PESHAWAR, June 19: The NWFP government will not make at-source deduction from district governments’ monthly disbursements in view of the financial problems they are facing, official sources said on Thursday.

Though the Provincial Finance Commission (PFC) award contains that at-source deduction could be made from the district government concerned in specific circumstances, the provincial government would adhere to its earlier decision of not doing so, said the sources.

The interim period of PFC award — announced for the financial year 2003-04 — contains that book adjustments would be made against the monthly releases to the district government concerned if at-source deduction from the revenue assignments to recover Wapda arrears owed by local bodies institutions was made, the sources said.

Wapda deducted at-source over Rs550 million from the NWFP’s net hydel profit account during the outgoing financial year on account of recovering as many arrears owed by the local governments’ institutions in the NWFP.

On the whole, the provincial government recovered over Rs180 million from the district governments through at-source deduction from the monthly releases made to them from the funds provided to the province by the Centre in lieu of octroi and zila tax.

The provincial government’s move, said the sources, caused some of the district governments to plunge into deep financial crisis.

However, after some of the town committees’ financial constraints, the provincial government was constrained to stop at-source deduction from the district governments to improve their financial condition, the sources said.