ISLAMABAD - The federal government would transfer Rs2.38 trillion to four provinces under the National Finance Commission (NFC) Award in the upcoming financial year 2017-18.

The government has made the budget 2017-18 on the basis of 7th NFC Award, as it failed to constitute a new revenue-sharing formula between centre and provinces. The government would extend the 7th NFC Award for another year, 2017-18.

The incumbent government for the consecutive third year would extend the seventh award, as the previous award had expired in June last year. The provincial governments get shares from the federal government under the NFC Award as per the said formula. Punjab gets 51.74 per cent, Sindh 24.55 per cent, Khyber Pakhtunkhwa 14.62 per cent and Balochistan 9.09 per cent.

The government would transfer Rs2.38 trillion to the provinces during 2017-18 as against the revised Rs2.12 trillion transferred during the outgoing year, showing growth of over 12.4 per cent. The amount to be transferred to the provinces would depend on the Federal Board of Revenue’s performance to achieve its collection target of Rs4 trillion in the fiscal year 2017-18.

The federal government would transfer Rs1161.8 billion to Punjab in the fiscal year 2017-18 as compared to Rs1020.1 billion of the outgoing fiscal year. The Sindh province would get Rs612.6 billion against Rs554.1 billion of the outgoing year. Similarly, Khyber Pakhtunkhwa would get Rs389.9 billion as compared to Rs343.5 billion of the outgoing year. Khyber Pakhtunkhwa would get one per cent additional due to the war on terror. The Balochistan province would get Rs219.97 billion against Rs203.6 billion of the outgoing fiscal year 2016-17.

The breakup of Rs2.38 trillion to be transferred to the provinces showed that Rs2.27 trillion would be collected as divisible pool taxes and Rs115.24 billion to be accumulated as straight transfers.

The breakup of divisible pool taxes showed that Rs895.5 billion would be collected as taxes on income, Rs1.56 billion as capital value tax, Rs918.8 billion as sales tax on goods, Rs123.55 billion as federal excise duty and Rs329.5 billion as custom duties in the fiscal year 2017-18.

Similarly, the breakup of straight transfers showed that Rs18.7 billion would be accumulated as royalty on crude oil, Rs38.61 billion as royalty on natural gas, Rs42.1 billion as natural gas development surcharge and Rs15.74 billion as excise duty on natural gas.

The five-year constitutional term of the arrangement had expired on June 30, 2015. However, the PML-N government had not paid any heed to the concerns of the provincial governments for making fresh revenue-sharing formula in last couple of years. The federal and provincial governments in December last year agreed to convene next meeting on NFC award in January 2017. However, no meeting took place yet since then.