Provinces to get 57% more under NFC award

ISLAMABAD: The Centre will transfer Rs1.04 trillion to the provinces from the federal divisible pool during financial year 2010-11, which is 57 per cent more than current year’s total transfers.

In this fiscal year ending June 30, the government had to transfer Rs655.2 billion and the next financial year’s total transfers are Rs378 billion more than this amount.

According to the ‘Budget in Brief’ document, in the first year of implementing the historic seventh National Finance Commission Award, the provinces will get 56 per cent of the total federal divisible pool. However, before dividing the pool, the Centre will deduct one per cent and transfer it to Khyber-Pakhtunkhwa to help the province cover losses on account of the war on terror.

Punjab, the largest province in terms of population, will get around 48 per cent (Rs494.3 billion) of the total transfers during the next fiscal year, which is 50 per cent more than this year’s transfers.

Sindh will be the second largest recipient, as it will get Rs279.7 billion, 40 per cent more than this financial year’s amount. This is 25 per cent of total transfers to the provinces.

Khyber-Pakhtunkhwa will get 80 per cent more than the amount it received from the Centre this year. The federal government will transfer Rs160.4 billion to the province compared to Rs88.9 billion in the current fiscal year. The amount is 15.5 per cent of the divisible pool.

Balochistan has turned out to be the largest beneficiary of the seventh NFC Award. Its share has increased by 180 per cent compared to the total transfers in the current financial year. The province will receive Rs99.4 billion, 10 per cent of the divisible pool, against Rs35.5 billion this year.

The divisible pool comprises income tax, capital value tax, sales tax on goods and services, federal excise duty, customs duty, royalty on crude oil and natural gas.

The federal government expects to net over Rs633 billion on account of income tax. Over half of this amount will be transferred to the four provinces.

Tax authorities are expected to collect Rs674 billion in sales tax on goods and less than half of it will go to the provinces.

Under the head of customs duty, the provinces will get Rs99.5 billion out of expected collection of Rs180 billion. Besides, Rs99.5 billion will go to the provinces on account of customs duty on gas. The provinces will also get Rs89.2 billion as their constitutional right on sales tax on services.

Published in the Express Tribune, June 6^th, 2010.