Chandigarh, Dec 2 2024-
In a push for the continuation of the Goods and Services Tax (GST) compensation cess regime, Punjab Finance Minister Harpal Singh Cheema on Monday recommended that it goes on beyond March 31, 2026, to ensure that states can mitigate the revenue loss caused by the subsumation of various taxes into the GST.
This recommendation was made during the Group of Ministers (GoM) meeting on compensation cess, which Cheema attended virtually.
He 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, as he highlighted the significant and permanent revenue loss faced by Punjab due to the subsumation of the purchase tax on foodgrains into the GST.
“This tax was a crucial contributor to the state’s revenue in the pre-GST era,” he added.
Finance Minister 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.
Noting that this discrepancy has resulted in considerable revenue loss for the state, he stressed that the continuation of the GST Compensation Cess regime is essential to address these financial challenges and ensure the fiscal stability of states like Punjab.
Cheema’s call for action reflects the broader concerns of many states that have experienced similar revenue losses due to implementing GST. His recommendation aims to ensure that states are adequately compensated for their financial setbacks and can continue to provide essential services and development initiatives for their citizens.
The Finance Minister’s strong advocacy for the extension of the GST Compensation Cess regime also underscores the Bhagwant Singh Mann-led Punjab government’s commitment to safeguarding the state’s financial interests.
Cheema on Sunday said the state witnessed 62.93 per cent growth in net GST collection during November 2024 compared to the corresponding period last year. Additionally, the total net GST collection up to November this financial year reflects an increase of 10.3 per cent compared to the same period last fiscal, he added. (Agency)
