(1) The Government of Nepal will distribute financial equalization grants to the provinces and local levels based on the needs of the provincial and local levels and the capacity of revenue based on the recommendation of the Commission.
(2) According to sub-section (1), the province shall distribute the subsidy received from the Government of Nepal and the revenue raised from its own sources, based on the expenditure needs of the local level within the province and the capacity of the revenue, on the recommendation of the commission in accordance with the provincial law.