Draft Article 250 (Article 269, Constitution of India 1950) was discussed on 5 August 1949, 19 August 1949 and 9 September 1949. It was a part of a series of Articles that laid down how revenue is to be distributed between the Union and States. This Draft Article provided that taxes such as terminal taxes, taxes on railway fares and freights etc. would be collected by the Union government and subsequently allocated to State governments. The Draft Article explicitly provided that the taxes collected under this provision would not be considered as the revenue of the Union Government.
A Member proposed to amend the Draft Article to provide that the terminal taxes collected under the Draft Article be distributed to the local authorities in each State instead of the State governments. He argued that terminal taxes were an important source of revenue for local bodies. Prior to the Government of India Act, 1935 terminal taxes were on the State list and the States had the power to levy taxes according to the requirements of the local bodies. However, after 1935 terminal taxes were shifted to the Union list. Another Member opposed the amendment and stated that the State Governments could allocate their revenues to local bodies as may be required. He believed there was no necessity to provide for the local bodies within the Draft Article. Some members also felt that the amendment interfered with provincial autonomy.
After significant debate, the Assembly rejected the amendment.
Minor amendments were accepted.
The Draft Article, as amended was adopted on 19 August 1949.
The Draft Article was re-opened on 9 September 1949 by the Drafting Committee Chairmanto include two additional taxes. First, taxes other than stamp duties on transactions in stock exchanges and futures market and second, taxes on the sale or purchase of newspapers and on newspaper advertisements. This amendment was adopted without debate.
Article 269 was further amended in 1956, 2000 and 2016 to only provide for two taxes. First, taxes on the sale or purchase of goods and second, taxes on the consignment of goods. However, goods and services tax related to inter-State trade or commerce provided for in Article 269A were excluded from the ambit of this Article.