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Constitution of India · Part XII: Finance, Property, Contracts and Suits · Distribution of Revenues between the Union and the States

Article 269: Taxes levied and collected by the Union but assigned to the States

In plain words

Taxes on the inter-State sale or purchase of goods (other than newspapers) and on inter-State consignment of goods, except as provided in article 269A, are levied and collected by the Government of India but assigned to the States from the 1st day of April, 1996.

  • The net proceeds, except those for Union territories, do not go into the Consolidated Fund of India, and are distributed among the States on principles Parliament sets by law.
  • Parliament can by law set principles for deciding when a sale, purchase or consignment is in the course of inter-State trade or commerce.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

[(1) Taxes on the sale or purchase of goods and taxes on the consignment of goods [except as provided in article 269A] shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in clause (2).

Explanation.—For the purposes of this clause,—

(a) the expression "taxes on the sale or purchase of goods" shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce;

(b) the expression "taxes on the consignment of goods" shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce.

(2) The net proceeds in any financial year of any such tax, except in so far as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that tax is leviable in that year, and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law.] [(3) Parliament may by law formulate principles for determining when a [sale or purchase of, or consignment of goods] takes place in the course of inter-State trade or commerce.]

Source: India Code (Legislative Department), the official text of the Constitution of India. As amended up to the Constitution (One Hundred and Sixth Amendment) Act, 2023. Text as on 10 September 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the article 269