FM seeks GST compensation cess extension beyond 2026

Finance Minister Harpal Cheema on Monday recommended the continuation 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 the subsumation of various taxes into the GST.

Cheema made this recommendation during the meeting of Group of Ministers on compensation cess. The minister attended the meeting via video-conferencing.

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. 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.