Chauth (from Sanskrit meaning one-fourth) was a regular tax or tribute imposed, from early 18th century, by the Maratha Empire in India. It was an annual tax nominally levied at 25% on revenue or produce, hence the name. It was levied on the lands which were under nominal Mughal rule. The sardeshmukhi was an additional 10% levy on top of the chauth. It is a tribute paid to the king.
Opinions on the function of the Chauth vary. According to M G Ranade, the chauth was charged to provide armed security for a state by the Marathas and is thus comparable to the system of subsidiary alliances that was used by Lord Wellesley to bring Indian states under British control.
The historian Jadunath Sarkar has argued that the chauth was essentially a tax paid by those states that did not want the Marathas to enter into their realm. The chauth thus served as protection money against Maratha invasions against the chauth paying state. The tax was levied at the rate of one fourth the annual revenues of the state and was levied at the cost of the revenue paid by the state to the Mughals or the Deccan kingdoms.
Shivaji first demanded chauth in 1665 and the Deccan sultanates of Bijapur and Golconda began to pay him a combined sum of 800,000 after he was made a raja by Aurangzeb in 1668. In 1719, the Mughal emperor granted Shahu the chauth and sardeshmukhi rights over the six Deccan provinces in exchange for his maintaining a contingent of 15,000 troops for the emperor. The revenues from chauth were in turn divided into four parts that went to various functionaries of the Maratha empire.
25% of the levy, called babti, went to the chhatrapati and he also had discretionary grant making authority over the nadgaunda proceeds which amounted to 3% of the total collection. 6% of the chauth collections was granted to the panch sachiv, the officer in charge of the royal secretariat and was called the sahotra grant. Two-thirds of the collections however remained with the Maratha sardars who collected the taxes and they used it for maintaining their troops for the chhatrapati. This part of the levy was called mokasa. The chauth along with sardeshmukhi levies ensured a steady and large stream of income for the Marathas and helped them expand their beyond the swarajya territories of Shivaji.
The right to assess and collect this tax was asserted first by Shivaji in the later 17th century, on spurious grounds that his family were hereditary tax collectors in Maharashtra.