ISLAMABAD            -         The federal government would transfer Rs2873.72 billion to the four provinces under the National Finance Commission (NFC) Award in the budget for the fiscal year 2020-2120.

The federal government has increased the provinces’ share by 19.63 per cent for the upcoming fiscal year under the NFC. The government would transfer Rs2873.72 billion to the provinces during the FY-2020-21 against revised Rs2402.08 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 Rs4.963 trillion in the fiscal year 2020-21.

The government has once again prepared the annual 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 per cent, Sindh 24.55 per cent, Khyber-Pakhtunkhwa 14.62 per cent and Balochistan 9.09 per cent.

President Dr Arif Alvi had recently constituted the 10th National Finance Commission to make 8th NFC Award. The 9th NFC had failed to constitute a new resource sharing formula between the centre and four provinces during the five-year constitutional term.

The five-year constitutional term of the 7th NFC award expired on June 30, 2015. Since then, the federal government is continuously extending the seventh award after failing to constitute the new NFC Award. Previous government of PML-N and the incumbent PTI government both failed to formulate the fresh resource sharing formula between federal government and the provinces.

According to the budget documents, the federal government would transfer Rs1439.116 billion to Punjab in the next fiscal year against revised Rs1135.45 billion of the current fiscal year. Sindh will receive Rs742.030 billion in the FY2020-21 as compared to revised Rs592.32 billion of the outgoing year.  Khyber-Pakhtunkhwa will receive Rs477.52 billion as against revised Rs379.097 billion in the ongoing year. KP would get one per cent under the war on terror.

The federal government would transfer Rs265.054 billion to Balochistan in next fiscal year as compared to Rs295.983 billion of the last year.  Federal government has deducted Rs50 billion of Balochistan as tax refunds.

The break-up of Rs2873.719 billion, which would be transferred to the provinces, showed that Rs2817.212 billion would be transferred from the divisible pool, which was Rs2300.482 billion in the outgoing year.

Meanwhile, the federal government would transfer Rs56.51 billion as straight transfers during the next financial year that was Rs101.598 billion in the outgoing year.

The break-up of divisible pool taxes showed that Rs1156.193 billion would be collected as income tax, Rs1.744 billion capital value tax, Rs1098.916 billion sales tax on goods, Rs198.4 billion federal excise duty and Rs361.957 billion customs duty in the fiscal year 2020-21.

Similarly, the breakup of straight transfers showed that Rs15.867 billion would be accumulated as gas development surcharge, Rs52.736 billion as royalty on natural gas, Rs23.199 billion as royalty on crude oil, Rs14.705billion as excise duty on natural gas.