"O Messenger of Allah (s.a.w.s.), if we desire something but verbally refuse it, is it a lie?"

The Holy Prophet (s.a.w.s.) said, 
"Yes! Certainly every kind of falsehood is recorded, (in the scroll of deeds) even the smallest of the small lies is written." 
(Safinatul Behaar)
If a person, just for the sake of formality, invites others, 
"Please come, and visit us sometimes," when he actually does not desire so, it is not a lie. Because the word "come" is conditional and uncertain. It is neither a truth nor a falsehood. But it is better to refrain from such a show of politeness, because to say something which you do not mean is a sign of hypocrisy.

One day, Imam Ja'far as-Sadiq (a.s.) was seated with his son Ismail when one of his followers arrived, saluted him and sat down. When the Imam (a.s.) stood up and walked towards the ladies portion, the man also followed till the door. Imam (a.s.) bid farewell to him from there. Later, Ismail asked his father, "Why didn't you invite him inside just for the politeness sake?"

Imam as-Sadiq (a.s.) said, 
"It was not proper to invite him inside. I did not wish him to come inside. Neither did I wish that Allah should include me among those who say one thing and wish another."
(Behaarul Anwaar)

A False dream

One type of falsehood is that a person says:
"I dreamt such and such." Or attributes falsely a dream to someone else when it is not so. This is also falsehood.

The Holy Prophet (s.a.w.s.) says that the worst types of falsehood are three:
1. To call someone as the son of someone other than his (real) father.
2. To relate a dream that one has not seen.
3. To say something which is not said by me.

One kind of falsehood is to relate folk tales, which are not based on reality but are considered true. The Holy Prophet (s.a.w.s.) says:
"The worst of the narrations is to narrate false history."

Falsehood in examples

Examples are used to explain, understand and remember some intellectual concepts. Sometimes, animals are shown as conversing among themselves. (For example, there is a poem by Allamah Iqbal where a squirrel advises the mountain to give up pride). Now everyone knows that such things are not possible so there is no risk of anyone having a misunderstanding. On the other hand they serve a useful purpose. Hence such examples are permitted. We find such types of examples in the narrations of Ahlul Bayt (a.s.).

Moreover there are also narrations that prove the permissibility of explaining facts and truthful concepts through the media of stories and anecdotes.

Imam Hasan (a.s.) mentions a simile

Hazrat Imam Hasan (a.s.) was in the court of Muawiya when a man said something uncivil about Imam (a.s.). Imam Hasan (a.s.) replied:
"O Umar Ibne Uthman! How stupid is your nature that you cannot understand. Your simile is like the mosquito that considered itself great. It perched on a date palm and when it took off in the air it said to date palm, 
'Be careful! I am about to land on you once more.'

The tree replied, 'I don't even know since when you had perched upon me, so how can your flying away affect me?'

Listening to a lie is haraam

It must be known that just as it is haraam to speak falsehood, it is also haraam to listen to it while knowing that it is a lie. And just as it is haraam to read or write falsehood, it is also haraam to quote a lie. The Quran has denounced the Jews and the polytheists for spreading untrue things. It is said regarding them, 
"(They are) listeners of a lie."
(Surah Maidah 5:42)

Shaykh Sadooq (r.a.) has recorded that Imam Ja'far as-Sadiq (a.s.) was asked, 
"Is it allowed to listen intently to a liar?"

Imam (a.s.) replied, 
"One who listens intently to a speaker, worships him. If the speaker is (speaking) from Allah the listener has worshipped Allah. But if the speaker is (speaking) from Satan the listener has worshipped Satan."

A similar kind of tradition is recorded from Imam Muhammad al-Baqir (a.s.) in the book Al Kafi.