Manu Smriti and Arthshastra, Income tax

Manu Smriti

The earliest and most important source of income tax regulations is the Manusmrti. Manusmrti emphasises the subjects' strategic imposition as well as regulation of income tax.

It states that taxes cannot be an unpleasant process for the subjects. Taxation must be fair enough that it can both achieve a realistic revenue goal and be seen favourably by the general public.

The Manusmriti's provisions for income tax are as follows:-

(i) Traders would pay 20% of their earnings.

(ii) 20% of income would be paid by artisans.

(iii) Farmers would pay 1/6, 1/8, or 1/10 of the production's overall worth.

Depending on the factors affecting crop output, the rates change. Additionally, income tax had to be paid by dealers and artists in the form of gold or silver.

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Arthashastra

In India, the Arthashastra is another important source of tax rules and regulations. The Arthashastra is the most important document in Indian literature that explicitly discusses public money, financial management, and financial legislation.

In the early 2300s BC, Kautilya wrote the book. The growth of India's income tax system was said to have been significantly impacted by it.

Kautilya made reference to the taxation system's guiding idea of "greatest social benefit."

The idea of creating a clear tax law was raised in the book. The book contains predetermined policies, tax slabs, and tax collector duties.

Also encoded were the frequency of payments, payment deadlines, amount, and kind of accepted goods.

The book also included information on toll fees, product import and export taxes, etc.

The Arthashastra's guidelines for income taxation are as follows:-

(i) Farmers would pay a flat tax on land equal to 1/6 of their production.

(ii) The wealthy would pay more taxes, while the less fortunate would pay lesser taxes.

(iii) The tax collectors are treated strictly according to the law.

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