Kautilya's concept of taxation
It's not difficult to see the justification for Kautilya's emphasis on government spending and the taxation system in the Arthasastra. He believed that the strength of the government's finances was a key factor in its authority.
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However, he saw revenue and taxes as the sovereign's means of payment for the protection, services, and maintenance of law and order he was expected to provide for the people. In order for land tax to be collected as a primary source of income for the State, Kautilya emphasised that the King was simply a trustee of the land and that it was his responsibility to protect it and increase its productivity.
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The relationship between the King and his subjects was based on Dharma, and it was the King's sacred duty to protect his citizens in light of the tax collected, and if the King failed in his duty, the subject had the right to stop paying taxes and even to demand a refund of the taxes paid. According to him, the tax was not a mandatory contribution that the subject was required to make to the State.
The Mauryan Empire's tax administration system was likewise thoroughly documented by Kautilya. The modern tax system's striking resemblance to the one that was popular roughly 2300 years ago is astounding. Each tax was precise, according to the Arthasastra, and there was no room for arbitrariness. Each payment's schedule, including the amount, timing, and method, was all precisely planned. The land revenue was set at 1/6 of the product's value, while import and export tariffs were calculated using an ad valorem method. In general, 20% of the value of imported items was subject to import taxes.
The same was true for tolls, road cess, ferry fees, and other levies. The idea of taxes in Kautilya is somewhat similar to the one in use now. His overall focus was on the justice and equality of taxes. In comparison to others who weren't as lucky, the wealthy had to pay more in taxes. People with illnesses, minors, and students were awarded tax exemptions or appropriate remissions. The tax collectors kept current records on collections and exemptions.
The various sources listed above contributed significantly to the State's overall revenue. Other revenue sources included land earnings (Sita), religious levies (Bali), and taxes collected in cash (Kara). Road and traffic toll revenue was known as vanikpath.
He categorised tax receipts under the heading of land revenues and trade taxes. These taxes ranged from annual levies to half-yearly taxes such as Bhadra, Padika, and Vasantika. The taxes on commerce included direct taxes, taxes on trade and professions, custom duties, and duties on sales. The non-tax revenues were made up of the fruits of the State's planted lands, the profits made from the production of oil, sugarcane, and beverages, as well as other State-conducted business.
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