The important outcome of the Battle of Buxar was the Treaty of Allahabad signed on 16 August 1765 between Lord Clive and Mughal Emperor Shah Alam II, who had submitted to the British in the battle. As per this treaty:
- Mughal Emperor granted Fiscal Rights (Diwani)or right to administer the territory and collect taxes to the East India Company at Bengal, Bihar and Orissa. Thus the British became the masters of fate of the people of Bihar, Bengal and Orissa and now they would collect the revenue.
- In lieu of this Right, the Company gave an annual tribute of 26 Lakh Rupees to the Mughals
- The districts of Kora and Allahabad were returned to Mughal Emperor.
- Awadh was returned to Shuja-ud-Daulah but Allahabad and Kora was taken from him.
- The Nawab of Awadh paid 53 Lakhs rupees of war indemnity to the British.
Thus Clive, in person settled the fate of almost half of the Northern India. The fiscal administration of Bengal, Bihar, and Orissa and the territorial jurisdiction of the Northern Circars is called the Dual System of Government.