In 1860, the newly introduced Licence tax and Income tax were met with wide- spread resentment and hostility.
Though no expert on finance, Govardhan Das, a merchant, refused to fill the income tax form. He attributed Indian poverty to British rule. Economists like Dadabhai Naoroji and Romesh Dutt, also came to the same conclusion after studying the income and expenditure of the British government in India from 1757 to 1900.
"Taxation raised by a king is like the moisture of the earth sucked up by the sun, to be returned to the earth as fertilising rain," wrote Romesh Dutt."But the moisture raised from the Indian soil now descends as fertilising rain largely on other lands, not on India…
…Under wise rulers, as under foolish kings, the proceeds of taxation flowed back to the people and fructified their trade and industries. But a change came over India under the rule of the East India Company. They considered India as a vast estate or plantation, the profits of which were to be withdrawn from India and deposited in Europe."
By the end of the 19th century, nearly half of the annual net revenues went out of the country as 'Home Charges' (see below) and remittances made by European officers to their families abroad.
Sir George Wingate estimated that from the beginning of the 19th century and upto 1858 alone £100 million was taken out of the country as 'Home Charges'. By adding a compound interest of 12%, Montgomery Martin arrived at a staggering figure of £700 million during the first thirty years of the 19th century. And these calculations did not include the sums remitted from India in the 18th century.

Reacting to the British stand that Indians should not grumble about economic drain for they enjoyed security of life and property under their rule as never before, Dadabhai Naoroji retorted,
"There is an Indian saying: 'Strike on the back, but don't strike on the belly.' Under the native despot the people keep and enjoy what they produce, though at times they suffer violence on the back. Under the British despot the man is at peace, there is no violence; his substance is drained away, unseen, peaceably and subtly – he starves in peace, and peaceably perishes in peace, with law and order!"