Latest News | Punjab FM Seeks Extension of GST Compensation Cess Beyond March 2026

Chandigarh, Dec 2 (PTI) Punjab Finance Minister Harpal Singh Cheema on Monday demanded extension of the goods and services tax (GST) compensation cess regime beyond March 31, 2026, to ensure that states can mitigate the revenue loss caused by various taxes subsuming into the GST.

The recommendation was made during the Group of Ministers (GoM) meeting on compensation cess, which Cheema attended via video conferencing.

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Cheema emphasised that the GST Council, as per the Goods and Services (Compensation to States) Act 2017, has the mandate to recommend extending the compensation period beyond five years.

He highlighted the significant and permanent revenue loss faced by Punjab due to the purchase tax on foodgrains subsuming into the GST. This tax was a crucial contributor to the state's revenue in the pre-GST era, he added.

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Cheema further pointed out that the rate of tax on goods under the Value Added Tax (VAT) regime was significantly higher than the rate applicable under GST.

This "discrepancy" has resulted in considerable revenue loss for the state, he added.

The FM stressed that the continuation of the GST compensation cess regime is essential to address these financial challenges and ensure fiscal stability of states like Punjab.

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