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Distribution of Revenues and Grants-in-Aid (Amendment) Order, 2006

Published: 2006-12-01

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Last Updated: 2006­12­01

further to amend the Distribution of Revenues and Grants­in­Aid Order, 1997
WHEREAS, in pursuance of clause (1) of Article 160 of the Constitution, the President, by the Finance Division’s Notification No. SRO 529 (1)/2000, dated 22nd July, 2000, as modified by SRO No. 895 (1)/2000, dated 18th December, 2000, Notification No. F­2(2)NFC/2000­508 dated 7th
November, 2001, Notification No. F2 (2)NFC/2000­200 dated 6th April, 2002, SRO No. 1043 (1)/2003, dated 13th November, 2003, read with SRO No. 739 (1)/2005, dated 21st July, 2005 and SRO No. 950(1)/2005,dated 12th September, 2005, appointed National Finance Commission to make recommendations, among other matters, as to the distribution between the Federation and the Provinces of the net proceeds of certain taxes.
AND WHEREAS the Commission could not submit its recommendations with regard to the said distribution and the matter being, urgent and national importance can not be further delayed;
AND WHEREAS it is expedient further to amend the Distribution of Revenues and Grants­in­ Aid Order, 1997 (P.O. No.1 of 1997) for the purposes hereinafter appearing;
NOW, THEREFORE, in pursuance of clauses (6) read with clause (7) of Article 160 of the Constitution of Islamic Republic of Pakistan, the President is pleased to make the following Order­
1. Short title and commencement.­(1) This Order may be called the Distribution of Revenues and Grants­in­Aid (Amendment) Order, 2006.
(2) It shall come into force on the first day of July, 2006.
2. Substitution of Articles 3, 4 and 7, P.O. No. 1 of 1997. In the Distribution of Revenues and Grants­in­Aid, Order 1997 (P.O. No.1 of 1997) for Articles 3, 4 and 7 the following shall be substituted, namely:­
"3. Distribution of Revenues.­(1) The Provincial Governments shall be assigned in each financial year a share equal to the percentage of the net proceeds of the following taxes and duties levied and collected by the Federal Government in that year as specified in clause (2):­
(a) taxes on income;
(b) wealth tax;
(c) capital value tax;
(d) taxes on sales and purchases;
(e) sales tax on services (CE mode);

(f) export duties on cotton;
(g) Customs­duties;
(h) federal excise duties excluding the excise duty on gas charged at well­head; and
(i) any other tax which may be levied by the Federal Government.
(2) The percentage share of the Provinces from the net proceeds of taxes and duties in each year shall be as under:­

                        Finance year                         Percentage share
                        2006­07                         41.50%
                        2007­08                         42.50%
                        2008­09                         43.75%
                        2009­10                         45.00%
                        2010­11 and onward                         46.25%
4. Allocation of shares to the Provincial Government.­(1) Out of the sum assigned to the Provincial Governments under Article 3 an amount equal to the net proceeds of 1/6th of Sales Tax shall be distributed amongst the Provinces at the following ratio and the Provincial Governments shall further transfer the whole of such amounts to the District Governments and Cantonment Boards without retaining any part thereof:­

The Punjab 50.00%
Sindh 34.85%
The North­West frontier Province 9.93%
Balochistan 5.22%
Total: 100.00%
(2) The balance shall be distributed amongst the Provinces on the basis of their respective population in the percentage specified against each:

            The Punjab                         57.36%
            Sindh                         23.71%
            The North­West frontier Province                         13.82%
            Balochistan                         5.11%
                                                           Total:                         100.00%

7. Grants­in­Aid to the Provinces. There shall be charged upon the Federal Consolidated Fund each year a sum of rupees twenty seven billion seven hundred and fifty million, as grants­in­aid of the revenues of the Provinces to be distributed amongst the Provinces as per ratio specified against each Province,   namely:­

            Province                         Amount
            The Punjab                         11.00%
            Sindh                         21.00%
The North­West Frontier Province                         35.00A
            Balochistan                         33.00%
                                                           Total:                         100.00%
Note.­­The grants­in­aid will be increased annually in line with the growth of net proceeds of divisible taxes for each year.
Explanation.­­With the arrangements contained in Articles 3 and 7 above, the overall provincial share in the net divisible pool would not be less than 45% in the first financial year and 50% in the last financial year.