1) Ancient India had a well-defined taxation system that was an important source of revenue for the state. Taxes included land tax, trade taxes, fines, and voluntary contributions. 2) Taxation principles emphasized protecting citizens, minimizing burden, and spending revenue on public welfare. Taxes were meant to be reasonable and not oppressive. 3) Revenue was used to fund administration, roads, healthcare, and other public services, reflecting the idea that taxes were payment for protection and social benefits provided by the state.

1. Dr. Rajiv Kumar Jaiswal
Assistant Professor
Dept. of AIHC & Archaeology
VCW, KFI, Rajghat, Varanasi
Vishti
Pranay
Kar
Udranga
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2. Introduction
• The evolution of government in ancient India presupposes the existence of some
forms of finance since it was impossible to ignore the importance of finance in
administration. The king of the state had unlimited power over the wealth of his
subjects as well as of enemies whom he conquered.
• A well filled treasury was the fundamental condition of the existence and strength
of the government.
• The sense of security was well recognized as fundamental to the growth of capital
and consequent economic prosperity to the kingdom.
• A well defined system of finance would minimize the excesses of the wealth of the
people without encroaching upon its root.
• The right to taxation is inherent in the government but according to the ancient
Indian thinkers it is not an unconditional right. Here it was no protection, no tax. It
was the duty of the King to protect the people from harsh and unjust
administration

3. Cont…..
• Treasury or Kosha was an important element of state and the ancient India
Economist/ Thinker’s attached much importance to the financial aspects of
the state. Due attention was paid to the treasury which formed the
backbone of all state undertaking.
• The revenue in the early Vedic period consisted mainly of the voluntary by
rich, and the compulsory tributes paid by the weak tribal king’s. The Vedic
people were acquainted with some principal of taxation viz: Bali and
Shulka.
• Here we come across for the first a conception of state’s revenue from
agricultural produce and contribution in cattle which were compulsory in
character.
• With the elaboration of state power, taxes multiplied and the importance
of finance was realized.

4. Sources:
• The Smritis: Manusmriti, Vishnusmriti, NaradSmriti
• The Buddhist literature: Milindapanho, Avadansatak, Divyavadan,
Mahavamsa,
• Epic: Mahabharata (MBH),
• The Arthashastra of Kautilya
• Literature: Apastamba Sutra, Gautam Sutra, Amarkosha, medhatithi
• Foreign account: account of Arrian, Megasthnese, Diodoros, Stabo, pliny,
account of Fa-haien & Xuan-cwang, Alberuni
• Inscriptions: Mahasthan and Sohagaura ins, Rummindei ins of Ashoka, Karle
cave ins of Vasisthaputra Pulumavi, Junagarh rock cut ins of Rudradaman,
Usavadata’s Nasik ins and Several Gupta ins,
give us an insight into the early nature of Taxations.

5. Principles of Taxation:
• There are references in the MBH to show the diverse activities of the state in the
realm of Vartta for the purpose of filling its treasury. Multiplicity of taxes is to be
found in the MBH. Sovereign property consisted of crown lands, waste lands,
forests, mines, natural tanks, reservoirs, which yielded considerable income to the
kingdom. They also claimed mines and salt deposits.
• Rigveda refers to the permanent sources of income but in course of time a
multiple system of taxation was adopted.
• Apart from the direct revenues of the state, there were several derivative sources
of revenue obtained from taxes, fees, fines, penalties and other miscellaneous
sources.
• The concept of multiplicity of taxes is clear from Kautilya, Manu and the MBH.
• Taxes were regarded as wages of the king for the services of administration.

6. Cont…..
• Both Kautilya and Manu suggest that the king should draw reasonable taxes
and certain principles are to be kept in view while levying taxes.
• The kings is likened to a gardener. He should not use improper means for
collecting taxes. The ruler should act like a Bee which collect Honey without
causing pain to the plant.
• He was to act like Sun and Indra in the collection and distribution of
resources.
• King was not to forget that nothing exposed him to greater hatred than
oppressive taxation. Taxation should be of a type that is least felt by the
people. No demand was to be made on those who had not enough for their
own subsistence.

7. Cont…..
• Taxes should be gradually imposed with mildness and at proper time. Taxes
on merchandise should be fixed once and for all after proper consideration
of all the pros and cons. The principles of economy implies minimum
possible cost of collection. Manu and MBH are clear in this point.
• Kautilya illustrates the principle of elasticity by suggesting that the king
should exploit resources without being harsh and unsympathetic to his
subjects.
• Taxes should be rationalized and diversified according to convenience. The
principle of equity was applied in times of calamity and also during the
emergencies. The long list of taxable commodities shows a developed state
of administrative organization.
• Dificit was to be avoided as far possible.

8. Cont……
• Alberuni has stated that the Indians pay one-sixth of their income to the king
in recognition of the protection he affords to his subjects, their property and
their families.
• MBH, Manu, Vishnu, Kautilya and others confirms that the king’s
recompense for protection was to be one-sixth. The idea of protection as
justification for taxation was well-conceived in ancient India.
• The MBH suggests that, king should cause annual revenue to be collected by
responsible and trustworthy persons. The tax was wage a for the king. Taxes
were collected for social security and protection of the people.
• The Vaisyas were encouraged to multiply money.

9. Cont…..
• According to Apastamba: the king to collect only lawful taxes. Lawful taxes
are those which are sanctioned by customs and approved by smritis.
• Unreasonable taxes are criticized. The rulers are advised to rule righteously
and not to oppress the people. Though one-sixth was the usual share, other
rates were also in vogue under different circumstances. Oppressive taxation
were not unknown. The Jatakas have numerous references to this aspect.
Epigraphic sources also imply that the state functionaries sometimes
oppressed the rural people and imposed on them annoying taxes.

10. Sources of Taxation:
• The main resources of revenue included:
Rastra (country parts)
Durga (cities on forts)
Khani (mines)
Setu (irrigatinal projects)
Vana (forests)
Vraja (heard of cattle)
Merchandise
Treasure trove
Voluntary contribution

11. Cont….
• Income from private lands: we know that land formed the chief source of
revenue in ancient India. Shadbhāga or one-sixth denoted the regular share
of king in kind.
• Land revenue differed with different varities of soil and crops.
• The Rummindei pillar ins of Ashoka shows that the usual rate of one-sixth
was reduced to one-eighth in the village of Lumbini [birth place of Sakya
Muni (Buddha)] as a special case.
• Gautam refers to one-sixth, one-eighth and one-tenth on good, intermediate
and bad qualities of soil.
• Kautilya recommends one-third and one-fourth in times Emergency.
• The rate varied according to the soil, productivity and irrigation. It is evident
from the Karle cave ins of Vasisthaputra pulumavi.

12. Cont….
Bali: a type of tax forcibly collected by officials (during mauryan pd. It’s a
religious tax and Ashoka remitted Bali altogether in Lumbini).
Kar: Tax paid in money
Bhāg: land tax paid by farmers
Vishti: forced labour
Hiranya: tax upon commercial crops
Pranay: Emergency tax
Vastu: income coming from the cities
Sulka: tax on trade
Gulmadeya: according to Kautilya, a type of tax paid by the merchants
dealing in foreign merchandise. Gulmadeya= duty tax

13. Cont….
Utsang: tax collected on the occasion of the birth of a prince. (excess tax)
Udakabhāga: irrigation tax
Uparikar: extra cess
Udranga: tax on permanent tenants
Income from Crown property: Crownland constituted the mainstay of
finance. Diodoros refers, the tax paid by the cultivators to the royal treasury
amounted to one-fourth of the produced in the absence of special
arrangements. Even Kautilya refers to one-third and one-fourth according to
the taxable capacity of the people in difficult times. Diodoros refers mainly
to the Crown lands.

14. Cont…..
• There were also income from the state controlled establishment. The
prostitutes (Ganikā) had to pay tax on two day’s earning in a month.
Actor, singer and dancers etc also had to pay taxes to the state treasury.
There was also a passport fee.
• State income was derived from the Vraja (herds). Fines and penalties
formed important sources of income. Kautilya mentions 340 kinds of
fines. The heirless property was usually inherited by the state.
• The royal grants carried exemptions from taxation, viz Brahmadeyas: land
gifted to Brahmanas and exempted from all type of tax.
• Women, students living with teachers, sudras, blind deaf, dumb and
diseased persons were also exempted

15. Cont…..
• The armour and the implements makers, ship builders, artisan etc were not
only free from payment of taxes but also received maintenance from the
royal fund.
• Sometimes taxes were also remitted by kings like Ashoka and Kharvela. The
kings had prerogative to grant immunity to any individual. Remission of taxes
as a relief to cultivators is inculcated I the Arthashastra and the MBH.
• Merchants and mariners dealing in foreign goods were favoured with
remission and such concession comprised exemptions from payment of Vyaji
(premia on sale). Such merchants were also immune from payments of trade
viz. Sulka, Tarpanya and Gulma. Further concession were also granted if
necessary.

16. Concluding remark’s
• In nut shell, taxation system in ancient India was well organized and certain
principles guided the course of public expenditure in ancient India also.
The welfare of the public was the prime consideration of the state and a
huge amount collected from tax was spent on the welfare activities in
ancient India. According to Manu, the King should shower benefit on his
people.
• Ashokan ins and Greek authors testify to the welfare activities of the
Mauryan state. Medical facilities were provided by the state. Ashoka made
medical arrangements for both men and animals.
• Construction and maintenance of roads was one of the primary duties of
the state.
• And ruler’s also spent a huge amount on the maintenance of royal dignity.
• On the whole social benefit was major consideration of early Indian
economy.