ISLAMABAD - As tax collection by the Federal Board of Revenue is well on track, the federal government has decided not to cut the provinces’

shares in the National Finance Commission (NFC) Award during the outgoing financial year 2015-2016.

“The FBR is in a position to achieve its tax collection target of Rs3104 billion set for 2015-16. Therefore, the federal government will not reduce the provincial share in resources under the 7th NFC Award,” said an official of the Ministry of Finance.

He further said the government would transfer entire budgeted amount of Rs1.85 trillion to the provinces by the end of June 2016.

“The provincial governments get shares from the federal government under the 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.

Following the formula, the Punjab province would receive Rs896.5 billion, Sindh Rs483 billion, KP Rs301.26 billion (including one percent additional due to war on terror) while Balochistan would get Rs171.2 billion during the outgoing financial year.

The release of resources to the provinces under the NFC Award completely depends on the tax collection by the FBR, which is all set to achieve the target by the end of June.

The FBR has to collect Rs464 billion in last month (June) of the outgoing fiscal year to meet the annual target. The net collection by the FBR stood at Rs2643 billion during July-May of the outgoing financial year (2015-16).

The break-up of Rs1.85 trillion shows that the federal government will transfer Rs1.75 trillion divisible pool taxes to the provinces; Rs100 billion as straight transfers, and Rs67 billion as General Sales Tax on services during the year 2015-16, according to the official documents of the Ministry of Finance.

According to further details, in divisible pool, the federal government would release Rs742.3 billion to the four provinces as taxes on income; Rs1.12 billion as Capital Value Tax; Rs704.3 billion as Sales Tax (excluding GST on services); Rs106.7 billion as Federal Excise Duty and Rs197.03 billion as Customs Duties.

Meanwhile, the break-up of Rs100 billion of straight transfer reveals that Rs17.08 billion would be transferred to the provinces as royalty on crude oil; Rs37.45 billion as royalty on natural gas; Rs31.36 billion as natural gas development surcharge and Rs14.47 billion as excise duty on natural gas.