KP rejects Centre’s proposal to deduct Rs6.4bn from federal transfers

The Khyber Pakhtunkhwa provincial government has firmly rejected a federal proposal to withhold Rs6.4 billion from its upcoming financial transfers. The federal Finance Ministry had directed the Accountant General of Pakistan Revenues (AGPR) to make the deduction at source for July 2026.

According to details obtained by Dawn, the Finance Ministry communicated this directive on August 5, requesting the amount be adjusted against the province's accounts for the fiscal year 2026-27. The ministry sought formal advice of adjustment once the deduction was carried out.

However, the Khyber Pakhtunkhwa Finance Department formally notified the Accountant General KP on Thursday. The provincial department stated that the Memorandum of Understanding (MoU) circulated by the federal government for this deduction had not received approval from the provincial cabinet, nor had it been signed by the provincial government. Consequently, the province has refused to comply with the federal Finance Division's proposed deduction.