Punjab assembly passes GST amendment bill to match central reforms
Finance minister Harpal Singh Cheema, who tabled the bill, said the legislation proposed to ensure uniformity with the provisions of the Central Goods and Services Tax Act, 2017, as recently amended by the Finance Act, 2025
The Punjab assembly on Monday unanimously passed the Punjab Goods and Services Tax (Amendment) Bill, 2025.
Finance minister Harpal Singh Cheema, who tabled the bill, said the legislation proposed to ensure uniformity with the provisions of the Central Goods and Services Tax Act, 2017, as recently amended by the Finance Act, 2025.
The provisions include redefining “Input Service Distributor” (ISD) to cover distribution of Input Tax Credit (ITC) for inter-state supplies on a reverse charge basis.
They also introduce “unique identification marking” for certain goods under a track-and-trace mechanism, along with a penalty of ₹1 lakh or 10% of the tax payable, whichever is higher, for non-compliance. For appeals involving penalties, tax payers will now have to deposit 10% of the penalty amount upfront.
Other changes include exemptions for goods stored in Special Economic Zones or Free Trade Warehousing Zones before export or clearance to the domestic tariff area, restrictions on output tax adjustments if recipients fail to reverse ITC or pass on tax burdens, and an amendment to Section 17(5) clarifying that the term “plant and machinery” includes both terms.
The Vidhan Sabha also passed five other bills, including the Seeds (Punjab Amendment) Bill, 2025; the Punjab Right to Business (Amendment) Bill, 2025; the Punjab Apartment and Property Regulation (Amendment) Bill, 2025; the Punjab Co-operative Societies (Amendment) Bill, 2025, and the Punjab Town Improvement (Amendment) Bill, 2025.
Punjab suffered ₹1.11 lakh cr loss after GST implementation, says FM Cheema
The finance minister addressed concerns raised by leader of Opposition Partap Singh Bajwa regarding the GST system, referencing an article by former Union finance minister P Chidambaram.
Cheema recalled that the proposal for GST was originally introduced by Chidambaram himself in 2006, but was not implemented by the Congress-led UPA government due to opposition. He said the BJP-led NDA government later advanced the concept on the principle of “One-Nation One-Tax”, which the then Punjab finance minister, Manpreet Singh Badal, had agreed to in Delhi.
At that time, the Union government had promised the compensation cess will continue until states’ economies stabilised, but this cess was discontinued after 2022.
Highlighting the adverse impact on Punjab, Cheema said the state’s pre-GST revenue neutral rate (RNR) was 18.3%, significantly higher than the country’s average of 14%. But following GST implementation, Punjab incurred a loss of ₹1.11 lakh crore over eight years, while only receiving ₹61,000 crore from compensation tax.
The minister pointed out that many other states were also grappling with revenue losses due to GST, but were not being heard by the central government due to the BJP’s majority.
Cheema shared his repeated appeals to Union finance minister Nirmala Sitharaman not to destabilise the economies of the states. He warned that if the federal structure was compromised, states will be reduced to the status of municipal committees, subservient to the Centre.
He alleged that the BJP was systematically undermining the Constitution, terming policies like “One Nation One Tax” and “One Nation One Election” as destructive to the federal structure. He reiterated that the Aam Aadmi Party opposed all such policies, but acknowledged that the GST proposal originated with the Congress party.
