Reinterpreting Ancient Indian Taxation Philosophy for the Modern Indian Economy: An Insights through the Lense of Kautilya’s Arthashastra

Abstract

This study undertakes a comparative examination of ancient Indian taxation philosophy, as articulated in classical texts such as the Arthashastra and Manusmriti, and the contemporary Indian tax system shaped by constitutional mandates and reforms such as the Goods and Services Tax (GST). Drawing on qualitative textual analysis and modern public finance theory, the research analyzes tax structures, revenue sources, expenditure priorities, administrative mechanisms, and ethical foundations. The findings reveal normative continuities in proportional taxation, welfare orientation, administrative accountability, and fiscal moderation, alongside significant institutional transformations driven by democratization, federalism, and digitalization. While ancient fiscal philosophy emphasized moral duty (dharma) and state responsibility, modern taxation operates within constitutional legality, technological infrastructure, and global economic integration. The study recommends integrating historically grounded ethical principles such as predictability, moderation, and administrative integrity into ongoing tax governance reforms. Future research should extend this comparative framework through empirical evaluation of taxpayer trust, compliance behaviour, and fiscal legitimacy in contemporary India, as well as comparative studies across other civilizational traditions. By bridging Indian Knowledge Systems and modern public finance theory, the paper contributes to interdisciplinary debates on sustainable and equitable revenue systems.