ISLAMABAD - Despite healthy growth in tax collection, the federal government withheld Rs167.4 billion of the provinces during first quarter (July-September) of the current fiscal year.

The federal government transferred Rs428.66 billion to the four provincial governments during July-September period of the year 2017-18 under National Finance Commission (NFC) award. In the first quarter, the provinces were supposed to receive 25 percent (around Rs596.1 billion) of the total estimated amount of Rs2,384.2 billion from the center.

The PML-N government failed to constitute new revenue sharing formula between centre and provinces. The government had extended the 7th NFC award for another year, 2017-18. The government for the consecutive third year had extended the seventh award, as previous award expired in June last year. The five-year constitutional term of the arrangement had expired on June 30, 2015. However, the PML-N govt 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.

The provincial governments get shares from the federal government under 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 have to transfer Rs2.38 trillion to the provinces during the year 2017-18 as against revised Rs 2.12 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 Rs 4 trillion in the fiscal year 2017-18.

The FBR tax collections remained robust during first quarter of the ongoing financial year. Total collections of Rs765 billion during July-September 2017 demonstrated growth of over 20 percent as compared to collections in the first quarter of last year. However, the government had transferred lesser amount to the provinces under NFC award.

The Punjab government received Rs200.7 billion during first quarter of the current fiscal year, which is 17.3 percent of the annual share of Rs1161.8 billion.

The federal government released Rs106.2 billion to the Sindh that is 17.3 percent of the Rs612.6 billion to be released in the year 2017-18. Khyber Pakhtunkhwa would get Rs66.27 billion during July-September that is 17 percent of its annual share of Rs389.9 billion of the ongoing year. The KP received one percent additional funds under the NFC award due to the war on terror. The Balochistan province received Rs55.5 billion, which is 25.23 percent of Rs219.97 billion to be released in the ongoing financial year under NFC.