Punjab Finance Minister Advocates for Extended GST Compensation

Punjab Finance Minister Harpal Singh Cheema has urged the extension of the GST compensation cess regime beyond March 31, 2026. This request aims to offset the revenue losses faced by Punjab, particularly due to the subsuming of the purchase tax on foodgrains into the GST.

Punjab's Finance Minister, Harpal Singh Cheema, has called for an extension of the GST compensation cess beyond the current deadline of March 31, 2026. He asserted that this is essential for states to counteract revenue deficits following the integration of various taxes into the GST framework.

During a Group of Ministers (GoM) meeting on compensation cess, which Cheema joined via video link, he stressed that the GST Council holds the authority to advise an extension of the compensation period in accordance with the Goods and Services (Compensation to States) Act 2017.

Cheema underscored the enduring impact on Punjab's revenue, particularly due to the purchase tax on foodgrains being absorbed by the GST. This tax had been a significant source of revenue pre-GST. He also noted that the VAT regime imposed higher tax rates compared to the current GST, leading to notable revenue shortfalls.

The Minister emphasized the necessity of continuing the GST compensation cess to maintain fiscal stability for states like Punjab amid these financial strains.

(With inputs from agencies.)