As defined in Wykepedia Dictionary taxes are ‘compulsory charges levied by a government for the purpose of financing services performed for the common benefit’. In the words of Mill, taxation is “the condition of the existence of governments”(Principles of Political Economy). There is no denying the fact that no government can function without incurring a considerable expense on governance and welfare of its people. And for this people’s contributions in the form of taxes are the foremost components of financial resources to the government. This position is not confined to modern days’ governments alone but existed through out the ages, ancient and medieval; rather its existence may be traced back to the evolution of mankind into political organization. The ancient India was no exception to this. There is no dearth of evidence in the form of references and inferences in the documents of this period. The Vedic texts, epics, smritis, puranas, Arthashatra, literary texts and epigraphs of the time, all equivocally dwell at great length about the paramount importance of taxes to governments. Starting with the Vedic period, there existed a regular system of taxation. The technical fiscal terms like ‘bali’, ‘shulka’,’bhaga’,‘udaja’, and ‘niraja’ are frequently mentioned in the literature of this period1 which reasonably and legitimately lend support to the view that taxation had evolved from voluntary to compulsory and regular in nature. The Rigvedic king was the ‘sole taker’ of taxes and even did not hesitate in using force to realize the state’s dues fallen in arrears2. The Atharvaveda refers to the state’s share ‘in village, in horses and in kine (cows)3′. However, it is not known what share the state had in the wealth of its people. It appears that in course of time during the Vedic period itself, taxation started affecting life of the people so much so that a tendency to escape from taxes started gaining ground among influential people of the society. The Brahmanas were the first to claim immunity from taxes possibly on the basis of being engaged in unproductive vocations4. However, the simple nature of Vedic taxation did not last long as it was no longer adequate to meet the growing needs of government arising out from sweeping economic, social and political developments that had taken place during the post Vedic period of Indian history. This gave birth to a number of general rules or canons of taxation.
Modern scholars on ancient Indian polity hold the principles of Hindu Taxation in high esteem. “That the constitutional law of taxation was a living law, regulating life”. Whatever the form of government there was, taxation was not an object of ruler’s caprice5. Some of the scholars go to the extent of asserting that the modern maxim of ‘ability to pay taxes’ and ‘the least sacrifice theory’ were the guiding principles in ancient India6. The historical accounts, however, do not subscribe to the eloquent estimates of these scholars as it would be evident from the critical examination of data available in the various texts of the period under review.
The first principle of modern taxation is that it is compulsory in nature. In ancient Indian texts, there are abundant evidences to show that taxes as compulsory payments were well