Article 270

Divisible Pool of Union Taxes and Financial Sharing with States

Official heading: “Taxes levied and distributed between the Union and the States”

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Source edition: The Constitution of India (as on 1 May 2026)
Source locator: Part XII, Article 270, printed pages 159–160
Last human source-link check: Not yet checked
Last human legal review: Not yet reviewed

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1. In One Sentence

Creates the divisible pool of Central taxes (income tax, corporation tax, CGST) distributed between the Union and States on the recommendation of the Finance Commission.

2. What It Means in Everyday Language

Article 270 is the primary vehicle for vertical fiscal devolution from the Union Government to the States.

Following the 80th Amendment (2000) and the 101st Amendment (2016), almost all central taxes and duties—including personal income tax, corporation tax, Central GST, and customs duties—flow into a shared "divisible pool".

The net proceeds of these taxes are collected by the Government of India, but a prescribed percentage is distributed among the States.

Crucially, under clause (2), this percentage is determined by the President by order after considering the recommendations of the Finance Commission constituted under Article 280 (currently 41% under the 15th Finance Commission).

Under clause (1), surcharges for Union purposes (Article 271) and cesses levied for specific purposes under parliamentary law are excluded from the divisible pool.

3. Practical Illustrative Example

Everyday Scenario:

The Central Government collects trillions of rupees in personal income tax and corporate income tax in a fiscal year.

Core takeaway: Under Article 270, 41% of these net tax proceeds are distributed among the States according to the horizontal devolution formula of the Finance Commission.

Illustrative Notice: Special cesses and surcharges levied by Parliament under Article 271 belong 100% to the Central Government and are not shared with the States.

4. Important Limits, Qualifications & Exceptions

Article 270 operationalizes macroeconomic revenue sharing across the federation.

Comprehensive divisible pool: Encompasses all central taxes except Article 268/269/269A taxes and cesses/surcharges.
Finance Commission formula: Prescribed by presidential order based on Article 280 recommendations.
State shares excluded from Union pool: Once assigned to States, proceeds do not form part of the Consolidated Fund of India.

5. Operative Constitutional Text

(1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268, 269 and 269A, respectively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2). (1A) The tax collected by the Union under clause (1) of article 246A shall also be distributed between the Union and the States in the manner provided in clause (2). (1B) The tax levied and collected by the Union under clause (2) of article 246A and article 269A, which has been used for payment of the tax levied by the Union under clause (1) of article 246A, and the amount apportioned to the Union under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2). (2) Such percentage, as may be prescribed, of the net proceeds of any such tax or duty in any financial year shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that tax or duty is leviable in that year, and shall be distributed among those States in such manner and from such time as may be prescribed in the manner provided in clause (3). (3) In this article, "prescribed" means, — (i) until a Finance Commission has been constituted, prescribed by the President by order, and (ii) after a Finance Commission has been constituted, prescribed by the President by order after considering the recommendations of the Finance Commission.

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 270, printed pages 159–160 • 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