The provinces' share of federally-collected divisible-pool taxes under the National Finance Commission (NFC) Award.
Source: Budget in Brief — Ministry of Finance, Government of Pakistan.
Provincial transfers are the share of federally-collected tax money that the central government hands over to Pakistan's four provinces — Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan. This happens under a constitutional rule called the National Finance Commission (NFC) Award.
Here's how it works: the FBR collects most major taxes — income tax, sales tax, customs duty — at the federal level. Before the federal government can spend any of that money on its own priorities, a large share (currently around 57.5%) is automatically transferred to the provinces, who then use it to fund their own schools, hospitals, police, and local development.
This matters because it's the single biggest deduction from the money Pakistan's government collects — even bigger than debt servicing or defence. How this share is divided between the federal government and provinces, and between the provinces themselves, is one of the most politically sensitive questions in Pakistani economic policy.
This is constitutionally the largest deduction from gross federal revenue before the federal government even starts spending — it directly shapes how much fiscal room the federal government has left.
What is the NFC Award?
The National Finance Commission Award is the constitutional mechanism (Article 160) that sets how federally-collected divisible-pool taxes are split between the federal government and the four provinces. The current 7th NFC Award gives provinces 57.5% of the divisible pool.
Does this include all federal-to-provincial payments?
This figure is the divisible-pool/NFC share specifically. Supplementary grants and straight transfers to provinces are tracked separately in this dataset as "Grants and Transfers to Provinces & Others."
Why was the NFC Award created?
To give Pakistan's provinces a guaranteed, formula-based share of national tax revenue, instead of relying on the federal government's discretion each year — intended to make provincial funding more predictable and fair.
How often is the NFC Award renegotiated?
The constitution requires a new award at least every five years, though in practice awards have sometimes stayed in place well beyond that when provinces and the federal government couldn't agree on a new formula.
Which province gets the largest share under the NFC Award?
Punjab receives the largest share, simply because the formula is heavily weighted by population, and Punjab is Pakistan's most populous province.
Does the NFC Award only consider population?
Mostly, yes, though the current 7th NFC Award also factors in poverty, revenue collection, and inverse population density to a smaller degree, partly to address smaller provinces' concerns.
Why is the NFC Award politically sensitive?
Because it directly determines how much money each province gets to run schools, hospitals, and police — any change in the formula creates clear winners and losers among the provinces.
Do provinces have other sources of revenue besides NFC transfers?
Yes — provinces also collect some of their own taxes, like agricultural income tax and provincial sales tax on services, but NFC transfers remain by far the largest source of provincial revenue for most provinces.
Every figure on this page is the Budget Estimate (BE) for that fiscal year, transcribed from that year’s own official Budget in Brief (Finance Division, Government of Pakistan). Most recent year:
Budget in Brief, FY2026-27 (Table 1: Budget at a Glance, Table 2/3: Fiscal Deficit & Financing / BE & RE Comparison, Table 11: Function-Wise Expenditure)Related Budget Categories
Related Provincial Pages