PESHAWAR, Oct 4: Punjab would get over 50 per cent of Rs32bn additional GST to be distributed among the federating units during the current financial year, according to sources.

The federal government has decided to allocate 2.5 per cent additional resources to provinces under the general sales tax (GST) head, according to sources.

Out of the total amount to be diverted to provinces under this arrangement, a sum of about Rs20bn would be distributed among the provinces on the basis of their respective annual share after the abolition of octroi and zila tax by the last Nawaz Sharif government.

Whereas, remaining Rs12bn—out of Rs32bn — would be distributed among the provinces on the basis of their respective population.

Although the issue of distributing 2.5 per cent additional GST among provinces has yet to be decided to pave the way for finalizing the 6th National Finance Commission (NFC) award, under the province-wise share determined by the federal government for the current financial year, Sindh, NWFP and Balochistan would jointly get Rs14.53bn and Punjab alone get Rs17bn.

Out of the total Rs32bn to be distributed among the provinces during the 2002-03 financial year, Punjab would get over Rs17bn, Sindh Rs10.4bn, NWFP Rs2.6bn and Balochistan would get Rs1.53bn.

Whereas, out of the Rs12bn funds to be distributed on the basis of population a sum of Rs6.9bn would go to Punjab, Rs2.8bn to Sindh, Rs1.6bn to NWFP and over Rs630m to Balochistan.

Similarly, out of the Rs20bn to be distributed among the provinces on the basis of their ‘historical’ share under the funds annually transferred to them in lieu of octroi and zila tax, greater chunk of Rs10.4bn would go to Punjab, over Rs7.5bn would go to Sindh, Rs1.008bn to NWFP and Rs888m to Balochistan.

“Smaller provinces have refused to accept this arrangement of distribution for being beneficial to only one province,” said the sources.

Sindh, Balochistan and NWFP are demanding greater share out of the 2.5 per cent additional GST allocation under the 6th NFC award being formulated for the five year term starting from the 2003-04 financial year.

Rejecting the above mentioned arrangement laid down by the federal government, Sindh and NWFP, said the sources, had been stressing the NFC for getting their share enhanced.

Sindh, said a well placed official from Islamabad, was stressing that 40 per cent of the share should be distributed on the basis of population and remaining on the basis of provinces’ annual share determined after the abolition of octroi and zila tax.

“This arrangement would certainly place the Sindh government better off,” said the sources.

Similarly, the sources said, NWFP wanted the distribution on the basis of population.

If NWFP’s demand, said the sources, was accepted the province would get around Rs4bn — well over Rs2.6bn the federal government would be releasing to it during the 2002-03 financial year.

NWFP, said the sources, had taken the plea that 2.5 per cent additional GST allocation should be distributed on population basis because general sales tax was being paid by every consumer hence its distribution among provinces should be on ‘per head basis’.