Progressing on the 10th NFC Award Chapter 7: Progressing on the 10 th NFC Award The Article 160 of the Constitution of Pakistan provides for the setting up a National Finance Commission(NFC) once every five years to make recommendations to the President on the following: a) The distribution between the Federation and the Provinces of the net proceeds of pre-specified federal taxes. b) The making of grants in aid by the Federal Government to the Provincial Governments. c) The exercise of borrowing powers. d) Any other matter relating to finance referred to the Commission by the President. 7.1. The 7 th NFC Award There have been five Awards since the promulgation of the Constitution in 1973. Table 7.1 presents the evolution of the Provincial shares in different Federal taxes in the different Awards. It is evident from the Table that the largest share given to the Provinces was in the last Award given by the 7 th NFC. Table 7.2 gives the criteria for horizontal sharing among the Provinces. Up to the 7 th NFC Award, the only criterion used was the share of population. Table 7.1: Provincial Share in Divisible Pool Taxes in Different Awards Divisible Pool Taxes 1 st NFC 1974 4 th NFC 1991 5 th NFC 1997 PO c 2006 7 th NFC 2009 Income Tax and Corporation Tax a 80 80 37.5 41.50-46.25 56.0- 57.5 • Other Direct Taxes-- 37.5 41.50- 46.25 56.0- 57.5 Sales Tax 80 80 37.5 41.50-46.25 56.0- 57.5 Central Excise Dutyb-- 37.5 41.50- 46.25 56.0- 57.5 • Tobacco- 80 • Sugar- 80 Import Duties-- 37.5 41.50-46.25 56.0- 57.5 Export Duties • Cotton 80 80- ­a Excluding taxes on income consisting of remuneration paid out of federal consolidated fund. b Excluding Central Excise Duty on Natural Gas| c Presidential Order. Source : SPDC(2014) 63