ISLAMABAD - Despite achieving its tax collection target, the federal government has not transferred the full share to provinces under the National Finance Commission (NFC) Award in the first quarter of the current fiscal year.

The federal government has transferred Rs503.98 billion to the four provinces under the NFC Award during the first quarter (July to September) of the ongoing financial year. The amount is 17.5 percent of the annual share of Rs2873.72 billion. The federal government was supposed to transfer 25 percent of the annual share in the first quarter of the current fiscal year.

The government has not transferred the full amount to the provinces despite the FBR has surpassed the tax collection target. The Federal Board of Revenue (FBR) had collected Rs1004 billion in the first quarter (July to September) of the current fiscal year exceeding the tax collection target by Rs40 billion. This was the first time FBR has managed to cross the figure of Rs1 trillion in gross as well as net collections in first quarter of a fiscal year.

In annual budget, the federal government had projected to transfer Rs2873.72 billion to the four provinces under the National Finance Commission (NFC) Award in the budget for the fiscal year 2020-2021. The amount to be transferred to the provinces would depend on the FBR performance to achieve its collection target of Rs4.963 trillion in the fiscal year 2020-21. 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 share.

Sindh has received only 16.73 percent of its share from the federal govt

According to the data of Ministry of Finance, the federal government has transferred Rs246.4 billion to Punjab in the first quarter of this FY21. The amount is 17.12 percent of the province’s annual share in the Award. The federal government has projected to transfer Rs1439.12 billion to Punjab in the ongoing fiscal year. 

Meanwhile, Sindh has received only 16.73 percent of its share from the federal government as against the projected 25 percent share. The federal government has transferred Rs124.17 billion to Sindh during July-September period of the ongoing financial year. In all, Sindh will receive Rs742.030 billion from the Centre in the entire FY.

According to the documents, KP has received Rs80.9 billion from the federal government, which is 16.94 percent of its annual share. The province will receive Rs477.52 billion. KP would get one per cent under the war on terror. However, Balochistan has also received less than its projected share.  The province has received Rs52.49 billion from the federal government under the NFC Award in the first quarter of the current fiscal year, which is 19.8 percent of its annual share of Rs265.054 billion.

It is worth mentioning here that the five-year constitutional term of the financial arrangement, NFC, had expired on June 30, 2015. However, the Pakistan Muslim League-Nawaz government had paid no heed to the demand of the provinces for formulating a fresh revenue sharing formula. The incumbent government had recently reconstituted the NFC, but it could not hold meeting.