The four provinces received a total of Rs1,895 billion from the federal divisible tax pool during the first quarter of the 2026-27 fiscal year, which ran from July to September, according to documents released by the Ministry of Finance. The transfers were made under the National Finance Commission (NFC) Award.
Punjab takes the largest share of provincial transfers
The documents show Punjab received the largest share, Rs942 billion, during the quarter. Figures for each province, as set out in the documents, are as follows:
- Punjab: transfer of Rs942 billion, revenues of Rs1,117 billion, expenditures of Rs784 billion and a surplus of Rs333 billion.
- Sindh: transfer of Rs479 billion, revenues of Rs690 billion, expenditures of Rs509 billion and a surplus of Rs180 billion.
- Khyber Pakhtunkhwa: transfer of Rs314 billion, revenues of Rs413 billion, expenditures of Rs311 billion and a surplus of Rs102 billion.
- Balochistan: transfer of Rs158 billion, revenues of Rs175 billion, expenditures of Rs191 billion and a deficit of Rs16 billion.
Balochistan was the only province to record a budget deficit in the period.
How the NFC Award divides federal tax revenue
The award, established under President’s Order No. 5 of 2010 and amended in 2015, governs how federal tax revenues are shared. Under the current arrangement, 57.5 per cent of the net proceeds from major federal taxes go to the provinces through the divisible pool, while the federal government keeps 42.5 per cent.
Provincial shares are calculated using four indicators. Population carries the heaviest weight at 82 per cent. Poverty and backwardness account for 10.3 per cent, revenue generation and collection for 5 per cent, and inverse population density for 2.7 per cent.
Federal finances and State Bank profit in the quarter
Separately, the Ministry of Finance released its Fiscal Operations Report for the same quarter. It showed federal government revenues of Rs6,003 billion against total expenditures of Rs4,370 billion.
Interest payments on public debt amounted to Rs1,700 billion, and defence spending stood at Rs495 billion. The federal government also spent Rs263 billion on pensions, Rs206 billion on civil government operations and Rs84 billion on subsidies.
The State Bank of Pakistan recorded a profit of Rs1,932 billion during the first quarter, according to the Finance Ministry’s documents.
