Punjab Advocates for Extension of GST Compensation Beyond March 2026
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Chandigarh, Dec 2 (NationPress) In a strong push for maintaining the Goods and Services Tax (GST) compensation cess framework, Punjab's Finance Minister Harpal Singh Cheema proposed on Monday that it should extend beyond March 31, 2026. This extension is crucial for states to recover from the revenue deficits caused by the integration of different taxes into the GST regime.
This suggestion was made during a virtual participation at the Group of Ministers (GoM) meeting concerning the compensation cess.
Cheema stressed that, according to the Goods and Services (Compensation to States) Act 2017, the GST Council is empowered to propose an extension of the compensation period beyond five years. He pointed out the substantial and enduring revenue losses that Punjab has encountered due to the inclusion of the purchase tax on foodgrains within the GST framework.
"This tax was a vital source of revenue for the state prior to the GST implementation," he noted.
Additionally, Finance Minister Cheema indicated that the taxation rates on goods under the Value Added Tax (VAT) system were significantly more elevated than those under the GST.
He highlighted that this disparity has led to a significant revenue decline for the state. Therefore, he emphasized that the continuation of the GST Compensation Cess framework is vital for addressing these economic difficulties and ensuring the fiscal health of states like Punjab.
Cheema's urgent appeal mirrors the wider concerns of numerous states that have similarly faced revenue losses following the GST implementation. His recommendation is designed to guarantee that states receive adequate compensation for their financial hardships, enabling them to maintain essential services and development programs for their residents.
The Finance Minister's robust push for prolonging the GST Compensation Cess framework also reflects the commitment of the Bhagwant Singh Mann-led Punjab government to protect the state's financial well-being.
On Sunday, Cheema reported that the state experienced a 62.93 percent surge in net GST collection for November 2024 compared to the same month last year. Moreover, the total net GST collection up to November in this financial year shows a growth of 10.3 percent compared to the previous fiscal year.
