The Distribution of Revenues and Grants-in-Aid Order, 2010 (President's Order No. 4 of 2010)

Updated: Saturday October 01, 2016/AsSabt Thoul Hijjah 29, 1437/Sanivara Asvina 09, 1938, at 09:12:38 PM

The Distribution of Revenues and Grants-in-Aid Order, 2010

PRESIDENT’S ORDER 4 OF 2010

An Order

to provide for distribution of revenues and certain grants

WHEREAS in pursuance of clause (1) of Article 160 of the Constitution of the Islamic Republic of Pakistan [hereinafter referred to as the Constitution] the President, by the Finance Division's Notification No. S.R.O. 739(I)/2005, dated the 21st July, 2005, as modified by the said Division's Notification No.S.R.O.693(I)/2009, dated the 24th July, 2009, appointed a 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 said Commission has submitted its recommendations with regard to the said distribution;

NOW, THEREFORE, in pursuance of clause (4) of Article 160 of the Constitution 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 Grants-in-Aid Order, 2010.

(2) It shall come into force on the first day of July, 2010.

2. Definitions. In this Order, unless there is anything repugnant in the subject or context,---

(a) “net proceeds” means, in relation to any tax, duty or levy, the proceeds thereof reduced by the cost of collection as ascertained and certified by the Auditor-General of Pakistan; and

(b) “Taxes on income” includes corporation tax but does not include taxes on income consisting of remuneration paid out of the Federal Consolidated Fund.

3. Distribution of revenues.-(1) The Divisible Pool taxes in each year shall consist of the following taxes levied and collected by the Federal Government in that year, namely:---

(a) Taxes on income;

(b) Wealth tax;

(c) Capital value tax;

(d) Taxes on sales and purchases;

(e) Export duties on cotton;

(f) customs-duties;

(g) Federal excise duties excluding the excise duty on gas charged at well-head; and

(h) Any other tax which may be levied by the Federal Government.

(2) One per cent of the net proceeds of divisible pool taxes shall be assigned to Government of North-West Frontier Province to meet the expenses on war on terror.

(3) After deducting the amounts as prescribed in clause (2) of the balance amount of the net proceeds of divisible pool taxes, fifty-six per cent shall be assigned to Provinces during the financial year 2010-11 and fifty-seven and half, per cent from the financial year 2011-12 onwards. The share of the Federal Government in the net proceeds of divisible pool shall be forty-four per cent during the financial year 2010-11 and forty-two and half per cent from the financial year 2011-12 onwards.

4. Allocation of shares to the Provincial Governments.-(1) The sum assigned to the Provincial Governments under Article 3 shall be distributed amongst the Provinces on the basis of the percentage specified against each:---

(a) Balochistan 9.09%

(b) The North-West Frontier Province 14.62%

(c) The Punjab 51:74%

(d) Sindh 24.55%

Total: 100.00%

(2) The Federal Government shall guarantee that Balochistan Province shall receive the projected sum of eighty-three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first year of the Award. Any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement for Balochistan shall remain protected throughout the remaining four years of the Award based on annual budgetary projections.

5. Payment of net proceeds of royalty on crude oil. Each of the Provinces shall be paid in each financial year as a share in the net proceeds of the total royalties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Province in that year bears to the total production of crude oil.

6. Payment of net proceeds of development surcharge on natural gas to the Provinces.-(1) Each of the Provinces shall be paid in each financial year as a share in the net proceeds to be worked out based on average rate per MMBTU. The average rate pr MMBTU shall be derived by clubbing both the royalty on Natural Gas and development surcharge on gas. Royalty on natural gas would be distributed in accordance with clause (1) of Article 161(1) of the Constitution whereas the development surcharge on natural gas would be distributed by making adjustments based on this average rate.

(2) The development surcharge on natural gas for Balochistan with effect from 1st July, 2002, shall be reworked out on the basis of the formula given in clause (1) and the amount, subject to maximum of ten billion rupees shall be paid by the Federal Government in five years.

7. Grants in Aid to the Provinces. There shall be charged upon the Federal Consolidated Fund each year, as grants-in-aid of the revenues of the Province of Sindh an amount equivalent to 0.66% of the Provincial share in the net proceeds of divisible pool as a compensation for the losses on account of abolition of octroi and Zilla tax.

8. Repeal. The Distribution of Revenues and Grants-in-Aid Order, 1997 (P.O. No.1 of 1997) is hereby repealed.