The antiquity of Indian legal system has long been acknowledged by many. The importance of finance was well recognized in ancient India and treasury was considered to be a part of the State. Ancient India had a clear and humane tax policy. There were several types of taxes. The difference between tax and non-tax revenue was well recognized. Various officials were appointed for tax collection and revenue administration. Ancient Indian law makers emphasized that citizens should not be put to hardship by way of taxes. Mahabharata, Arthasastra, Manusmriti, Apastamba Sutra, Sukraniti and other Dharmasastras dealt on taxation. The taxation system in ancient India was more advanced than the contemporary nations. Taxes were categorized under various heads akin to the modern classification. The tax rates were reasonable and people friendly and had many features which arise from the policies of a welfare state. Even the rich were not approached in a biased manner. Tax exemptions were granted to a various category of people. Taxation system included Land revenue, Sales tax, Income Tax and Imports and exports duty. The hierarchy of state authorities and their duties were well defined. During emergencies, extra taxes were collected to tide over the emergency, but here also the limits were prescribed. Permissible heads and limits of public expenditure were well defined. State had to maintain funds to meet the expenses for twenty years. Detailed accounts were maintained in a scrupulous manner, audited and submitted to the cabinet. There was a state insurance for goods. Overall, the tax system and revenue management were at par with any developed state.