India is a federal country with the Central government, State governments and local governments. The Seventh Schedule of the Indian constitution has specifically assign the responsibility and taxation power of the Centre and the States. In pre GST regime, the Centre was assigned for taxation power on manufacture, interstate trade and international trade like import and export. The states were assigned taxation power of intra state trade and taxation power on local economic activity. As local governments were under the jurisdiction of the states therefore no separate financial arrangement were been made in the constitution for local governments. In pre GST regime, Indian indirect taxation was characterized by multiple taxes with cascading effect and different tax administration in a single country. Under this constitutional back ground, constitutional amendment 101 (2016) has been passed and the Centre state financial relationship has been re arrange regarding indirect taxation.