Neutrality after Proclaiming War, as mentioned in Chapter IV of Book VII in Arthashastra, specifies the situation when after proclaiming to war and fighting for some time the rulers realise the negative impact of war which shall ruin both without any positive results. As such both decide to come to some kind of compromise and agree to neutrality within them. Arthashastra lays down three aspects of neutrality which includes keeping quite (sthana), withdrawal from hostility (asana) and negligence (upekshana) which form the synonyms for asana or neutrality. While keeping quite means maintaining a particular kind of policy under which the ruler decides to observe silence; withdrawal from hostility for one's own sake is the second type of neutrality called asana; and taking no step against the enemy is the third step of neutrality which is known as upekshana.

Neutrality after Proclaiming War observes three conditions during which a king can choose to remain silent and observe sthana. Firstly, when two kings who are bent upon making conquests on each other, are desirous of peace and are unable to go against each other anymore may choose to remain silent or keep quiet and observe the position of sthana. Secondly when a superior king finds it possible to put down another king's army possibly the enemy king's army either with the help of his own army or with the help of neighbouring king's army, then again he may choose to remain quite; and thirdly when the king is confident about the strength of his own army, and his own subjects who are brave, united, prosperous, and are able to carry not only their own work without any interference but also harass his enemy's work; the king may decide to remain quiet after proclaiming war. Again if the king finds his army to be ill treated, impoverished and greedy, and are ever being oppressed by the inroads of army, thieves and wild life, then in order to protect his people he may choose to remain silent. Also Arthashastra lays down some more conditions like suffering from famine or forced to get involved with intrigues, in such conditions the king may choose to remain silent.

Thus, Kautilya suggests that neutrality is one such step which is always preferable till it provides productive ends with unfavourable conditions. As soon as the king regains his power by observing neutrality for some time then he shall wage a war against his enemy. The policy of neutrality does not prohibit a king from waging war ever in future rather it is only a temporary step for some time.