Article 269 of Constitution of India: Taxes Levied and Collected by the Union but Assigned to the States
Article 269 is part of the constitutional scheme for distribution of tax revenues between the Union and the States. In its present form, it principally addresses taxes on inter-State sale or purchase of goods and taxes on consignment of goods, subject to the separate constitutional regime for inter-State Goods and Services Tax under Article 269A.
Meaning and scope of Article 269
Article 269 provides a revenue-assignment mechanism: the specified taxes are levied and collected by the Government of India, but the net proceeds are assigned to the States in accordance with the Constitution and principles laid down by Parliament. The provision therefore concerns both taxing authority and distribution of revenue.
The present text is materially different from the older version reproduced on this page earlier. The Constitution (Eightieth Amendment) Act, 2000 substituted clauses (1) and (2), and the Constitution (One Hundred and First Amendment) Act, 2016 inserted the words making Article 269 subject to Article 269A. The GST amendment took effect from 16 September 2016.
Current text and explanation of Article 269
Clause (1). Taxes on the sale or purchase of goods and taxes on the consignment of goods, except as provided in Article 269A, are levied and collected by the Government of India and assigned to the States in the manner provided by clause (2).
Explanation. For Article 269, taxes on sale or purchase of goods refer to taxes on goods other than newspapers where the sale or purchase occurs in the course of inter-State trade or commerce. Taxes on consignment refer to taxes on consignments of goods in the course of inter-State trade or commerce, whether the goods are sent to the consignor or another person.
Clause (2). Except for proceeds attributable to Union territories, the net proceeds of such tax do not form part of the Consolidated Fund of India. They are assigned to the States where the tax is leviable and distributed according to principles formulated by Parliament by law.
Clause (3). Parliament may formulate by law the principles for deciding when a sale, purchase or consignment of goods takes place in the course of inter-State trade or commerce.
Legal reading note: The wording above is an explanatory presentation for readability. For authoritative wording, amendment footnotes and the complete Constitution, use the official Legislative Department text linked in the resources on this page.
Article 269A and inter-State GST
Article 269A was inserted by the Constitution (One Hundred and First Amendment) Act, 2016. It provides the constitutional basis for levy and collection of GST on supplies in the course of inter-State trade or commerce and for apportionment of that tax between the Union and the States. Because Article 269 now expressly operates "except as provided in article 269A", GST supplies falling within Article 269A are governed by that provision rather than the older Article 269 mechanism.
Central Sales Tax Act, 1956 and Article 269
Parliament enacted the Central Sales Tax Act, 1956 to formulate principles for determining when a sale or purchase of goods takes place in inter-State trade or commerce, outside a State, or in the course of import or export, and to provide for levy, collection and distribution of tax on inter-State sales. The Act remains an important statutory reference when examining the non-GST inter-State sale of goods that continue within its scope.
Important constitutional amendments
Sixth Amendment, 1956: inserted clause (3), enabling Parliament to formulate principles for identifying inter-State transactions. Forty-sixth Amendment, 1982: expanded the relevant wording to include consignment of goods. Eightieth Amendment, 2000: substituted clauses (1) and (2), with constitutional effect linked to assignment on or after 1 April 1996. One Hundred and First Amendment, 2016: inserted the exception for Article 269A as part of the GST constitutional framework.
Related constitutional provisions
Article 269 should be read with Articles 267 and 268, Article 270, Articles 271 and 272, and Articles 277 to 279 for the wider constitutional framework governing Union-State fiscal relations.