ISLAMABAD  -  The federal government would transfer Rs8.2 trillion to the four provinces under the National Finance Commission (NFC) Award in the upcoming fiscal year of 2025-26.

The provinces would receive Rs8.205 trillion from the centre under the NFC Award in the next financial year as against the revised Rs6.996 trillion of the outgoing fiscal year, showing an increase of Rs1.209 trillion. The share of provinces has been increased by Rs1.2 trillion due to the federal government’s decision to enhance the tax collection target for the FBR. The government has set a Rs14.131 trillion tax collection target for the next financial year.

The amount to be transferred to the provinces would depend on the FBR performance to achieve its collection target of Rs 14.131 trillion in the fiscal year 2025-26. The government has enhanced the share of the provinces under NFC award, but it has also asked them to give a surplus budget of Rs1.464 trillion.

Under the 7th NFC Award, the Federal Divisible Pool was distributed as 57.5 percent share for the provinces and the remaining for the Centre. 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.

According to the budget documents, the federal government would transfer Rs4.076 trillion to Punjab in the next fiscal year against the revised Rs3.425 trillion of the current fiscal year. Sindh will receive Rs2.043 trillion in the FY2025-26 as compared to revised Rs1.752 trillion of the outgoing year.  Khyber-Pakhtunkhwa will receive Rs1.342 trillion as against revised Rs1.135 trillion in the ongoing year. KP would get one per cent under the war on terror. The federal government would transfer Rs743.166 billion to Balochistan in next fiscal year as compared to revised Rs673.023 billion of the previous year.

The break-up of Rs8.205 trillion, which would be transferred to the provinces, showed that Rs7.988 trillion would be transferred from the divisible pool, which was Rs6.773 trillion in the outgoing year. Meanwhile, the federal government would transfer Rs217.186 billion as straight transfers during the next financial year that was Rs223.606 billion in the outgoing year.

The break-up of divisible pool taxes showed that Rs3.866 trillion would be collected as income tax, Rs9.859 billion capital value tax, Rs2.716 trillion sales tax on goods, Rs503.141 billion federal excise duty and Rs892.174 billion customs duty in the fiscal year 2025-26.

Similarly, the break-up of straight transfers showed that Rs37.24 billion would be accumulated as gas development surcharge, Rs112.7 billion as royalty on natural gas, Rs56.84 billion as royalty on crude oil, Rs10.406 billion as excise duty on natural gas.