Thursday, October 20, 2005

Taxation in Hindu Law

I refer to A.L. Basham, "The Wonder That Was India", London: Sidgwick and Jackson, 1954. The fiscal norms alluded to below are extracted from Sanskrit legal texts and the Arthashastra. These principles were the ideal, not necessarily the reality of public finance in early India. Moreover, the literature is too vast to do justice to the subject in just 200 words. This note is not intended to be comprehensive. The idea is to merely provide a flavor of the concept.

The Smritis reiterate that taxes should never act as a check on trade, industry and individual initiative. They should be fixed in such a manner as to allow a profit to the tax payer. Articles of commerce can not be taxed twice. There can be no increase in taxation without adequate notice. Moreover, a state is only entitled to tax the populace if it affords protection to the citizenry. The ideal tax is likened to "a bee that extracts honey without damaging the flower"! The literature adds, however, that all norms can be jettisoned in times of financial exigency and crisis.

The legal texts uphold a tax that is 1/6th of ones income while the Arthashastra stipulates a 1/4th tax on fertile lands. The land that has just been brought under the plough is not to be taxed immediately. The agricultural tax is to be remitted in times of bad harvest. A tax holiday was the norm for villages investing in irrigation and public works. A defaulter was to be evicted from his land, but only after one year's notice. The tax was to be assessed on total income minus expenditure incurred i.e. on the net profit rather than on asset value. Women, children, students and men of religion were tax exempt. Temples were subject to a reduced tax. The state levied a water tax for irrigation services provided. Essential goods, such as grain, sugar and salt, were to be taxed at 1/12th their value.

There was a tax on livestock, commercial establishments and houses, the revenue of which was allocated for the expenditure of the village council. The state levied a toll tax on roads in exchange for insurance cover for the traveling merchant. The toll tax was 1/5th the value of the commodity. It, otherwise, exacted a 10% tax on merchandise. Merchants importing foreign goods could claim a remission of the trade tax. The intent was to encourage foreign trade.

Nilakantha, a medieval jurist, asserts that land is the private property of the owner and that a ruler's prerogative is confined to the tax on land. I interpret this to mean property rights. However, the literary evidence is mixed. Sukra, another medieval commentator, advices a king to set aside 1/6th of tax revenue for the treasury, expend 1/12th for charity, 1/12th for public works, 1/12th for the civil service and 1/12th for his personal consumption. The rest is to go for defence.

These principles were the ideal, not necessarily the reality of life in early India. Moreover, not everyone had the wealth to be taxed. Should you be more interested in the subject, I recommend U.N. Ghoshal's classic "Contributions to the History of the Hindu Revenue System" published in Calcutta in 1929 and J.J Angharia's "The Nature and Grounds of Political Obligation in the Hindu State" published in London in 1935.


sanatan said...

This is amazing. Jaffna, I wonder whether you subscribe to Primary Red's subscription of the duality of right and left as obviously evidenced by the title of this blog itself, because there is an alternative way to comprehend and visualize the state and that is the dharmic way.

Primary Red said...

Clearly he doesn't!!

One reason Jaffna's posts are so interesting is that some of them touch on topics PR would never touch, nor could frankly discuss with Jaffna-like academic rigor.

Best regards.

Jaffna said...

Primary Red,

You flatter me. It is you who conceptualize "out of the box" and provide the ignition as it were. Mine is only a dry archival reiteration of facts and interpretation :-) .


doubtinggaurav said...


I think discussion of past tax practices is a good topic.
I don't think it is communal for the reason that "Hindu" label only came after advent of invaders from outside.

Due to our constant subjugation, we are ignorant about our history, as well as disinterested in it.
So in my opinion you(with other people like JK) are doing a good job as minutemen of Indian heritage.

Best wishes in your endeavour.


Jaffna said...


Who is JK? And more importantly, what are the coordinates for your blog. I am not able to access it.


doubtinggaurav said...


JK is the blogger behind "varnam",
Which is linked through this site !
I like his site.

Mine is a dummy account, which I created just so that I don't have to comment as Anonymous .

My sloth (acquired, not inherited) prevents me from posting a well researched post.


nukh said...

sorry for posting out of context. thought you might be interested.
from the new york times.

October 21, 2005
Top Syrian Seen as Prime Suspect in Assassination

UNITED NATIONS, Oct. 20 - The United Nations investigation into the murder of former Prime Minister Rafik Hariri of Lebanon is focusing on the powerful brother-in-law of President Bashar al-Assad of Syria as the main suspect, a diplomat with intimate knowledge of the inquiry said Thursday.

The diplomat spoke as a long-awaited United Nations report on the killing made public on Thursday said it was a carefully planned terrorist act organized by high-ranking Syrian and Lebanese intelligence officers.

Though the report did not include names, the diplomat said the investigators were focusing on Syria's military intelligence chief, Asef Shawkat, the president's brother-in-law.

"Their main lead is that he is the ringleader," the diplomat said. "This is where it is heading."

Detlev Mehlis, the United Nations investigator, has been given an extension until December to continue his inquiry. He said his commission had in four months interviewed more than 400 people, reviewed 60,000 documents and arrested four high-level officials of the Lebanese "security and intelligence apparatus."

"There is evidence in abundance," the diplomat said. "But to get every piece of the puzzle they need more time." He spoke on condition of anonymity because of what he described as the extreme sensitivity of the matter.

Mr. Shawkat is considered the second most powerful man in Syria and has been seen as a likely candidate to take over the country if the embattled Mr. Assad were removed from office.

The diplomat, describing Syria as a "country run by a little family clique," said the involvement of any one in Mr. Assad's inner circle would be a severe blow to the government.

"There is absolutely no doubt, it goes right to the top," he said. "This is Murder Inc."

In his report, Mr. Mehlis said the killing last February was carried out by "a group with an extensive organization and considerable resources and capabilities."

The report said, "There is converging evidence pointing at both Lebanese and Syrian involvement in this terrorist act."

The 54-page report said the crime had been planned "over many months" and that the movements of Mr. Hariri and the convoy he traveled in had been closely monitored with his "itineraries recorded in detail."

As evidence of the coordination, the report listed cellphone records that showed close street-by-street observation of his convoy by people planning the killing. It also said the telecommunications antenna near the crime scene had been tampered with.

Mr. Hariri and 15 others died when a bomb blew up his six-car convoy on a downtown Beirut street.

It said the van containing the bomb had earlier been seen in a Syrian military base in Lebanon.

Mr. Mehlis and his investigators spent several days in September interrogating Syrian security officials in a resort near the Syria-Lebanon border, and his report said that leads developed there "point directly towards Syrian security officials as being involved with the assassination."

Indications that the Mehlis report would reveal a Syrian role in the Hariri killing have focused pressure on Mr. Assad and caused intense anxiety in political circles in Damascus and Beirut.

As the investigation tightened this month, the Syrian interior minister, Ghazi Kanaan, who for two decades had called the shots in Lebanon as Syria's virtual proconsul, was found dead in his Damascus office, shot in the mouth with his own pistol.

Syria's official news agency announced that the death had been a suicide.

The United Nations investigators - as well as many Lebanese and Syrians - cast doubt on that account, suspecting instead that he was either killed by government agents or forced to kill himself under some threat.

Investigators had two theories, the diplomat said: "One was that he had either given information to Mr. Mehlis or was about to. The other was that he was involved in plotting a coup."

The United States has sought support from allies in the region to isolate Syria and force Mr. Assad to cease the support and financing of anti-Israel militias and stop what Washington believes is a willingness by Damascus to infiltrate insurgents across its border with Iraq.

John R. Bolton, the United States ambassador, said, "After an initial read, the results are clearly troubling and will require further discussion with the international community."

Diplomats from the United States, Britain and France have been discussing options for action against Syria to be considered next week by the Security Council. Mr. Mehlis will brief the Council on his report on Tuesday.

Among the options are two resolutions that would step up pressure on Damascus to end actions destabilizing the region, according to a European diplomat familiar with talks on the subject between Secretary of State Condoleezza Rice and the French president, Jacques Chirac, in Paris last week.

He said one resolution would be put forward under Chapter 7 of the United Nations Charter, which calls for forceful measures like economic and diplomatic sanctions, and the other under Chapter 6, which calls for solutions through negotiation and mediation.

The United States and France sponsored the original resolution in September 2004 calling on Lebanon to reject Syrian interference in its politics and calling on all foreign forces to leave the country. The resolution led to the eventual departure of 20,000 Syrian troops and the virtual end of the decades-long domination of Lebanese politics by Syria.

A second report on Syria originally scheduled for this week, has been put off until next week to avoid what United Nations officials described as a "congestion" of measures dealing with Damascus. That report will verify whether all Syrian troops and intelligence officials have truly withdrawn from Lebanon and track progress in disarming militias as required by a United Nations resolution.

The Mehlis report showed that the commission had discredited a number of other leads and claims of responsibility for the killing that might have been put forward to disguise the real authors of the crime.

Mr. Mehlis said a number of witnesses feared they would be harmed if it became known that they had cooperated with the commission, and said that consequently he had not identified any of them in the report.

He said there were now competent judicial and security authorities in Lebanon to carry forward the investigation with international assistance and support.

Beirut's streets were empty Thursday night as many Lebanese stayed home fearing possible violence resulting from the release of the report. In recent months, a string of bombings have rattled the fragile peace of the city, underscoring the gravity of the political crisis set off by the assassination of Mr. Hariri.

In Beirut, late night traffic on Hamra Street, normally a busy thoroughfare, was little more than a trickle as Lebanese soldiers made spot searches of cars and bicyclists, and armored vehicles patrolled some streets.

A group of young men gathered round a television in a food shop, listening to news of the release of the report but not quite knowing what to make of it.

"Did they name Shawkat?" one man asked.

"I'm not sure," the store owner said.

"Whom did they name?" another asked.

"We don't know yet," said several others as they tried to turn up the volume to listen to the announcer who pored through the report.

Hassan M. Fattah contributed reporting from Beirut for this article.

Qalandar said...

Doubtinggaurav: Personally I don't think there's anything "communal" about discussing, among India's heritages, its Sanskritic heritage: such "Sanskritophobia" has given secularism a bad name. Check out:

doubtinggaurav said...


I have gone through that post earlier and found it insightful.
I have yet to read the book (here, I admit that I am biased against Mr Sen), but all the reviews I have read so far are favourable.

Just to up the ante, my view is that in Indian context, it is very difficult (if not outright impossible) to seperate what is spritual (or religious in western context) from what is philosphical (or secular in western context).
That is why I am wary of using "secularism" indiscriminately.


PS. My apologies to PR and Jaffna for going Offtopic :-)

Just as a matter of curiosity,is Pragmatic for real ??
Or is it some sort of dualism !

Jaffna said...

Sanatan, Qalandar and Gaurav,

First, a thank you. Two, the purpose of the discussion trail is to encourage debate. Hence, going "off topic" is fine. I intend to check Qalandar's blog soon.

The Sanskrit inheritance is not India's monopoly. It influenced Indonesia (what ever the political dynamics in that troubled archipelago might be today), Cambodia in its hey day and Sri Lanka. We are all legatees of that inheritance which I believe has much to offer vis-a-vis statecraft, economy and jurisprudence. Unfortunately, the entire edifice of Nehruvian ideology (and its proponents in the national media and Indian Departments of History) only served to sideline it as "taboo". This is unfortunate.

Primary Red said...

A couple comments.

One, Pragmatic indeed exists, out in silicon valley, but has been busy constructing a brand new -- very cool -- venture lately, hence has been silent.

Two, sure history and heritage have much to offer, but this can be easily overstated. This discussion of taxation in "Hindu" literature is a case in point.

Is it interesting how this subject is treated by various scholars over the centuries? Sure. Are we to run out and change our ways to reflect past practice merely because it is our heritage? Clearly not.

The world is different, and thought has evolved -- given welcome influence from fresh ideas, both internal and external. The basis and history of thought are important, the epistemology is important, but let's not get too carried away here.

One has to be very careful, for example, in trying to force 7th century ideas on 21st century living.

Finally, calling such ideas "Hindu" versus "Indian" is a deliberate political act. To this blogger, these ideas are interesting as an academic curiosity, perhaps even insightful, but he is extremely wary of using these to push non-secular political agendas that he abhors.

Best regards.

doubtinggaurav said...


We agree to disagree :-)

Either that or we can sort it in old fashioned way, i.e rock, paper or scissors, best of three


sanatan said...

PR keeps repeating that "he is extremely wary of using these to push non-secular political agendas that he abhors." I have read many a post on this blog but have not come across what PR proposes as a working deinition of religion in the unique Indian circumstances. Although, I agree with the concept that "religious" ideas ought not to be discussed in political sphere, and that there should be a separation between "religion" and state, but what is religion to a majority of Indians?

On this blog, in numerous instances caste has been discussed. Is caste religions or social? If religious, why is it being touched? If social that why is it presented as the Hindu problem, and not as a Indian problem? If state is intervening in this "religious" issue, why not in the case of other religions.

Until there is a clear understanding of what the great majority of Indians agree upon is religion, any talk to secularism will remain a mere farce, and so long we will continue to have persons like PR, who though want to move away from the socialist notions and uptopian and contrary to reality ideas of the left, India cannot be presented to with an alternative to get out of the current mess because they have accepted the framework of the left. If one continues of be bound to this duality, one cannot get India to move to the next level. No matter how good the intention of the people like PR may be, they are unlikely to bring about any sustainable changes within the framework of left-right politics because this framework does not intitutively fit with the common man, no matter how often the English Media and the left oriented opinion makers currently in India would like us to believe that it does.

doubtinggaurav said...


My views, more or less.



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