HistoriCity | Taxes and tolls in Indian subcontinent

In the Indian subcontinent, taxes and tolls have a rich legacy. One of the earliest references to taxation can be found in the epic Mahabharata

The US administration under President Donald Trump has raised tariffs on Indian imports to the US triggering a crisis that has serious ramifications for business in both countries.

Trade and taxation was the basis of revenue for ancient kingdoms. (Representational image)

Tariffs, taxes, tolls have evolved over at least the last three millennia. All over the world taxes have existed in one form or another, growing more complex and comprehensive during the last century. They have evolved from simple levies on crops and other materials both consumed and held precious by humans to air waves and energy consumption. However, fundamentally they have remained unchanged: anything that is precious, profitable, and whose production and distribution can be controlled often attracts a tax. There is no getting off ‘scot-free’ (a medieval tax imposed towards a common fund for the needy in medieval Scandinavia) for most of us.

“Koshamula hi rajanah Kosho brdhikaro bhavato”

(O King, you can make your state prosperous only through a strong treasury”)

In the Indian subcontinent, taxes and tolls have a rich legacy. One of the earliest references to taxation can be found in the epic Mahabharata in which one of the key qualities of a king is described in terms of his ability to increase the coffers of the state treasury. Kalidasa’s Abhigyan Shakuntalam contains a beautiful reference to a mythical king Dilip’s tax policy. It says, “It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the earth only to give it back a thousand-fold.”

Author Kunwar Deo Prasad writes in Taxation in Ancient India, “ancient Indian political thinkers have expressed unanimously that sound finances are absolutely necessary for a stable and prosperous state”.

According to the Manusmriti, the Arthashastra, and the Yajnavalkya Smriti dating back at least 1500-2000 years, the commonest form of Sulka/Shulkas or Duties were the ones paid by peasants, cattle-herders, craftsmen and traders among others.

The Manusmriti dated broadly to 200 BCE-200 CE contains descriptions of a wide range of taxes. The core principle of taxation i.e they should be moderate instead of high and should enable the king to ensure stability, prosperity and protection of the kingdom or state.

Manu’s Warning against High Taxes

Manu warns against high taxation, “Just like a leech, calf and bee draw only small-but-very-small quantities from their respective feeds (i.e., blood, milk and honey), similarly a King should, by his orders, take from his subjects, very small amounts of taxes”.

Sulkas and Karas (taxes) were of various kinds and were levied on both domestic and foreign goods. When goods travelled from one kingdom to another even within the Indian subcontinent, they were subjected to taxes, much like today.

According to Kautilya’s Arthashastra, the head tax collector (Sulkadhyaksha) was responsible for the smooth collection of taxes at toll-houses, which too were of different kinds. The Arthashastra says, “sulka should be imposed on all types of merchandise, either coming from the country part, or imported from foreign country”.

Yet more evidence of taxes on distant trade through river and sea can be found in the form of duties of the captain of the ship of the Navadhyaksa.

Traders had to pay taxes in the form of share of goods in accordance with the usage of the ports. Medhatithi, a commentator of Manusmriti dated broadly between the 9th and 11th century, also speaks of dues to be charged for crossing or plying a boat in the river of the sea.

According to Vishnusmriti, dated to the 16th century, the king’s portion or the tax levied on domestic goods and foreign imports was one-tenth and one-twentieth respectively. The former was called a toll while the latter, customs duty. As opposed to different rates suggested by Vishnu for foreign and domestic goods as well different quantities of imported goods, Baudhyana (8th century) suggested a standardised rate of 10 per cent on imported goods. A reasonable and scientific basis of fixation of prices seems to have been a challenge and concern since the earliest kingdoms and records of trade.

The Yajnavalkya Smriti says that the market price of goods made may be fixed and to it be added the cost of transportation so as to ensure that the trader is not shortchanged or incurs losses. Vijnesware, who lived in the 11th century, argued for fixing rates such that they leave a profit of 10 per cent to the trader on the price of the article.

The Periplus of the Erythraean Sea, a unique Greek record from the 1st century CE, gives us an idea of what ancient people of the subcontinent loved to import. It writes about foreign merchants bringing expensive silverware, “singing boys, beautiful maidens for the harem, fine wines, thin clothing of the finest weaves and the choicest ointments for Indian kings”.

However, as Prasad notes in Taxation in Ancient India, “it is difficult to say whether these offerings constituted any regular tax in the nature of duty or merely tributes to be paid by foreign traders as a mark of respect to the Indian kings. In any case, the practice of realising dues in kind from traders does not seem to be unknown during our period”.

Domestic Trade and Taxes

The Arthashastra and Manusmriti both set the rate for taxing farmers as one-sixth of the produce. They both also emphasise on a flexible taxation system that accounts for failed crops, river and rain-fed farming as well as other causes that may cause damage to crops. In such cases the king should not tax the farmer. For instance, for lands not fertile the rate drops to 1/8th and 1/12th. Gold, animals, their meat, cow milk, wood, grass, herbs, gold and silver and gemstones, salt, and several other items were taxed.

Dr. Sanjiv Sharma refers to Jain texts and compiles a list of taxes mentioned in them. He writes in Taxation and Revenue Collection in Ancient India, “There were various sources of income to the state. Eighteen types of taxes are mentioned in the Jain texts: taxes from cows (go), buffaloes (mahisha), camels (utti), cattte (pasu), goats (chagali), grass (tana), straw (palala, puval in Hindi), chaff (bhusa), wood (kattha), coal (angara), plough (siya), threshold (umbara), pasture-ground (jangha), bullocks (balivadda), earthen pots (ghaya, ghata), hides and skins (camma), food (cullaya) and any other tax imposed by will (uppatti, swechhayakalpita)”.

That trade and taxation was the basis of revenue for ancient kingdoms is also clear from the records of officials responsible for different functions. For instance, the Pautavadhyaksha - was the Superintendent of Weights and Standards, and the Shulkadhyaksha ensured collection of Collector of Customs and Tolls. There were several other officials each responsible for trades such as in yarns and textiles, animal slaughter, cattle-rearing and forest products as well as the management of brothels which were a source of substantial revenue.