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The centre's transfers from the Federal Divisible Pool Taxes to the Punjab government are expected to increase to Rs 650,735.911 million during the financial year 2012-13. The Punjab government calculated this in its budget document for 2012-13.
"Because of an increase in the nominal size of the Federal Divisible Pool, transfers to Punjab are expected to increase to Rs 650, 735.911 million during FY 2012-13 against budget estimates for FY 2011-12 of Rs 531,528.327 million," the budget document said.
The share of the Divisible Pool Taxes for FY 2012-13 is based on the Federal Board of Revenue's (FBR) target of Rs 2,381,000 million. This would actually mean that the budget estimates 2012-13 are likely to be 22 percent higher than the revised estimates for 2011-12.
Under the 7th National Finance Commission Award, the percentage share of the provinces in the Divisible Pool is 57.50 percent with effect from FY 2011-12. Under this award, the Divisible Pool now comprises taxes on income, customs, duties, sales tax, federal excise excluding excise duty on gas charged at well head, and any other tax levied by the federal government.
According to the budget document, major increase in the Divisible Pool Taxes is expected from the Income Tax and Sales Tax. These two taxes collectively contribute 83.6 percent of Punjab's share from the Federal Divisible Pool. Land Customs and Federal Excise contribute the balance 16.4 percent.
The Punjab budget estimates 2012-13 of Straight Transfers have been pitched at Rs 6,585.092 million compared to budget estimates of Rs 5,423.944 million in 2011-12. Straight Transfers comprise a smaller portion of the financing package to Punjab by comparison with other provinces such as Sindh and Balochistan.
Under Article 161 of the Constitution and the NFC Award, Straight Transfers to provinces include the net proceeds of the federal excise duty on natural gas and the net proceeds of royalty on crude oil and natural gas assigned to the provinces. The Punjab budget estimates 2012-13 of Federal Grants at Rs 2,147 million against budget estimates of Rs 4,506.387 million in 2011-12. The provincial government is expected to receive project grants worth Rs 117 million, whereas estimates of Federal Grants have been pitched at Rs 2,030 million.

Copyright Business Recorder, 2012

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