The study has been carried out to measure the incidence of government spending on education in Pakistan at the provincial (both rural and urban) level, using the primary data of the Pakistan Social Standard Living Measures Survey (PSLM), 2004-2005, and by employing the three-step Benefit Incidence Approach methodology. The paper reviews the national policies emphasising provision of education in Pakistan, as well as the trend in coverage and public sector spending on education facilities in Pakistan. The study examines the inequalities in resource distribution and service provision in relation to the government education expenditure. The rural areas of Pakistan are the more disadvantaged in the provision of the education facilities. Overall, the expenditure on the education sector is progressive, both at the regional and the provincial levels. However, variation exists in the shares of different income groups benefit from the provision of educational facilities created by public expenditure.