Offering a scarf may seem to be a very simple gesture but in Tibetan traditions it has its own significance and protocol and is governed by tradition. To present a Khata, you first fold it in half length-wise. This represents the interdependence of each other. Then when you offer the scarf to a person, you offer the open edges facing the person you are giving; the folded section will be towards you, which represents your open pure heart, with no negative thoughts or motives in the offering.
There are two general purposes for offering Khatas, with greetings and well wishes being common to both:
RESPECT/GRATITUDE. For holy sites, honored monks, teachers, dignitaries and elders, the scarf is given with folded hands near your forehead, with a humble bow before them, with head bent over and palms joined in respect. You never put the Khata over their neck in this situation. In most cases the giver will receive his or her Khata back from the given, as a token of blessing back to them, especially when you visit high lamas and teachers. It is custom to put Khatas over statues, thangka painting, pictures of reincarnated Rinpoches and altar spaces. A Khata offered to H. H. the Dalai Lama and received back by a Tibetan personally will be cherished and preciously kept as it is now a very special blessing, a talisman and protector. It may never come back into recirculation from that Tibetan again. It is also flown and put on Prayer Flags before one hangs them as a sign of your prayers being sincere and pure, also as on offering to the gods for swift accomplishment of prayers and wishes.
AFFECTION/CELEBRATION. This is for special events, like marriage, birthdays, New Year, farewell and safe journey, welcome home, honor celebration of events and happenings, death ceremony and other day to day events in life’s journey. On these occasions you can offer khatas around the neck of recipients provided they are not from the first category, or lay it over the body, in the case of someone who is deceased.
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Thanks to Tibetan Prayer Flags for this information.