The federal government transferred Rs2,347 billion to Khyber-Pakhtunkhwa (KP) under the National Finance Commission (NFC) Award over the past two fiscal years, even as the province continues to face serious security challenges. The province also receives an additional one per cent of resources under the NFC Award to support its efforts in the war against terrorism. According to documents of the Ministry of Finance, the federal government transferred Rs1,103 billion to KP under the NFC Award during the fiscal year 2024-25 and Rs1,244 billion during 2025-26, bringing the total amount transferred over the two-year period to Rs2,347 billion.

Ministry of Finance officials said the federal government transferred the provinces their shares from tax revenues under the NFC Award. They said 57.5 per cent of the Federal Board of Revenue's (Federal Board of Revenue (FBR)) tax collection is distributed among the provinces according to the agreed formula, while the remaining 42.5 per cent goes to the federal government. The officials clarified that non-tax revenues remain with the federal government and are not distributed among the provinces.

Petroleum levy is classified as non-tax revenue and, therefore, provinces do not receive a share of its proceeds under the NFC formula. Under the current NFC arrangement, KP is also allocated an additional one per cent from the divisible pool for expenditure related to the war against terrorism. Pakistan is currently operating under the seventh NFC Award.

Of the provincial share, Khyber Pakhtunkhwa receives 14.62 per cent under the agreed horizontal distribution formula. The latest figures highlight the scale of federal transfers to KP at a time when the province continues to grapple with persistent security and counterterrorism challenges.