Jharkhand, in reply, were struggling at 210 for nine after getting off to a decent start.
The hosts lost the last seven wickets for just 29 runs to give Punjab complete control of the match at the end of day two at the Railway stadium here.
Jharkhand were 173 for two when opener Rameez Nemat (81) was run out by Yuvraj Singh.
Spinners Rajwinder (4/66) and Gurkeerat (4/36) wreaked havoc as Jharkhand batsmen failed to negotiate the two.
Ishank Jaggi (51) and Rameez, who hit 11 boundaries, put on a 91-run stand for the second wicket, while Saurabh Tiwary made 30.
Earlier, Siddarth Kaul (50) scored a half-century to guide his side over the 500-run mark after starting the day on 380 for four.
For Jharkhand, spinner Shahbaz Nadeem picked four scalps while Samar Quadri and Varun Aaron finished with three and two wickets respectively.
Brief Scores:
Punjab 1st innings: 516 all out in 117.5 overs (Manan Vora 187, Jiwanjot Singh 78; Shahbaz Nadeem 4/165)
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