Chandigarh, Aug 21 — Punjab Finance Minister Harpal Singh Cheema said the state was suffering an annual revenue loss of nearly ₹21,000 crore under the goods and services tax (GST) regime, warning of deepening fiscal stress unless the Centre addressed the issue of compensation.
“The state is losing ₹21,000 crore annually under the GST regime, and the uncertainty over the compensation cess’s future is a pressing concern,” Cheema said. He pointed out that Punjab’s fiscal health had been severely strained since the shift to GST, which subsumed most state-level taxes.
His remarks come as the group of ministers (GoM), formed to chart the way forward on the compensation cess, is yet to firm up an alternative taxation structure. The cess, introduced in 2017 to offset revenue losses of states, is scheduled to end in March 2026.
Cheema said the GST Council must urgently address how surplus collections from the cess will be utilised, stressing that the funds should be shared equally between the Centre and the states.
Punjab has consistently argued that GST has eroded its revenue base, given its heavy dependence on taxes from sectors like alcohol and petroleum that remain outside the GST net. Officials have previously warned that the state could face mounting difficulties in meeting expenditure commitments without adequate compensation.
