Punjab Finance Minister Harpal Singh Cheema on Monday made a compelling case for extending the GST Compensation Cess regime beyond March 31, 2026, to address states’ revenue losses caused by the subsumation of various taxes into the Goods and Services Tax (GST). Participating virtually in a Group of Ministers (GoM) meeting on the issue, Cheema underscored the pressing need for this extension to safeguard fiscal stability. 

Highlighting Punjab's plight, Cheema pointed out the significant revenue loss due to the inclusion of the purchase tax on foodgrains within GST. This levy was a critical revenue source for Punjab in the pre-GST era. He further explained that goods under the earlier VAT regime were taxed at substantially higher rates compared to GST, exacerbating revenue challenges for the state. 

Citing the Goods and Services (Compensation to States) Act 2017, Cheema stressed that the GST Council has the authority to recommend extending the compensation period beyond five years. He argued that such a step is essential for Punjab and other states facing similar setbacks due to GST implementation. 

The Finance Minister’s appeal resonated with broader concerns among states, many of which have reported permanent financial losses since the tax overhaul. Cheema emphasized that extending the compensation regime is vital for states to sustain essential public services and development programs without financial strain. 

The strong advocacy aligned with the Chief Minister Bhagwant Mann-led Punjab Government’s commitment to protecting the state’s financial interests.