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

The Khyber Pakhtunkhwa government has rejected a federal proposal to deduct Rs6.4 billion from the province's federal transfers. This was proposed by the Finance Ministry on August 5, informing the Accountant General of Pakistan Revenues (AGPR) Peshawar office about the at-source deduction for July 2026. The KP Finance Department responded that the proposed deduction had not been approved by the provincial cabinet or signed by the provincial government, nor had any budgetary provision been made for it in the provincial budget for FY2026-27.

They emphasized that Article 164 of the Constitution does not authorize unilateral deductions from funds constitutionally payable to a province, and any such deduction must have express constitutional or statutory basis. The KP government, according to the rejection letter, did not consent to any deduction without express approval, nor could it be effected through an executive or accounting instruction.

Chief Minister Sohail Afridi stated that the federal government had initially demanded additional funds from KP prior to the budget, linking it to a meeting with PTI leader Imran Khan, and that a meeting with Imran Khan was not arranged before the budget. The KP government has also filed a petition with the Federal Constitutional Court to enforce its constitutional rights under the National Finance Commission.