KP to receive Rs1.2 trillion in federal transfers for FY2024-25

The Khyber Pakhtunkhwa (KP) government is projected to receive Rs1212 billion in federal transfers from the central government for the fiscal year 2024-25, according to a white paper on the province’s budget. 

According to a news report, these transfers constitute 69% of KP’s total revenue receipts, including the province’s share of the National Finance Commission (NFC) Award, Net Hydel Profit (NHP), and revenue from oil and gas.

The federal transfers encompass receipts from federal tax assignments, including taxes on income, customs duties, sales tax, capital value tax (CVT), and federal excise. 

The provincial government is expected to receive Rs903 billion from these sources, compared to Rs713 billion in the previous fiscal year.

A significant portion of these funds is expected from taxes on income, estimated at Rs405 billion, up from Rs338 billion in the outgoing fiscal year. Sales tax revenue is projected at Rs330 billion, with customs duties and federal excise estimated at Rs116 billion and Rs51 billion, respectively.

KP is also set to receive Rs108 billion under the 1% share of the divisible pool for the War on Terrorism, recognizing the province’s central role in the conflict. 

Additionally, the provincial government will receive Rs43 billion in straight transfers, including Rs26 billion in royalty on crude oil, Rs11 billion in royalty on natural gas, Rs3 billion in gas development surcharge, and Rs3 billion in excise duty on natural gas.

An estimated Rs47 billion will be received as a windfall levy from the federal divisible pool. In terms of hydroelectricity profits, the province is expected to receive Rs111 billion, which includes Rs33 billion from the current year’s NHP, Rs37 billion in reconciled arrears, and Rs41 billion in unreconciled arrears indexed for inflation.