“A full treasury is a guarantee of the prosperity of the State” says Kautilya who advocated the idea that the most important duty of a monarch was to keep his treasury full at all times for all works.
The taxes were levied both in cash and in kind and were collected by the local officers. The chief source of revenue was the land tax which was one-sixth to one-fourth of the produce, and was collected by the revenue officer, agronomic, who measured the land, levied the tax and collected it.
For irrigated land the tax was slightly more, but reduced if it was less productive. The second major source of income was toll tax which was imposed on all articles (except grain, cattle and a few other items) which were brought for sale. This tax was approximately 10 per cent and was equivalent to the modern excise duty. Municipal octroi duty was levied on the local manufacturers.
Then there were taxes on liquor shops, gambling houses and professionals like dancing girls.–Fines imposed by the law courts, tolls on ferries and bridges, lost articles, treasure troves, tributes and presents to the king, were other sources of revenue to the State.
Those who could not pay in cash or kind were to contribute their share in the form of labour. Mechanics, artisans, shudras and others who survived on manual labour had to work free for one day in each month. The register of births and deaths indicates that some kind of poll tax was also exacted. Public ceremonies, temples, etc. also provided revenue.
Strabo mentions those craftsmen (except ‘royal craftsmen’), herdsmen and husbandmen, all paid taxes. The Arthashashtra describes the system of revenue at great length the Treasury received revenue from mines, forests, pasture-lands, trade, forts, etc. The king’s own estate or royal lands yielded income called Sita. Tributes were received on the birth of a “Prince or on other occasion.
During the Mauryan period, the taxation system was carefully worked out. Two kinds of taxes, Bali and bhaga, are referred to in the Edicts of Asoka. The Rummindei Edict records that the village of Lumbini, where the Buddha was born, was exempted from bali and was to pay only one- eighth of the bhaga.
Bhaga was levied on agricultural produce and the cattle at the rate of one-sixth (shadabhaga) and was called the king’s share (Rajabhaga). Bali was a religious tribute. The land tax, according to Kautilya, could be raised from one-sixth to one-fourth in case of financial difficulties.
The Brahmins, women, children, armourers, the blind, the deaf and other handicapped persons, and the king’s men were exempted from paying tax, according to the Arthasaslitra. No tax was levied in areas where new trade routes or new irrigation projects or the construction of forts were undertaken. The taxes were collected fully and regularly, and tax-dodgers were punished.
Money thus obtained was largely spent on the maintenance and upkeep of the King, his palace, the royal members and other paraphernalia. A large expense was incurred on the salaries of Army personnel and Government officials and on the allowances and gifts given to the artisans and the needy. Public welfare acts such as the construction of roads, hospitals (for human beings and animals), rest-houses, temples, educational institutions, canals, wells, etc. were given priority.