Constitution of the Islamic Republic of Pakistan, 1973 — Article 160

160. National Finance Commission..—(1) Within six months of the commencing day and thereafter at intervals not exceeding five years, the President shall 1constitute a National Finance Commission consisting of the Minister of Finance of the Federal Government, the Ministers of Finance of the Provincial Governments, and such other persons as may be appointed by the President after consultation with the Governors of the Provinces.

(2)It shall be the duty of the National Finance Commission to make recommendations to the President as to

(a)the distribution between the Federation and the Provinces of the net proceeds of the taxes mentioned in clause (3);

(b)the making of grants-in-aid by the Federal Government to the Provincial Governments;

(c)the exercise by the Federal Government and the Provincial Governments of the borrowing powers conferred by the Constitution; and

(d)any other matter relating to finance referred to the Commission by the President.

(3)The taxes referred to in paragraph (a) of clause (2) are the following taxes raised under the authority of 2[Majlis-e-Shoora (Parliament)], namely:

(i)taxes on income, including corporation tax, but not including taxes on income consisting of remuneration paid out of the Federal Consolidated Fund; 3 [(ii) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed;]

(iii)export duties on cotton, and such other export duties as may be specified by the President;

(iv)such duties of excise as may be specified by the President; and

(v)such other taxes as may be specified by the President. 4 [(3A) The share of the Provinces in each Award of National Finance Commission shall not be less than the share given to the Provinces in the previous Award. 1 For the notification constituting the National Finance Commission, see Gaz. of Pak. 1974, Ext., Part II. pp. 191-192. 2 Subs. by the Revival of the Constitution of 1973 Order, 1985 (P.O. No.14 of 1985), Art.2 and Sch. 3 Subs. by the Constitution (Fifth Amendment) Act, 1976 (Act No. LXII of 1976), s. 3, (w.e.f. the 13th September, 1976). 4 Ins. by the Constitution (Eighteenth Amendment) Act, 2010 (Act No. X of 2010), s. 59. (3B) The Federal Finance Minister and Provincial Finance Ministers shall monitor the implementation of the Award biannually and lay their reports before both Houses of Majlis-e-Shoora (Parliament) and the Provincial Assemblies.]

(4)As soon as may be after receiving the recommendations of the National Finance Commission, the President shall, by 1Order, specify, in accordance with the recommendations of the Commission under paragraph (a) of clause (2), the share of the net proceeds of the taxes mentioned in clause (3) which is to be allocated to each Province, and that share shall be paid to the Government of the Province concerned, and, notwithstanding the provision of Article 78 shall not form part of the Federal Consolidated Fund.

(5)The recommendations of the National Finance Commission, together with an explanatory memorandum as to the action taken thereon, shall be laid before both Houses and the Provincial Assemblies.

(6)At any time before an Order under clause (4) is made, the President may, by Order, make such amendments or modifications in the law relating to the distribution of revenues between the Federal Government and the Provincial Governments as he may deem necessary or expedient.

(7)The President may, by Order, make grants in aid of the revenues of the Provinces in need of assistance and such grants shall be charged upon the Federal Consolidated Fund. 161. Natural gas and hydro-electric power. 2[(1) Notwithstanding the provisions of Article 78,

(a)the net proceeds of the Federal duty of excise on natural gas levied at well-head and collected by the Federal Government and of the royalty collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well-head of natural gas is situated;

(b)the net proceeds of the Federal duty of excise on oil levied at well-head and collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well-head of oil is situated.]

(2)The net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated. Explanation.__ For the purposes of this clause “net profits” shall be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydro-electric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, duties, interest or return on investment, and depreciations and element of obsolescence, and over-heads, and provision for reserves. 1 For such Order, see the Distribution of Revenues and Grants-in-Aid Order, 1975 (P. O. No. 2 of 1975). 2 Subs. by the Constitution (Eighteenth Amendment) Act (Act No. X of 2010), s. 60. 162. Prior sanction of President required to Bills affecting taxation in which Provinces are interested. No Bill or amendment which imposes or varies a tax or duty the whole or part of the net proceeds whereof is assigned to any Province, or which varies the meaning of the expression “agricultural income” as defined for the purposes of the enactments relating to income-tax, as defined for the purposes of the enactments relating to income-tax, or which affects the principles on which under any of the foregoing provisions of this Chapter moneys are or may be distributable to Provinces, shall be introduced or moved in the National Assembly except with the previous sanction of the President. 163. Provincial taxes in respect of professions, etc. A Provincial Assembly may by Act impose taxes, not exceeding such limits as may from time to time be fixed by Act of 1[Majlis-e-Shoora (Parliament)], on persons engaged in professions, trades, callings or employments, and no such Act of the Assembly shall be regarded as imposing a tax on income. Miscellaneous Financial Provisions 164. Grants out of Consolidated Fund. The Federation or a Province may make grants for any purpose, notwithstanding that the purpose is not one with respect to which 1[Majlis- e-Shoora (Parliament)] or, as the case may be, a Provincial Assembly may make laws.