History of taxation, Pre – 1922

Although there is ample evidence to support the claim that income taxes existed even in prehistoric and ancient cultures, contrary to popular opinion, they were only recently instituted. The term "taxation," which means an estimate, is where the word "tax" first appeared. These were occasionally haphazardly collected taxes that were imposed on the sale and purchase of goods or cattle. Almost two thousand years ago, Caesar Augustus issued a proclamation mandating taxation throughout the whole world.

Taxes were also imposed under the Greek, German, and Roman Empires occasionally based on revenue and occasionally based on vocations. The monarch received tax income for many centuries. Taxes on real estate and mobile property, like the Saladin title, were imposed in Northern England in 1188. These were later reinforced by the introduction of poll taxes and what was known as "Ancient Customs," which were indirect taxes on things like wool, leather, and skins.

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These levies and taxes, which came in many different forms and were levied on a variety of goods and professions, were imposed to help governments pay for their military and civil expenditures as well as to provide for the basic needs of the populace like road maintenance, justice administration, and other state-related duties as well as to ensure the safety of the subjects.

The modern system of direct taxation has existed in India in one form or another from the beginning of time. A number of tax policies are mentioned in both Manu Smriti and Arthasastra. According to the Sastras, the king may impose taxes, according to Manu, an ancient scholar and lawgiver. Taxes, according to the wise sage, should be determined by the subject's income and expenses. But he warned the king against paying too much in taxes and said that both extremes, i.e., paying no taxes at all or paying a lot of taxes, should be resolved.

He believed that the king should set up tax collection so that the people paying the taxes would not feel the burden. According to his rules, craftspeople and traders should pay 1/5th of their profits in silver and gold, while farmers should pay 1/6th, 1/8th, or 1/10th of their harvest, depending on their circumstances. Manu's thorough analysis of the subject makes it abundantly clear that even in ancient times, there was a well-thought-out taxation system in place. In addition to this, taxes were imposed on a number of different classes of people, including actors, dancers, singers, and even dancing girls. Taxes were paid with gold coins, cattle, grains, raw materials, and other items, as well as by providing personal service.

There is a tax exemption under section 80g.