Directions: Read the following passage and answer the given questions: 

The Arthashastra is an ancient Indian treatise on statecraft, economic policy, and military strategy. It was written by the sage Kautilya (also known as Chanakya) in the 4th century BC. In the Arthashastra, merchants are considered to be an important part of the economy, and Kautilya devotes several chapters to the regulation and taxation of trade and commerce. According to the text, merchants were divided into four categories based on the nature of their business: those who traded in locally produced goods, those who traded in imported goods, those who traded in both locally produced and imported goods, and those who provided services such as moneylending or transportation. These merchants are also considered to be at a higher risk, because their goods may be difficult to move or sell in other locations.
The Arthashastra suggests taxing merchants based on the value of their goods and the distance travelled to sell them. In addition, Kautilya recommends that the state impose taxes on various commercial activities, such as the sale of horses, elephants, and chariots, and on the use of certain types of vehicles, such as boats and carts. The text also advises rulers to impose fines on merchants who engage in fraudulent or deceptive practices, such as misrepresenting the quality or quantity of their goods. It also emphasises the importance of maintaining a stable and predictable system of taxation, and he advises rulers to avoid imposing taxes that are too high or too burdensome on merchants. He recommends that rulers consult with merchants and other experts when setting tax rates and policies and be transparent about their tax policies and the revenue they generate from them. Special taxes on merchants, including taxes on their sales, profits, and imports/exports. He also suggests that traders should announce the quantity and price of their goods and that taxes should be collected on the basis of this information.