Guru Ram Das, the fourth Sikh guru is credited with founding the holy city of Amritsar in the Sikh tradition. Two versions of stories exist regarding the land where Ram Das settled. In one based on a Gazetteer record, the land was purchased with Sikh donations, for 700 rupees from the owners of the village of Tung.
According to the Sikh historical records, the site was chosen by Guru Amar Das and called Guru Da Chakk, after he had asked Ram Das to find land to start a new town with a man made pool as its central point.After his coronation in 1574, and the hostile opposition he faced from the sons of Amar Das, Ram Das founded the town named after him as "Ramdaspur". He started by completing the pool, and building his new official Guru centre and home next to it. He invited merchants and artisans from other parts of India to settle into the new town with him. The town expanded during the time of Arjan financed by donations and constructed by voluntary work. The town grew to become the city of Amritsar, and the pool area grew into a temple complex after his son built the gurdwara Harmandir Sahib, and installed the scripture of Sikhism inside the new temple in 1604.
The construction activity between 1574 and 1604 is described in Mahima Prakash Vartak, a semi-historical Sikh hagiography text likely composed in 1741, and the earliest known document dealing with the lives of all the ten Gurus.