Abolition of Octroi, Zila tax: Sindh govt to get Rs3.5bn to offset against losses

ISLAMABAD: The government has decided to give Rs3.5 billion to the Sindh government in order to offset against losses of abolition of Octroi and Zila tax from divisible pool taxes following improved revenue collection of the Federal Board of Revenue (FBR) during the current fiscal year.

Sources said that a proposal was moved to the ECC by the Finance Division that the Sindh government may be allowed Rs3.5 billion technical supplementary grant (TSG) to offset losses off abolition of Octroi and Zila tax.

The Finance Division convention was under 7th NFC Award, the government of Sindh is entitled to receive a grant in aid equivalent to 0.66 per cent of the provincial share in the divisible pool taxes as compensation for losses on account of the abolition of Octroi and Zila tax.

The ECC was also informed that an allocation of Rs19.250 billion was made for this purpose against the actual working of Rs21.472 billion calculated on the basis of Rs5.829 trillion Federal Board of Revenue (FBR) tax collection.

The meeting was further stated that due to improved FBR revenue collection Rs16.867 billion stands released as on 18th April 2022 out of the allocation of Rs19.250 billion, leaving a balance of Rs2.383 billion. The FBR collections during May and June 2022are expected to be much higher than reported previously, therefore, the additional allocation of Rs3.5 billion would be required.

PPP govt criticised for not completing annual development schemes

The ECC meeting was further informed that an amount of Rs.17 billion has been allocated for “Grant for Relief and Rehabilitation of Internally Displaced Persons” under the same demand and of the total allocation, Rs.5.1 billion have been released during the first quarter of the current financial year, 2021-22.

However, the balance allocation has not been released as the federal government has cumulatively released Rs112.463 billion against the total approved package of Rs95.51 billion for the internally displaced persons and the balance allocation is available for surrender or utilisation for some other purposes, if so required.

The allocation of grant-in-aid to Sindh is an expenditure charged upon the federal consolidated fund (FCF) and the allocation is a voted expenditure and terms of the Public Finance Management Act, 2019, no re-appropriation can be made between funds authorized for expenditure charged upon the FCF and voted expenditure. The possible solution is to surrender funds from the head and obtain TSG where required.

Copyright Business Recorder, 2022