Chapter – XXI) Inter-governmental Fiscal Transfers #
117. Provincial allocable amount and transfers to the local governments.– #
(1) Before the commencement of each financial year, the Government shall set aside a portion of moneys likely to be received in the consolidated fund during that financial year to be called the provincial allocable amount.
(2) The provincial allocable amount shall be transferred to local governments, in accordance with the provisions of section 118 of this Act.
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 185 | 117 | 126 | 117 |
| RELEVANT RULES | |
| 1. | The Punjab Local Governments (Fiscal Transfers) Rules, 2017. |
118. Process for determination of provincial allocable amount and share of individual local governments.–
(1) As soon as may be, but not later than six months of the commencement of this Act and at least six months prior to the commencement of every fourth financial year thereafter, the Finance Commission shall make recommendation to the Government for establishing formulae for determining:
(a) the size of provincial allocable amount in accordance with the principles set out at section 121 of this Act; and
(b) the share of individual local governments from the provincial allocable amount in accordance with the principles set out in section 122 of this Act.
(2) Not less than two months before the commencement of each financial year, the Finance Commission shall make recommendation to the Government in respect of:
(a) the value of provincial allocable amount for that financial year as per formula determined under clause (a) of subsection (1); and
(b) the moneys to be transferred to each local government in the Punjab as per formula determined under clause (b) of subsection (1).
(3) The Government shall, within twenty-one days of the receipt of a recommendation under subsection (1) or subsection (2) may:
(a) accept it; or
(b) refer it back to the Finance Commission if it considers that it is not in accordance with this Act or suffers from a factual error.
(4) The Finance Commission shall, within fifteen days of the receipt of a reference under clause (b) of subsection (3), consider the views of the Government and resubmit its recommendation with or without any amendment.
(5) As soon as may be after accepting a recommendation under clause (a) of subsection (3) or resubmission of a recommendation under subsection (4), the Government shall, having regards to the merits of the recommendation and the provisions of this Act, approve the aforesaid formulae with or without any amendment and where required also allocate provincial allocable amount and the share of individual local governments from the provincial allocable amount.
(6) The formulae, provincial allocable amount and the shares of individual local governments from the provincial allocable amount approved by the Government and the related recommendation of the Finance Commission shall be tabled in the Provincial Assembly as part of the Finance Bill for the relevant financial year.
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 186 | 118 | 127 | 118 |
119. Duty of Finance Commission to consider views of Government and local governments.–
In preparing a recommendation for the Government under section 118 of this Act, the Finance Commission may inform itself in the way it considers appropriate and shall also receive, consider and decide any submission made to it by the Secretary or a local government in this respect.
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 187 | 119 | 128 | 119 |
120. Term of formulae on share of local governments and their revision.–
(1) After their approval by the Government, formulae referred to in section 118 of this Act shall remain in force for the following four financial years.
(2) The Finance Commission shall, at least six months prior to the expiry of enforcement period of a formula referred to in subsection (1), make recommendation to the Government for establishing a fresh formula.
(3) In case the recommendation of the Finance Commission under subsection (2) is not approved by the Government before the expiry of aforesaid enforcement period, the last approved formula shall continue to remain in force till such time that a new formula is approved.
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 188 | 120 | 129 | 120 |
121. Determination of provincial allocable amount.–
(1). The provincial allocable amount shall constitute not less than twenty-six per-centum of the general revenue receipts of the Province in the relevant financial year for the first two financial years following the commencement of this Act and thereafter constitute not less than twenty-eight per centum of the general revenue receipt of the Province in the relevant financial year
(2) The grant in lieu of Octroi and Zilla Tax being received by local governments at the commencement of this Act shall be included in the provincial allocable amount to meet the minimum threshold fixed at subsection (1).
(3) Where, after the commencement of this Act, the Government withdraws any local tax, fee, rate, rent, toll or any other charge of a local government in lieu of an equivalent grant, such grant shall not be included in the provincial allocable amount but shall be transferred to the local governments by the Finance Commission in accordance with the principles set out in section 122 of this Act.
(4) The final value of the provincial allocable amount shall be worked out on the basis of actual receipts of the Province during a given financial year and any adjustments shall be made accordingly in that or the following financial year.
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 189 | 121 | 130 | 121 |
122. Principles for determining transfers to individual local governments and related grants.–
(1) In so far as possible, the share of a local government in the provincial allocable amount shall be worked out having regard to the following:
(a) fiscal needs of the local government that is moneys required by it to maintain minimum service standards in relation to the functions assigned to it under this Act;
(b) equalization payments that are the moneys transferred to the local government to compensate for comparative poverty and backwardness of the local area;
(c) fiscal capacity that is the potential of the local government to raise local taxes, toll, fees, rates and other charges under this Act;
(d) fiscal effort that is the local government is compensated for collecting higher local taxes, toll, fees, rates, rents and other charges as against the potential to raise them;
(e) better expenditure management that is the local government is compensated for adherence to financial and procurement rules, bringing innovations and transparency in its working and achieving higher value for money; and
(f) quality of public services that is the local government is compensated for maintaining higher quality of public services.
(2) Based on the above, provincial allocable amount shall be transferred to the local governments through any one or more of the following means, namely:
(a) General purpose transfers worked out on the basis of principle given at clause (a), (b) and (c) of subsection (1); and
(b) Performance grants worked out on the basis of principles given in clause (d), (e) and (f) of subsection (1).
| NOTES: | ||||
| PARI MATERIA PROVISIONS | ||||
| PLGA 2013 | PLGA 2019 | PLGO 2021 | PLGA 2022 (Act No. XIII of 2022) | PLGA 2022 (Act No. XXXIII of 2022) |
| s. | s. | s. | s. | s. |
| – | 190 | 122 | 131 | 122 |
