ISLAMABAD, June 12: Provinces will get Rs42 billion more next year from sales tax under the amended National Finance Commission (NFC) award, following federal government’s decision to increase General Sales Tax (GST) on consumer goods and services from 15 to 16 per cent.
The centre will earmark Rs172 billion from sales tax in the financial year 2008-09 for distribution among the provinces, compared to Rs130.4 billion this year. Under a formula, one-sixth of the total sales tax collected is distributed among the provinces, with 50 per cent going to the Punjab, 34.85 per cent to Sindh, 9.93 per cent to NWFP and 5.22 per cent to Balochistan.
The NFC award 1997 has been amended under the Distribution of Revenue and Grant-In-Aid Amendment Order, 2006.
In the new NFC award, provincial governments shall be assigned in each financial year a share equal to the percentage of the net proceeds of eight different taxes presently levied by the centre.
These include taxes on income, wealth tax, capital value tax (CVT), sales tax on services, export duties on cotton, customs duties and federal excise duties, excluding the excise duty on gas.
The share of provinces in the taxes will be raised to 43.75 per cent from this year’s 42.5 per cent. The amended NFC envisages 45 per cent share of the provinces in money collected under these taxes in the financial year 2009-10.
In the last financial year, provinces got 41.5 per cent share in this pool.
Finance Minister Naveed Qamar reiterated on Thursday that the National Finance Commission (NFC) would be reconstituted and its meeting would be held soon.
The government has announced 24 per cent increase in transfer to provinces from the federal divisible pool in the next financial year.
In the budget speech, the minister projected provincial transfers, including grants, at Rs606 billion in the next financial year, against the revised estimates of Rs490 billion this year.
The NFC award next year will be on the basis of the population of the provinces.
Overall, 57.36 per cent of the award money will go to Punjab, 23.71 per cent to Sindh, 13.82 per cent to NWFP and 5.11 per cent to Balochistan.
Under the amended award, Rs27.75 billion will be provided to provinces under the Federal Consolidated Fund, 11 per cent of which will go to Punjab, 21 per cent to Sindh, 35 per cent to NWFP and 33 per cent to Balochistan.
INCOME TAX: The government will distribute in the next financial year over Rs196 billion among the provinces as their share in income tax, compared to the revised Rs146.7 billion in the outgoing year. This is an increase of Rs49.4 billion over the financial year 2007-08. Punjab will get Rs112.52 billion, Sindh Rs46.5 billion, NWFP Rs27.1 billion and Balochistan around Rs10 billion.
The provinces will get Rs2.7 billion to provinces under the CVT, of which more than half, Rs1.5 billion, will go to Punjab, Rs640 million to Sindh, Rs373 million to NWFP and Rs138 million to Balochistan. In 2007-08, this amount was Rs2.3 billion.
The provinces will get Rs43.7 billion as their share in federal excise duty, compared to Rs34.4 billion in the outgoing year. This is an increase of over Rs9 billion.
Punjab will get around Rs25 billion, Sindh Rs10 billion, NWFP Rs6 billion and Balochistan Rs2.2 billion.
The federal government will transfer Rs69.3 billion to provinces from the money collected through customs duties next financial year, compared to Rs58.63 billion in the outgoing year.
Of this, Rs39.7 billion will go to Punjab, while Sindh will get Rs16.5 billion, NWFP Rs9.5 billion and Balochistan Rs3.5 billion.
In 2008-09, the centre will disburse Rs21.1 billion among the provinces as their share in the General Sales Tax levied in the form of central excise. This is a form of sales tax imposed by the federal government on companies. In the outgoing year, the government provided Rs18.7 billion to provinces from its collections under the central excise mode of GST.
From this allocation, Punjab will get Rs12.15 billion, Sindh Rs5 billion, NWFP Rs2.9 billion and Balochistan about Rs1 billion.
DIVISIBLE TAXES: Under the amended NFC award, over Rs62.6 billion will be provided to provinces as straight transfers. This includes the share of provinces in royalty on crude oil and natural gas, gas development surcharge, excise duty on natural gas and provincial GST.
Dear visitor, the comments section is undergoing an overhaul and will return soon.