ISLAMABAD, June 12: The federal budget 2004-05 has projected Rs256.7 billion net transfers to the provinces compared to Rs213 billion during the current year, showing an increase of 20.5 per cent.

Of this amount, the provincial share from the net proceeds of the divisible pool has been estimated at Rs201 billion against current year's revised estimates of Rs176 billion.

Straight transfers to the provinces would amount to Rs38 billion, compared to Rs34 billion, while special grants and subventions have been estimated at Rs36 billion, compared to Rs32.4 billion during the current fiscal year.

Project aid to the provinces would increase to Rs21 billion from Rs12.5 billion during the current year, showing an increase of 68 per cent.

The provincial cash balance is estimated at Rs31.6 billion in the budget for 2004-05, indicating an improvement of Rs3.6 billion over the budget estimates of 2003-04.

On provincial basis, the highest share of Rs120.3 billion would go to Punjab against its current year's share of Rs106 billion.

Sindh would get Rs72.7 billion, compared to Rs64.5 billion this year. Likewise, NWFP's share would increase to Rs28.5 billion from Rs25 billion, and that of Balochistan to Rs17.6 billion from Rs16 billion.

In pursuance of the NFC award of 1996, that became effective on July 1, 1997, the divisible pool consists of taxes on income, wealth tax, capital value tax, taxes on sales and purchase of goods, export duty on cotton, customs duty, federal excise duty excluding the excise duty on gas charged at well-head.

The net proceeds of the divisible pool are arrived at by deducting five per cent collection charges (six per cent for income tax) by the federal government. The federal share in the net proceeds of divisible pool is 62.5 per cent with remainder 37.5 per cent going to four provinces.

The province-wise share in the divisible pool has been worked out on the basis of their respective population in the percentages fixed in the distribution of revenues and grants in aid (amendment) order 2002. As such Punjab gets 57.36 per cent share, Sindh 23.71 per cent, the NWFP 13.82 per cent and Balochistan 5.11 per cent.

The provincial share in income tax has been projected at Rs61.5 billion, Rs87.7 billion in sales tax, Rs14.7 billion under federal excise (net of gas), Rs36.8 billion under customs duties, Rs12.4 billion in royalty on natural gas and Rs14.7 billion on account of gas development surcharge. Provincial share in the excise duty on gas and GST on services are projected at Rs4.3 billion and Rs2.9 billion, respectively.

The royalty on crude oil and development surcharge on natural gas, after deducting two per cent collection charges is transferred to the provinces on the basis of well-head production.

Similarly, royalty and excise duty on natural gas after deducting two per cent collection charges is also transferred to the provinces in accordance with article 161(1) of the constitution.