80pc GST collection to be distributed among provinces

ZAHEER ABBASI

ISLAMABAD: The federal and provincial governments Monday agreed that 80 percent of the total GST collection on services, for the first six months of 2011-12, should be distributed among the federating units till a consensus is reached on new distribution formula.

The agreement to this effect was reached during the second meeting of 8th National Finance Commission chaired by Finance Minister, Dr Abdul Hafeez Shaikh and attended by the Finance Ministers of the provinces. The meeting discussed draft report on the bi-annual monitoring of the NFC Award implementation from July-December 2011 as well as the collection of GST on services with reference to the position of final distribution of divisible pool. The federal and provincial governments decided with respect to GST on services that 80% of the collection should be distributed till the finalization of new formula. The Finance Minister directed that the 80% collection till December 2011 be distributed among provinces on temporary basis, the provinces unanimously agreed over this decision of the Finance Minister.

The meeting also held detailed discussion about excise duty on natural gas and royalty to the provinces as well as 1 percent of income tax paid out of the federal consolidated fund. On the issue of Gas Development Surcharge, the Secretary Petroleum assured the provinces that the Ministry would make available all the details with respect to production in the oil fields.  The meeting was informed that FBR collection of Rs.840.7 billion during July-December 2011-12 with federal government share Rs.338.9 billion and provinces Rs.458.9 billion, as 57.5% and 42.5 % respectively. Punjab government share was Rs.237.2 billion, Sindh Rs.112.6 billion, Khyber Pakhtunkhawa Rs.75 billion and Balochistan Rs.46.7 billion including Rs.5 billion from federal government as guaranteed share during the first half of this fiscal year.

Of the total collection in the divisible pool, Rs.27.2 billion was deducted less non-divisible pool. This included Rs.11.2 billion workers welfare fund, Rs.5.9 billion excise duty on natural gas, Rs.7.1 billion export development surcharge and  Rs3 billion on account of 1% income tax paid from federal consolidated fund. The gross divisible pool stood at Rs.813.5 billion. Another 1% was deducted on account of collection charges by federal government which was Rs.8.1 billion. The net divisible pool of taxes stood at Rs.805.4 billion for first half of this fiscal year. Khyber Pakhtunkhawa was given Rs.8 billion from the net divisible pool on account of 1% on War on Terror and balance divisible pool stood at Rs.797 billion which accounts for distribution of 57.5 percent and 42.5 percent to the between provinces and federation respectively.

The distribution to the provinces on account of royalty of crude oil from the Ministry of Petroleum was Rs.8.4 billion during first six months of the current fiscal year. Punjab government received Rs.2.2 billion, Sindh 2.1 billion and Khyber Pakhtunkhawa Rs.4.1 billion.

On account of royalty on natural gas an amount of Rs.15.7 billion was distributed among the provinces during July-December 2011-12. The Punjab province received 0.8 billion, Sindh Rs.9.4 billion, Khyber Pakhtunkhawa Rs.1.8 billion and Balochistan Rs.3.7 billion. On account of gas development surcharge, Rs Rs.8.6 billion were distributed among the provinces with Rs.0.6 billion to the Punjab, Rs.6.6 billion to Sindh, Rs.1 billion to Khyber Pakhtunkhawa and Rs.0.4 billion to Balochistan.

Those who attended the meeting included Abdul Ghafoor Mirza from Punjab, Kaiser Bengali from Sindh, Senator Haji Muhammad Adeel Khyber from Pakhtunkhawa, Sheikh Jaffar Khan Mandokhail from Balochistan, the Provincial Finance Ministers and Finance Secretaries as well as Chairman Federal Board of Revenue (FBR), Secretary Finance and Advisor to Finance Ministry.