KP govt slams Rs6.4bn deduction from federal fiscal transfers

PESHAWAR: Chief Minister Khyber Pakhtunkhwa Muhammad Sohail Afridi has said that the federal government has issued instructions for an at-source deduction of Rs6.4 billion from federal fiscal transfers due to the province for the month of July, without the consent of the provincial government and without any constitutional or legal basis.

The Khyber Pakhtunkhwa government, he said, would not accept this unconstitutional action under any circumstances and would pursue every available legal, constitutional and institutional forum to safeguard the province’s constitutional and fiscal rights.

The Chief Minister said that, prior to the federal budget for the current financial year, the federal government had sought additional funding from Khyber Pakhtunkhwa, as it had from other provinces.

In the event that the Federal Board of Revenue (FBR) achieved its tax collection target of Rs15,260 billion, Khyber Pakhtunkhwa’s share would have amounted to approximately Rs175 billion.

The Chief Minister further clarified that he had made the provision of the additional amount conditional upon a meeting with and approval from his leader, Imran Khan.

The second condition was that the merged districts be given their constitutional and legitimate share under the 11th National Finance Commission Award.

Sohail Afridi said the federal government had accepted the condition of providing the merged districts their due fiscal share within six months, and the commitment was also incorporated into the proceedings of the National Economic Council.

It had further been agreed that, if the due share was not provided within six months, the matter would be pursued under the 7th NFC through submission of a summary to the Prime Minister and the President and issuance of an ordinance in accordance with the constitutional procedure.

He said that since he was not allowed to meet his leader, Imran Khan, the Khyber Pakhtunkhwa government had neither approved nor signed any MoU with the federal government concerning the provision of the additional amount.

The Chief Minister said that, accordingly, the additional amount was not included in the Khyber Pakhtunkhwa budget for FY2026-27, and no funds were allocated for the proposed arrangement. Despite this, on August 5, the very day when the provincial government was holding a grand public gathering in Peshawar against the three-year unjust imprisonment of its leader, Imran Khan, the Ministry of Finance issued instructions, without prior consultation with the provincial government, for an at-source deduction of Rs6.4 billion from the federal fiscal transfers due to Khyber Pakhtunkhwa for July.

The provincial government neither approved nor concurred with the deduction. He said the Khyber Pakhtunkhwa Finance Department had, through its letter of August 13 addressed to the Accountant General, Khyber Pakhtunkhwa, categorically conveyed the provincial government’s non-consent to the proposed deduction.

The Chief Minister said the matter was not merely one of political disagreement, but concerned the constitutional and fiscal rights of Khyber Pakhtunkhwa. Any deduction from the province’s constitutional fiscal entitlement, he said, must have a clear constitutional or legal basis and the consent of the provincial government.

Sohail Afridi said that, given the seriousness of the matter, Finance Adviser Muzammil Aslam, on his instructions, immediately met with relevant officials of the Accountant General, Khyber Pakhtunkhwa. Following the meeting, formal letter was also issued to refrain from making the Rs6.4 billion deduction or taking any related action without the consent of the provincial government.

The Chief Minister added that the Khyber Pakhtunkhwa government had already filed a petition before the Federal Constitutional Court seeking enforcement of its constitutional right under the National Finance Commission.

The Chief Minister said his government would make no compromise whatsoever on Khyber Pakhtunkhwa’s constitutional, fiscal and NFC-related rights and would not accept any unconstitutional action by the federal government.

Copyright Business Recorder, 2026