ISLAMABAD - The federal government would transfer Rs3254.6 billion to the four provinces under the National Finance Commission (NFC) Award in the budget for the fiscal year 2019-2020

The government has prepared the budget on the basis of the 7th NFC Award as the government has failed to constitute a new revenue sharing formula between the centre and the four provinces. The government would extend the 7th NFC Award for another year. The provincial governments get shares from the federal government under NFC award as per the said formula. Punjab gets 51.74 percent, Sindh 24.55 percent, Khyber-Pakhtunkhwa 14.62 percent and Balochistan 9.09 percent. The federal government has increased the provinces’ share by 32 percent for the upcoming fiscal year under the NFC. The government would transfer Rs3254.6 billion to the provinces during the FY-2019-20 against Rs2462.7 billion of the outgoing year. The amount to be transferred to the provinces would depend on the Federal Board of Revenue’s performance to achieve its collection target of Rs5.55 trillion in the fiscal year 2019-20  The federal government would transfer Rs1611.4 billion to Punjab in the next fiscal year against the Rs1204.7 billion of the current fiscal year. Sindh will receive Rs814.9 billion in the FY-2019-20 as compared to Rs616.3 billion of the outgoing year.  Khyber-Pakhtunkhwa will receive Rs533.3 billion as against Rs404 billion in the ongoing year. KP would get one percent under the war on terror. The federal government would transfer Rs295 billion to Balochistan in next fiscal year as compared to Rs237.6 billion of the last year. The break-up of Rs3254.5 billion, which would be transferred to the provinces, showed that Rs3153.8 billion would be transferred from the divisible pool, which was Rs2368.8 billion in the outgoing year.  Meanwhile, the federal government would transfer Rs100.8 billion as straight transfers during the next financial year that was Rs93.8 billion in the outgoing year.

The break-up of divisible pool taxes showed that Rs1176.8 billion would be collected as income tax, Rs2.23 billion capital value tax, Rs1207 billion sales tax on goods, Rs200 billion federal excise duty and Rs568 billion customs duty in the fiscal year 2019-20.

Similarly, the breakup of straight transfers showed that Rs24.2 billion would be accumulated as royalty on crude oil, Rs50.6 billion as royalty on natural gas, Rs9.8 billion as natural gas development surcharge and Rs16.1 billion as excise duty on natural gas.

The five-year constitutional term of the financial arrangement expired on June 30, 2015, however, the Pakistan Muslim League-Nawaz government had paid no heed to the demand of the provinces for constituting a fresh revenue sharing formula. The incumbent government had reconstituted the NFC but it held two meetings under the former finance minister Asad Umar. However, the government had not reconstituted the NFC after removal of Asad Umar from the post.