Part XII - Finance & Property • Article

Article 269A Simplified: Levy and collection of goods and services tax in course of inter-State trade or commerce

Article 269A is the foundation of Integrated GST (IGST). It mandates that GST on cross-border transactions (inter-state trade and imports) is levied and collected by the Central Government, and then shared (apportioned) between the Union and States on the recommendations of the GST Council.

Official Text

(1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India. (3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India. (4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State. (5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

Simple Meaning

Explain Like Ten

When you buy something from another state online, the central government collects a combined tax called IGST. They then split this tax money between themselves and the state where the item is delivered, using rules decided by the GST Council.

Student Mode

Inserted by the 101st Constitutional Amendment Act, 2016, Article 269A provides the mechanism for taxing inter-state transactions under the GST framework. It authorizes the Union to levy and collect GST on inter-state trade and imports (which are deemed inter-state supplies). The tax is then apportioned between the Union and States based on the recommendations of the GST Council. Crucially, the apportioned share does not form part of the Consolidated Fund of India.

Example

When an online store in Delhi ships a smartphone to a customer in Haryana, the Union collects Integrated GST (IGST) under Article 269A and splits it with the Haryana government (the consumer state) based on GST Council guidelines.

Key Takeaway

Integrated GST on inter-state commerce is collected by the Union and shared between the Center and states based on GST Council recommendations.

FAQs

What is the destination-based principle in GST and how does Article 269A implement it?

GST is a consumption/destination-based tax. Article 269A ensures that the tax collected on an inter-state sale is apportioned to the consumer state where the goods or services are finally consumed.

Who has the power to formulate principles for determining the 'place of supply' under Article 269A(5)?

Only Parliament has the exclusive power to formulate these principles by law.

Quiz

Under Article 269A, GST on imports of goods or services into India is treated as:

Answer: Inter-State trade or commerce

Whose recommendations guide the apportionment of inter-state GST under Article 269A?

Answer: The Goods and Services Tax (GST) Council