Jhooth Bole Kauwa Kaate is the story of Shankar (Anil Kapoor) and Urmila (Juhi Chawla) who fall in love, but are afraid of telling the truth to Neha's strict and old fashioned father Abhayankar (Amrish Puri). Shankar moves into Urmila's parent's house as a tenant to win their heart.

Meanwhile, Abhayankar makes plans to marry Urmila to his friend's son Chanakya (Sajid Khan). Casual lies told to impress Urmila's father backfire and cause him to suspect Shankar's motives. Unable to resolve their problem the two lovers seek the help of family friend Rashid Khan (Anupam Kher).

Are they able to convince Abhyankar to accept Shankar? What happens when Abhayankar discovers the truth?