"There are many similarities between the current day tax system and the Kautilya's system of Tax administration". Explain.

Model Answer:
Kautilya’s tax administration was based on Kosha Moolo Danda, which means
“revenue is the backbone of administration”,. This phrase has been used in the logo of Income Tax Department of India in Devanagari script. This implies that a nation’s status relies upon its fiscal power. The basic premise of Kautilya’s taxation doctrine was that public should not be exploited by imposing tax more than their competence to pay. Even, the current day tax system in India seems to be inspired from the Kautilya’s system of Tax administration prevalent more than two thousand years ago. For example, Kautilya had specifically laid down the terms for taxation, without any scope for arbitrariness. Further, he fixed a time table for payment of taxes and also what share of the produce or product value is to be paid as tax. Further, the stance of Kautilya on a kind of progressive taxation and ability to pay principle are followed in modern day practice also. Furthermore, the personnel responsible for collection of the tax needed to keep proper record of the entire collection as done today. There were additional taxes for emergency situation (such as tax on liquor levied during war or emergencies). (187 words)

Topics: GS-III: Indian Economy Issues Relating to Planning