Article 269

Inter-State Sales and Consignment Taxes Assigned to States

Official heading: “Taxes levied and collected by the Union but assigned to the States”

Check this article against the official editionAwaiting human legal review

Source edition: The Constitution of India (as on 1 May 2026)
Source locator: Part XII, Article 269, printed pages 157–158
Last human source-link check: Not yet checked
Last human legal review: Not yet reviewed

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1. In One Sentence

Provides that taxes on the inter-State sale or consignment of goods (outside GST) are levied and collected by the Union but assigned entirely to the States.

2. What It Means in Everyday Language

Article 269 governs taxes that are levied and collected by the Central Government but whose net proceeds are handed over entirely to the States.

It applies to taxes on the inter-State sale or purchase of goods (such as Central Sales Tax on petroleum products) and taxes on the consignment of goods in inter-State trade.

The net proceeds do not form part of the Consolidated Fund of India (except for proceeds attributable to Union Territories) and are distributed among the States in accordance with principles formulated by Parliament by law.

Following the 101st Amendment in 2016, goods and services covered by the new GST regime were carved out of Article 269 and placed under the specialized Article 269A.

3. Practical Illustrative Example

Everyday Scenario:

Crude petroleum or aviation turbine fuel (which remain outside GST) is sold by an oil refinery in Gujarat to an airline depot in Delhi.

Core takeaway: Under Article 269, the Central Sales Tax is levied under federal authority but the proceeds are assigned to the exporting State.

Illustrative Notice: All other inter-state supplies of goods and services are governed by the Integrated GST (IGST) framework under Article 269A.

4. Important Limits, Qualifications & Exceptions

Article 269 prevents destructive inter-state tax barriers while channeling revenues to States.

Federal levy and collection: Uniformly administered by the Central Government.
Assigned to States: Revenues bypass the Consolidated Fund of India and go directly to States.
Non-GST goods: Primarily applies today to non-GST commodities like petroleum and alcohol.

5. Operative Constitutional Text

(1) Taxes on the sale or purchase of goods and taxes on the consignment of goods 2[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.

Transcription for reference; compare with the linked official editionNot yet verified by a human legal reviewer

6. Sources & Historical Assembly Deliberations

Assembly quotations are withheld until wording, dates, and attribution have been checked against the primary record.

Sources & Citation Metadata

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Constitutional TextThe Constitution of India (as on 1 May 2026)Cited PDF page
Government of India (Legislative Department, Ministry of Law and Justice) • Part XII, Article 269, printed pages 157–158 • Human source-link check pending
Primary PDF accessed and transcribed with AI assistance on 14 October 2026. Formatting and amendment annotation markers are omitted; operative wording is retained. This is not human legal review. Later amendments and commencement notifications have not been comprehensively checked.

Human legal review is pending; compare the text with the cited editionNon-partisan educational resource