Govt likely to extend 7th NFC award

The federal government has decided to extend the seventh National Finance Commission (NFC) award for another five years. The NFC was supposed to announce the new award on July 1, 2024 but now it will extend the seventh award for five more years.

The NFC award is set for five years. However, if a new award cannot be determined, the president can extend the previous award on the recommendation of the government.

Under the current award, resources are allocated based on 82% population and 10.3% poverty criteria, with 5% allocated based on distribution and 2.7% on area. Under the seventh award, provinces receive 57.5% of the divisible resources, while the center receives 32.5%.

The NFC award is a constitutional mechanism in Pakistan designed to allocate financial resources between the federal government and the provinces.

Established under Article 160 of the Constitution, the NFC award is typically revised every five years to address the changing economic dynamics and needs of the provinces.

The award determines the share of each province in the federal divisible pool, which includes taxes like income tax, sales tax, wealth tax, capital gains tax, and customs duty.

If a new award cannot be established within the stipulated period, the existing award can be extended by the President of Pakistan based on the government’s recommendation.

This extension ensures continuity in the financial distribution and prevents fiscal disruptions.