The federal government has constituted eight working groups to prepare recommendations for the 11th National Finance Commission (NFC) Award, sources said on Tuesday.

According to the sources, one working group headed by the Punjab finance minister will formulate recommendations on the sharing of federal expenditures related to subjects falling under provincial jurisdiction.

A separate working group, led by the Balochistan finance minister, has been established to determine the ratio for the distribution of resources between the federation and the provinces, as well as the distribution of resources among the provinces.

Another working group has been formed to review the structure and utilisation of national debt.

A working group headed by the Khyber Pakhtunkhwa finance minister will propose measures to improve the tax-to-GDP ratio, while a group led by the Sindh finance minister will focus on the direct transfer of resources to the provinces.

A separate working group has been constituted to make recommendations regarding the merger of the former Federally Administered Tribal Areas (FATA) and their share under the NFC framework.

The eighth working group, chaired by Federal Finance Minister Muhammad Aurangzeb, will examine the structure of the divisible pool and propose whether certain taxes should be included in or excluded from it.

The sources said the federal government is considering removing customs duty from the divisible pool.

Meanwhile, the Khyber Pakhtunkhwa government has demanded a four per cent increase in its NFC share, citing the province’s expanded territorial boundaries and population growth.