Sindh to Get Rs. 3.5 Billion Grant from Center to Offset OZT Loss

The federal government decided to transfer a Rs. 3.5 billion technical supplementary grant to Sindh to offset losses due to abolition of the octroi and zila tax (OZT)

Sources said that the cabinet has approved a technical supplementary grant (TSG) worth Rs 3.5 billion for Sindh to offset losses due to the abolition of the OZT.

Finance Ministry informed the cabinet that the government of Sindh Is entitled to receive a grant in aid equivalent to 0.66 percent of the provincial share in the divisible pool taxes as compensation for losses on account of the abolition of OZT tax in terms of article 7 of the President’s Order No.6 of 2010 (7th NFC Award).

An allocation of Rs. 19.250 billion was made for the purpose against the actual working of Rs.21.472 billion made based on Federal Board of Revenue (FBR) receipts of Rs 5.829 trillion.

The releases are made based on the actual collection reported by FBR. Due to improved FBR revenue collections, Rs.16.867 billion stands released as of April 18, 2022, out of the total allocation of Rs. 19.250 billion leaving a balance of Rs. 2.383 billion.

The FBR collections during May and June would be much higher than reported previously. As such, the existing balance allocation is not sufficient and an additional allocation of Rs. 3.5 billion is required as per working.

An amount of Rs. 17 billion has been allocated for the ‘Grant for Relief and Rehabilitation of Internally Displaced Persons” under the same demand out of which funds amounting to Rs. 5.1 billion were released during the first quarter of the current financial year, 2021-22.

However, the balance allocation has not been released as the federal government has cumulatively released Rs. 112.463 billion against the total approved package of Rs. 95.51 billion for the Internally Displaced Persons and the balance allocation is available for surrender or utilization for some other purposes if so required.

The allocation of grant-in-aid to Sindh is an expenditure charged upon the federal consolidated fund (FCF) and the allocation is a voted expenditure and under terms of the Public Finance Management Act, 2019, no re-appropriation can be made between funds authorized for expenditure charged upon the FCF and voted expenditure.

The possible solution is to surrender funds from the head and obtain a technical supplementary grant (TSG) where required. The ECC has been requested to approve TSG of Rs.3.5 billion under ID K0955-Grant No.45 (FC24G01) in lieu of surrender from ID 1130570 Grant 45 (FC21G01).

As releases are made based on actual FBR receipts reported by FBR, therefore schedule for the TSG will be issued as per the requirement for which the ECC approval was solicited.

 



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