(1) The Government of Nepal shall set up a federal segregated fund to distribute the amount of value added tax and excise duty raised from domestic production between the Government of Nepal, the provinces and local levels and deposit such amount in that fund.
(2) According to sub-section (1), seventy percent of the amount accumulated in the Federal Divided Fund shall be distributed to the Government of Nepal, fifteen percent to the provinces and fifteen percent to the local level.
(3) According to sub-section (2), the amount received by the Government of Nepal from the amount to be distributed between the Government of Nepal, the provinces and local levels shall be deposited in the Federal Reserve Fund and the amount received by the provinces and local levels shall be deposited in such fund by setting up the following separate fund:-
(a) Amounts to be received by the Provinces from the Provincial Dividend Fund,
(B) The amount received by the local levels is the local allotment fund.
(4) According to sub-section (3), the amount accumulated in the provincial separate fund and local separate fund shall be distributed to each province and local level according to the basis and pattern determined by the commission under the constitution and this act.
(5) The amount received by each province from the distribution according to sub-section (4) shall be provided on a monthly basis in the respective provincial reserve fund and the amount received by each local level shall be deposited in the respective local reserve fund.
(6) The amount to be distributed according to this section will be reconciled in the last month of the financial year.