According to the Permanent, the rajas and taluqdars were recognized as zamindars and were given the responsibility of revenue collection from the peasants. The amount to be paid was fixed permanently and hence the name Permanent Settlement.

In order to get a stable revenue income, most of the East India Company’s officials believed that investment in land had to be encouraged and agriculture had to be improved. This led to introduction of permanent settlement in 1793
(i) By the terms of the settlement the rajas and taluqdars were recognized as zamindars.
(ii) They were asked to collect rent from the peasants and pay revenue to the company.
(iii) The amount to be paid was fixed permanently.
(iv) It was felt that this would ensure a regular flow of revenue into the company’s coffers and at the same time encourages the zamindars to invest is improving the land.
(v) If the zamindars failed to pay the revenue, which they usually did as the fixed revenue was very high, they lost their zamindari.